“The industrial age was fueled by coal and oil and fossil fuels. But this information age is increasingly being powered by critical minerals,” said Sharon Burke, director of the Resource Security group at the think tank New America who served as assistant secretary of defense for operational energy in the Obama administration, and in the State Department during the Bush administration.
The U.S. imports more than 80% of its supply of rare earths and minerals from China. Beijing’s cornering of that market could have broad consequences.
Biden’s climate plan to reduce America’s greenhouse gas emissions to net zero by 2050 includes a requirement that all new cars sold in the United States be emissions-free. That kind of mass-production of electric vehicles comes with a not-so-green asterisk: Instead of drilling for oil and gas, electrification requires mining of the more exotic elements of the periodic table. Materials with names like neodymium, niobium, yttrium, along with lithium and cobalt and others, are used in rechargeable batteries, solar cells and other technologies.
These materials are also needed to manufacture devices that form the very bedrock of the tech economy: semi-conductors and smart phone batteries. The military relies on them, too, for the production of everything from jet engines and night-vision goggles to the control systems of cruise missiles.
Disruptions to the supply of these materials could be devastating to the U.S., said Burke. She recalled designing a “war game” simulation in which America was knee-capped in a military confrontation as soon as China cut off supplies. “We were bringing our artillery and the Chinese just manipulated trade in raw materials and in industrial capacity to end the war before it ever started,” she said.
That scenario is not purely hypothetical. In 2010, China halted exports of rare earths to Japan over a political dispute, raising concerns that they could do so again as U.S.-China tension rise.
In response to an executive order from President Donald Trump, in 2018, the Interior Department identified a list of 35 mineral commodities deemed critical to American security and economic prosperity, declaring that dependence on foreign sources for the materials “creates a strategic vulnerability” for both the U.S. economy and military.
The U.S. government has since begun mapping out the extent of America’s economic and strategic vulnerability to disruption by China as part of a broader mineral strategy launched by the Trump administration.
“These minor metals are really produced in just a few locations, which causes concern regarding the stability of their supply,” said Dr. Nedal Nassar, chief of the Material Flow Analysis Section at the U.S. Geological Survey, who is now working to understand different scenarios that a shortage would cause, the potential impact to economic output and which industries in the manufacturing sector would be disrupted the most.
“You can imagine that there are a lot of ripple on effects,” particularly in the automobile and technology sectors, he said.
China’s dominance in critical minerals did not arise by accident. Beijing followed an intentional industrial strategy to achieve its dominant position. In addition to building refineries at home, it made strategic purchases of mining assets in Central Asia, Africa, South America and Australia, and built infrastructure through its “Belt and Road” initiative, to secure raw commodities from around the world.
“They’re building roads, railroads, for instance, all the way into Europe, ports around the world to places in Europe, Africa, Latin America, where they think they can sell products, but also to get access to the basic materials that they don’t have within China itself,” Thomas Duesterberg, a senior fellow at the Hudson Institute.
“China has a goal of producing 80 percent of the electric vehicles that go into its domestic auto market by 2025. They’re well on the way to at least controlling the battery production that goes into that. So it’s all an integrated policy,” he said.
China was able to secure its global dominance in part through state subsidies that enabled its low-priced exports to displace competitors, and by skirting international environmental, labor, and anti-corruption standards.
“They have very lax environmental regulations and they also have very low, exploitative labor costs. So those are things that would not fly in the United States or in western countries,” said Burke.
The U.S. government is also looking to collaborate with mineral-rich allies, such as Australia and Canada, to develop alternative supply chains. And Washington is beginning to debate whether it should develop an industrial policy to bring back its own rare earths and minerals mining sector — with the catch being that doing more mining on domestic soil means the pollution and mining waste would be produced here, too. Still, proponents think the environmental downsides can be mitigated.
“The United States needs to improve its production of minerals at home — and that has potential to create a lot of jobs,” Burke said. “And I think that we should do it in a way that’s innovative and clean — in a way that China never would.”