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Framework for Securing American Critical Mineral Supply Chains

Smartphones, clean energy infrastructure, and U.S. military readiness have a common denominator. They depend heavily on a secure supply of critical minerals such as cobalt, lithium, and graphite. Unfortunately, global demand for these integral inputs threatens to outpace production, and the United States depends almost exclusively on other countries—particularly China—for their supply. Both Republicans and Democrats recognize that America’s national security, economic welfare, and energy security hinge on developing reliable and secure mineral supply chains.

More palatable alternatives to the status quo do exist. Many critical minerals could be sourced and processed either domestically or from allied nations. There are also ways to reduce dependence on critical minerals that may be heavily concentrated in adversarial locations.

What must change is the public policy framework, particularly as the U.S. looks to build clean energy infrastructure. There is broad bipartisan interest in building strong and reliable critical mineral supply chains, as demonstrated by recently enacted laws including: The John. D. Dingell, Jr. Conservation, Management, and Recreation Act of 2019; Energy Act of 2020; Bipartisan Infrastructure Law (BIL); CHIPS and Science Act; and the Inflation Reduction Act. These laws created and funded critical mineral research and mapping programs that are important steps forward. The work, however, is far from finished.

Here, we outline the energy policy levers and targeted actions that can garner bipartisan support and advance the United States much closer to addressing America’s critical mineral vulnerabilities.

Recommendation: Resource assessments

An important step in utilizing and responsibly accessing potential domestic mineral resources is conducting a comprehensive resources assessment. This will provide a full understanding of what resources exist and where they are located. Such an assessment was authorized by the Energy Act of 2020 which directed the government to catalog current U.S. supplies of critical minerals and the locations of certain domestic stockpiles. The BIL also authorized assessments of critical mineral resources in ground and mine wastes, an often-overlooked resource with great potential. Congress should fully fund these assessments and consider additional policies to assess and map critical minerals, including increased coordination between existing databases of critical minerals supply chains.

Recommendation: Permitting reform – accelerate access to domestic resources while protecting environmental stewardship

Specific and targeted commonsense permitting reforms are essential to accelerate access to domestic critical minerals through environmentally responsible mining.

Hardrock mines are governed by the gold rush era General Mining Law of 1872, which has resulted in a cumbersome and lengthy process for securing permits. In 2021, the Department of the Interior (DOI) formed an interagency working group (IWG) to review existing mining laws, regulations, and permitting processes. The administration should finalize the report as soon as possible with recommendations for improved hardrock mining permitting.

The permitting process should ensure environmental responsibility while increasing secure supplies of the critical minerals necessary for the United States to achieve economic security and climate objectives. Congress should enact permit reforms that expedite permits while maintaining environmental and social safeguards.

Recommendation: Clean up abandoned U.S. mines

Although not a replacement for the new mining operations necessary to access domestic minerals for America’s clean energy transition, efforts to improve abandoned mine reclamation and remediation should be part of the U.S. comprehensive mineral onshoring strategy. The Good Samaritan Remediation of Abandoned Hardrock Mines Act introduced by Sens. Martin Heinrich (D-NM) and James Risch (R-ID) in the 117th Congress would accelerate the clean up of abandoned mines. This approach can serve as an example for other policy initiatives that recognize the full life cycle of operations, related mineral extraction, and the need to ensure environmental protection remains a priority.

Recommendation: Develop and deploy domestic mineral processing capacity

The United States is heavily reliant on China for certain raw minerals, such as graphite and rare earth elements, but the reliance on China is even more extreme for the processing of almost all minerals. China controls 90% of the world’s critical mineral processing capacity. Even the critical minerals that are mined in the United States are often exported to China to be processed and then returned for domestic use. A fully integrated strategy for a secure supply chain of critical minerals requires domestic capacity for processing, refining capabilities, and recycling to go hand-in-hand with increased domestic/allied resource extraction.

While the economic and national security benefits of increased domestic processing capacity are largely appreciated, the climate benefits of reshoring mineral supply chains are substantial, yet often overlooked. For example, some mining activities in China result in over five times more greenhouse gas emissions than if that activity occurred in the United States. In fact, virtually any activity related to resource extraction, processing, and industrial utilization conducted domestically—or in Canada, Mexico or the European Union—will result in far fewer emissions than if such activity were to take place in China.

