If pragmatic action isn’t taken soon to halt growing U.S. dependence on imported minerals and metals, especially from China, our economy will be seriously harmed.
The Biden administration and Congress, not just industries with global supply chains, must address this very real danger.
Minerals are indispensable to a modern economy. A secure supply is essential to the production of everything from smart phones and electric vehicles to the advanced weapons systems that underpin our national security. Yet, despite an abundance of resources beneath the ground in this country, it has become increasingly difficult to open a new mine in the United States or expand an existing one. No matter how worthwhile the mining project and how many jobs it will create, when militant dissent builds, even the most promising and necessary projects can be derailed.
This mentality has deep roots extending back to the 1990s, when the United States went from being a minor importer of minerals and metals to a major importer. The neglect of U.S. mining and the outsourcing of minerals and metals is symptomatic of the hollowing out of our country’s production base. And the results have been devastating. U.S. mineral import reliance is at an all-time-high, having doubled in the past 20 years.
The need to reverse this import reliance and reinvigorate domestic production has picked up new urgency because clean energy technologies and infrastructure are particularly minerals intensive. Building thousands of miles of new high-voltage electric power lines that can deliver more renewable energy, ramping up the production of electric vehicles (EVs) and charging stations, and manufacturing high-tech products such as advanced batteries all rest on a minerals and metals foundation that stretches the full breadth of the periodic table.
Nothing looms larger now than the EV production part. The global market for EVs is expected to reach 26.9 million vehicles — cars, SUVs, pickups and trucks — by 2030 from 3.2 million in 2019. The manufacture of EV batteries in particular is an engine for job creation and economic growth.
Currently, an EV’s battery pack accounts for a quarter of the total vehicle cost, making it the most important factor in the sales price. But in one critical aspect, the system has become increasingly vulnerable: in the growing reliance on China for critically important battery metals — nickel, lithium, copper, graphite and cobalt.
Also, rare earth minerals. But while there is no shortage of battery metals and rare earths in China, there is no shortage of things that can go seriously wrong — for example, something like an embargo against the United States that interrupts the supply chain and causes prices to soar, jeopardizing the U.S. auto industry.
Chinese dominance in minerals production is a serious strategic issue for the United States. For one thing, China — which is by far the world’s largest battery producer — has given its own battery manufacturers preferential access to battery metals and is using its control of the metals supply chain to reorient the global auto industry.
This situation — which not only threatens the future of U.S. car manufacturing — also creates the potential for security problems similar to those the U.S. experienced as a result of its heavy reliance on Middle East oil during the 1970s.
This vulnerability needs to be addressed now. Take lithium, the critical ingredient in lithium-ion batteries. Despite projections that show demand soaring, the U.S. has just one operational lithium mine and no domestic processing. China, on the other hand, has the market cornered. Is trading the whims of OPEC for machinations of Beijing a geopolitical upgrade? It’s a deeply unsettling situation.
Precisely because the hazards are so acute and unpredictable, we need to make it harder for our adversaries to use minerals as a weapon and take steps to protect ourselves if it is used. And that means building the domestic mineral supply chains a clean energy economy demands. Reshoring America’s industrial base must begin with reshoring mineral production and processing. The scandalous neglect of U.S. mining must stop. It’s past time to reinvest and rebuild the sustainable, secure and absolutely essential mining industry this country needs.
• Dan Ervin is a professor of finance at Perdue School of Business, Salisbury University.