It is hardly a secret that the pandemic acted as a powerful reminder of the need to secure supply lines.
It is hardly a secret that the pandemic acted as a powerful reminder of the need to secure supply lines. And it is hardly a secret that relations between Russia and China on one side, and the U.S. on the other, are not in the best possible shape.
China said on Tuesday that it would begin banning the export of several rare minerals to the United States, an escalation of the tech war between the world’s two biggest powers. The move comes a day after the Biden administration tightened Chinese access to advanced American technology.
The ban signals Beijing’s willingness to engage in supply chain warfare by blocking the export of important components used to make valuable products, like weaponry and semiconductors.
Sales of gallium, germanium, antimony and so-called superhard materials to the United States would be halted immediately on the grounds that they have dual military and civilian uses, China’s Ministry of Commerce said. The export of graphite would also be subject to stricter review.
This also underlines the point that it would be madness to allow any strategic sector of the economy to be dependent on China.
And yet the government continues to force a transition to electric vehicles . . .
The International Energy Agency estimates that 90% of graphite and 77% of refined rare earths — key inputs in EV and battery production— will come from China by 2030. The U.S. currently imports 100% of its graphite, with one-third of that supply sourced from China, according to the Alliance for Automotive Innovation.
So far as materials such as those on the Chinese export ban list are concerned, the U.S. should boost efforts to ensure supplies at home (and that includes supporting, rather than hobbling mining operations) and, if those materials are not available domestically in sufficient quantities, build or maintain strategic reserves as well as establishing supply lines that have a reasonable prospect of resilience in periods of international tension. The Department of Defense does run the National Defense Stockpile, but from the look of things, this needs work.
This will not, of course, always be the most economically efficient way to proceed. In a September 2024 report, the U.S. Government Accountability Office (GAO) noted how American rare earth mining capacity has “waned” over the last 40 years, in no small part “due to the emergence of lower-cost suppliers in other nations, such as China.” Between 2019-22, the U.S. imported more than 95 percent of the total rare earths it consumed, much of which was from China. But, as Germany discovered in the case of Russian natural gas, “cheap” may be more expensive than it seems.
In an age of automation, China’s cost advantage ought to shrink, but something else is at play.
The GAO:
According to DOD officials, the U.S. has more rigorous environmental regulations than China. This allows China to mine and process rare earths and certain other critical materials at a lower cost.
Ah.
Adam Smith recognized that sometimes economic efficiency had to take second place to strategic necessity, writing that “[D]efense,… is of much more importance than opulence.” In a U.S. that is greener than is prudent, those words need a supplement:
“[D]efense… is of much more importance than opulence or exaggerated environmental sensitivity.”
At least so far as the mining of strategically vital minerals is concerned, much of the green tape must be shredded. DOGE might want to take a look.
Meanwhile, via Reuters:
Russia has imposed restrictions on the export of enriched uranium to the United States, the government said on Friday, creating supply risks for U.S. nuclear power plants which last year imported a quarter of their enriched uranium from the country.
Russia said the temporary restrictions were a response to Washington’s ban on imports of Russian uranium, which was signed into law earlier this year, but contained waivers allowing for shipments to continue in case of supply concerns through 2027…
Russia is the world’s sixth largest uranium producer and controls about 44% of global uranium enrichment capacity. In 2023, the U.S. and China topped the list of Russian uranium importers, followed by South Korea and France.
Basically, uranium is not (surprise!) like coal, a product that can be mined and used as a power source. It has to be “enriched.” The same is true of the uranium used in nuclear weaponry, too. The U.S. share of global enrichment capacity is currently around a quarter of Russia’s and is (finally) set to increase, but by enough?
U.S. uranium mining needs to do the same. There are signs that is underway. Meanwhile, Canada is currently the world’s second-largest producer of uranium. No tariffs on that, please.