In-Depth: Sen. Lisa Murkowski (R-AK) introduced this bill to develop a comprehensive plan for reducing the United States’ dependence on foreign minerals. In remarks at the Benchmark Minerals Summit, where she announced this bill, Sen. Murkowski said:
“Our nation’s mineral security is a significant, urgent, and often ignored challenge. Our reliance on China and other nations for critical minerals costs us jobs, weakens our economic competitiveness, and leaves us at a geopolitical disadvantage. I greatly appreciate the administration’s actions to address this issue, but Congress needs to complement them with legislation. Our bill takes steps that are long overdue to reverse our damaging foreign dependence and position ourselves to compete in growth industries like electric vehicles and energy storage.”
Original cosponsor Sen. Joe Manchin (D-WV) adds that U.S. national security depends on an independent domestic critical minerals supply:
“I am grateful to continue working with Chairman Murkowski to find ways to reduce our reliance on foreign countries for critical minerals in a responsible way. Our legislation requires common sense steps to begin restoring American independence regarding critical minerals and strengthen our national security, diversify our economy and create job opportunities in our communities.”
In testimony to the Senate Energy & Natural Resources Committee on May 14, 2019, Assistant Secretary for Land and Minerals Management Joseph Balash expressed support for this bill, saying:
“The Department appreciates the Chairman and the Ranking Member’s recognition of the great importance of critical minerals. We are grateful for the hard work that has been done to draft legislation that will help us fulfill the critical minerals strategy developed in response to Executive Order 13817, A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals. We look forward to working with you on the bill to best achieve these goals.”
This bill has four bipartisan cosponsors, including three Republicans and one Democrat. Sen. Murkowski has introduced similar standalone legislation in previous Congresses, in addition to including sections on critical minerals in her energy bills in both the 114th and 115th Congresses.
This bill has the support of Lithium Americas Corporation, a company currently developing a lithium project in Nevada; and Piedmont Lithium Ltd, which is developing a lithium project in North Carolina.
Of Note: Although there’s no official government-wide definition of critical minerals, the U.S. Geological Survey says that “broadly speaking, if a vital sector of the economy requires a mineral in order to function, that mineral would likely be deemed ‘critical.’” Thus, this category includes rare earth elements, gallium and manganese.
The U.S. Geological Survey reports that the U.S. imported at least 50% of 48 minerals in 2018. Of those 48 minerals, the U.S. imported 100% of 18 of them, including 100% of the nation’s supply of rare earth elements, graphite and indium. This is a marked uptick in reliance on international sources: according to Sen. Murkowski’s office, the U.S. imported 100% of only 11 different minerals and 50% of another 26 minerals as recently as 1997. With this trend in mind, Simon Moores, managing director of Benchmark Mineral Intelligence, argues that the U.S. is in the middle of a “global battery arms race” and praises Sen. Murkowski for introducing this legislation:
“Senator Murkowski has taken a true leading role in US supply chain security for the critical minerals that are the foundation of the 21st century automotive and energy industries. We are in the midst of a global battery arms race that is intensifying. Lithium, graphite, cobalt and nickel are the key enablers of the lithium ion battery and, in turn, the lithium ion battery is the key enabler of the energy storage revolution. Globally, they are facing a wall of demand especially from electric vehicles yet the US has been a bystander in building a domestic supply chain capacity. Right now, the US produces 1% of global lithium supply and only 7% of refined lithium chemical supply, while China produces 51%. For cobalt, the US has zero mining capacity and zero chemicals capacity whilst China controls 80% of this second stage. Graphite is the most extreme example with no flake graphite mining and anode production compared to China’s 51% and 100% of the world’s total, respectively. And its a similar story with nickel: under 1% mined in the US and zero capacity for nickel sulfate. These supply chains are the oil pipelines of tomorrow. The lithium ion battery is to the 21st century is what the oil barrel was to the 20th century. Senator Murkowski’s focus on not just the mineral resources but the entire supply chain is absolutely crucial to giving the industry confidence to build a US blueprint for the energy storage revolution.”
Thanks to its control over much of the world’s lithium processing and supply, China dominates the electric vehicle supply chain, producing nearly 66% of the world’s lithium ion barriers (versus America’s 5%). Securing America’s Future Energy, a nonpartisan advocacy group for renewable energies, contends that this may be detrimental to future U.S. energy independence. Robbie Diamond, the organization’s founder and president, says, “The [U.S.] should not go from dependence on oil from the Middle East for transportation, to dependence on China for electric vehicles and batteries.”
In testimony to the Senate Energy & Natural Resources Committee on May 14, 2019, Dr. John Warner, Chairman of the National Alliance for Advanced Technology Batteries, argued that the energy materials supply chain challenge in the North America has two components: “the market price problem and the geopolitical problem.” Warner described the market price problem, in which energy materials supply and energy materials demand differ wildly over short periods of time, as a product of the energy market’s inherent characteristics. However, he also added that this characteristic of the energy materials market has led Chinese companies, “acting almost certainly at the behest of the Chinese government,” to buy up energy materials supply sources around the world in order to ensure that Chinese battery manufacturers will have access to reasonably stable supplies of low-cost energy materials, benefitting Chinese businesses at the cost of other nations’ businesses. This, Warner argues, then poses a public policy problem for the U.S., forcing U.S. policymakers to decide what strategic industries the country will invest in to regain leadership in and dominance of the global energy materials supply market. It also creates what Warner characterizes as “the geopolitical problem” precipitated by the threat of disruptions to energy materials supplies by foreign actors: a risk that both China and the U.S. are acutely aware of.
The U.S.-China trade war is making America’s exposure to Chinese threats in this area known. As trade tensions have escalated, China-watchers have raised the possibility of China cutting of rare earth exports to the U.S. — a fear that was stoked by Chinese President Xi Jinping’s and his top trade negotiator’s visit to a rare earth mining and processing plant in China’s eastern Jiangxi province (the province is a key rare earths mining area).
However, Eugene Gholz, an advisor to the U.S. government on rare earths, argues that China’s leverage over the rare earths market doesn’t pose a serious threat. In an October 2014 report for the Council on Foreign Relations, he writes:
“[P]olicymakers should not succumb to pressure to act too quickly or too expansively in the face of raw materials threats. Not all such threats are like that posed by the historical precedent that is typically invoked: the 1973 oil crisis… Caution about overstating raw materials threats is particularly advisable because where foreign policy or intelligence analysts see a potential for dangerous market concentration and economic coercion, some businesses are also likely to see an opportunity to introduce competition and make a profit, ameliorating risks.”
Summary by Lorelei Yang(Photo Credit: iStockphoto.com / JacobH)