The industrial facilities required for carrying out processing are capital intensive, but ripe for private sector investment. The BIL provides funds for Department of Energy grants and loans for processing capacity relevant to batteries, but this is just a starting point. Action to ensure a domestic supply chain will require a suite of synergistic policies that can provide market and financial incentives to develop and deploy new domestic processing facilities. In particular, policies that recognize and address the near monopoly of mineral processing currently owned by China. Options worthy of consideration include demand-pull efforts with government guaranteed forward contracts for supplies or through public-private partnership models that reduce risk and liability for private sector investors. Additionally, barriers, such as permitting and regulatory obstacles that delay deployment of new and innovative technologies, as well as existing technologies, need to be addressed to encourage investment by reducing financial exposure and risk.

Recommendation: Advance “friend-shoring” and create a critical minerals supply network among allied nations

Some level of domestic capacity is crucial for creating a secure and reliable supply of critical minerals. Even under the best of circumstances, robust imports from strategic partners are needed to meet demand and ensure a durable and diversified supply. As we pursue policies to expand use of domestic minerals and processing capacity, we should also prioritize alliances with friendly nations. Such “friend shoring” will reduce America’s reliance on adversarial nations, and create a global network of mutual support in pursuit of clean energy while lowering supply chain risk. A clear example of the risks and costs of resource reliance on belligerent nations is Russia’s invasion of Ukraine. Congress and the administration should pursue policies that encourage and incentivize friend-shoring of the critical mineral supply chains through alliances or prioritization of trade with likeminded countries.

Recommendation: Invest in a domestic workforce for critical minerals

A domestic workforce for mining and mineral processing is key to the success of building out domestic supply chain capacity. As the United States take steps to increase domestic mineral supply, as well as processing and recycling capacity, we will need a workforce capable of meeting the demands of an integrated domestic critical mineral supply chain. Congress made progress in this area, including the Critical Minerals Mining Research and Development Program at DOE, the National Science Foundation authorized in the CHIPS and Science Act, and the Education and Workforce grant program at the Interior Department, authorized by the Energy Act of 2020. Congress should ensure these programs are fully funded. In addition, Congress should consider additional legislation to incentivize a workforce that can meet the demand of a re-shored critical mineral supply infrastructure.

Recommendation: Progressing federal research and development

Research and development, both public and private, will be crucial for pioneering innovation in accessing, processing, and recycling minerals, as well as alternative technologies that reduce the need for minerals. Programs authorized and funded by the BIL are exploring innovative approaches to critical minerals sourcing and recycling, and DOE’s rare earth and critical mineral recovery program is utilizing unconventional resources like coal waste and ash. Congress should fully fund these programs and explore new actions, such as public/private partnerships, to fully leverage innovation opportunities.

Recommendation: Enhanced transparency of supply chain – knowing the risks

Efforts to secure the supply of critical minerals will be undermined by practices that undercut responsible actors, distorting the market for everyone. Mining companies in the United States and allied nations are transparent in their adherence to strict environmental standards and labor laws. Such transparency is not uniform across countries, however, putting American and allied players at a disadvantage and greater risk of disruption.

The full risk of a critical minerals supply chains heavily dependent on nations like China and Russia is difficult to quantify due to a lack of transparency, including the security, environmental, and labor impact of sourcing from these nations. The lack of performance and standards comparable to the United States not only creates a moral hazard, but also results in competitive disadvantages for more responsible players, particularly those in the United States. Our energy, economic, and national security are all enhanced by supply chains that are more transparent in their impact and risks. Congress should consider policies that enable supply chain transparency, potentially through a country of origin labeling model for critical mineral supply chains.

Recommendation: Anticipate future supply chain challenges

Our nation’s energy system is in transition, and supply chain constraints of the future will be very different than supply chain constraints of the past. It will take time to develop sufficient domestic mining and processing capacity. The United States needs to anticipate and respond to emerging supply chain challenges that will come with ever increasing technology demands. A coordinated critical minerals action plan—such as the strategies published by the Trump and Biden administrations—is a good first step, but additional actions are needed to strengthen our ability to anticipate and react to supply chain challenges in the years ahead. Congress should encourage the Interior Department to consider future supply chain challenges when carrying out resource assessments or within their framework for designating critical minerals. Policymakers should also support policies and funding for efforts to understand future supply chain challenges, such as the newly authorized Annual Critical Minerals Outlook at the U.S. Geological Survey or by supporting Congress’ ability to anticipate emerging technological challenges through an improved Office of Technology Assessment.

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