Elements of Security: Mitigating the Risks of US Dependence on Critical Minerals (June 2011)

Elements of Security
J U N E
2 0 1 1 Mitigating the Risks of U.S. Dependence
on Critical Minerals

By Christine Parthemore

Acknowledgments
I would like to thank my colleagues at the Center for a New American Security (CNAS) for their valuable insights and com-
ments throughout the research and writing process for this report. John Nagl, kristin Lord, Will rogers, Nora Bensahel and
more than a dozen colleagues all provided invaluable feedback and critiques. Joseph S. Nye, Jr. National Security Intern
Zachary keck contributed extensive research as well as assistance in developing the tables in this report.
As always, Liz Fontaine, Ashley hoffman and Shannon o’reilly provided guidance and advice through the production
process. I am also grateful for reviews and advice from David Sullivan, David Abraham and other external reviewers, includ-
ing several Georgetown graduate school classmates and professors who contributed to a thesis project that formed the
foundation of this research.
this report also benefitted immensely from nearly two years of consulting with and learning from a range of experts from
the Department of Defense, Department of energy, u.S. Geological Survey, several National Labs and private companies.
Any errors or omissions, however, are mine alone.

Cover Image
(ShutterStoCk)

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Mitigating the Risks of U.S. Dependence on Critical Minerals


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About the Author
Christine Parthemore is a Fellow at the Center for a New American Security.

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ElEmENtS oF SECurity: mitigAtiNg thE riSkS
oF u.S. DEPENDENCE oN CritiCAl miNErAlS


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E l E m E N t S o F S E C u r i t y: Executive Summary
m i t i g At i N g t h E r i S k S Reliable access to critical minerals is a matter of
o F u. S . D E P E N D E N C E both economic and geostrategic importance to the
oN CritiCAl miNErAlS United States. Although concern about access to
minerals waxes and wanes, it is rising now due to
increasing demand, new competitors capturing
large market shares and other trends that defy easy
prediction. These same trends can interfere with
foreign and defense policy goals and give mineral
suppliers easy leverage over the United States and
other countries reliant on global supply chains.

Despite renewed attention to critical minerals,
America’s dependence on these minerals is often
misunderstood and miscast in the public debate.
Recent tensions with China concerning the supply
of rare earth elements, for instance, should chal-
lenge U.S. policymakers not because the United
States’ import dependence is inherently problem-
atic (which it is not) or because rare earth minerals
are scarce (which they are not). Rather, rare earths
deserve attention because U.S. supply options
are limited: Supplies are concentrated mostly
in the hands of one supplier with its own rising
demand, and the United States currently has no
good options for recycling rare earth minerals or
substituting more easily obtained minerals. While
China is nearly the sole producer and exporter of
rare earths today, it does not possess a permanent
“corner” on this market. Indeed, China holds only
about half of known world reserves – not a terri-
bly high concentration.1 The loss of a single major
supplier such as China may therefore increase the
costs of rare earth minerals, but may not affect
their long-term availability. The issue, then, is more
appropriately understood in terms of managing
short-term risks such as disruptions and ensuring
that the U.S. government’s most important defense
and energy needs can be met.

To manage these risks, the U.S. government
needs to alter government policy, ensure access to
correct information about mineral markets and
better assess which minerals are required for a
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small number of strategic needs, such as defense
and energy. It must also use existing mechanisms, Risks Involving Minerals
such as stockpiling and research and development
• leverage provided to sometimes-hostile suppliers.
funding, to help mitigate risks. The Department
of Defense (DOD) can also understand its unique • Persistent cost overruns in an era of budget cuts.
supply needs better by including mineral problems
in relevant war games involving regions such as the • lags in military equipment delivery.
South China Sea and Latin America. • inability to fully develop clean energy technolo-
gies domestically.
U.S. policy should focus on:
• New roadblocks for achieving u.S. foreign policy
• Preventing supplier countries and companies
goals around the world, especially in Asia.
from wielding undue leverage over the United
States. • trade disputes that entangle other u.S. security
• Mitigating fiscal risk and cost overruns in an era interests.
of budgetary strain. • unintentionally funding human rights atrocities
• Reducing vulnerability to supply disruptions, and fueling black markets.
especially for critical military assets.
• Ensuring the ability of the United States to meet
its economic growth goals in clean energy and A sober and informed analysis suggests there are
other high-tech fields. real vulnerabilities, which place critical national
security and foreign policy interests at risk. In
The United States should not be complacent about worst-case scenarios, supplies of minerals that
its access to critical minerals. Political and economic the United States does not produce domestically
risks to critical mineral supplies are still visible may be disrupted, creating price spikes and lags
on the horizon and the stakes are high. Growing in delivery. Even short of major supply disrup-
global demand coupled with the mineral require- tions, supplier countries can exert leverage over the
ments necessary for both managing military supply United States by threatening to cut off certain key
chains and transitioning to a clean energy future mineral supplies. The United States may also lose
will require not only clearer understanding, but also ground strategically if it continues to lag in man-
pragmatic and realistic solutions. aging mineral issues, as countries that consider
assured access to minerals as far more strategically
Introduction
important are increasingly setting the rules for
Minerals are a subject of much contention. On one
trade in this area.
hand, the United States remains less prepared for
supply disruptions, price spikes and trade dis- China’s rising dominance is at the heart of this
agreements related to the global minerals trade growing public debate. Its 2010 cutoff of rare
than most experts realize. On the other hand, earth elements2 – a unique set of minerals that
public concern over reliable access to the miner- are difficult to process yet critical to many high-
als required in key sectors of the U.S. economy, in tech applications – attracted particular attention.
particular those needed to produce military equip- After Japan detained a Chinese trawler captain
ment, is growing. Too frequently, however, such over a skirmish in the East China Sea, Japanese
concerns are based on inaccurate assumptions. companies reported weeks of stalled shipments of
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rare earths from China amid rumors of an offi- to find additional sources of supply for rare earth
cial embargo. This may sound like a minor trade minerals, and stated that China’s recent cuts to
dispute, but China currently controls production of rare earth exports “served as a wakeup call that
about 95 percent of the world’s rare earths, which being so dependent on only one source, disruption
are critical to building laser-guidance systems for could occur for natural disaster reasons or other
weapons, refining petroleum and building wind kinds of events could intervene.”5 In January 2011,
turbines. Coinciding with possessing this incred- Sen. Mark Begich, D-Alaska, Sen. Lisa Murkowski,
ible leverage over the rest of the world, China has R-Alaska, and Rep. Mike Coffman, R-Colo., wrote
also reduced its export quotas for these minerals. a letter to Defense Secretary Robert Gates express-
For its part, the Chinese government contended ing concern for minerals required for producing
that it did not put any formal export embargo in defense equipment such as Joint Direct Attack
place, and that its plans to reduce exports simply Munitions (JDAMs), which stated, “Clearly, rare
reflect the need to meet growing domestic demand earth supply limitations present a serious vulnera-
for rare earths. Japan-China relations experienced bility to our national security. Yet early indications
further strain in their already tense relationship. In are that DOD has dismissed the severity of the
the United States, many reporters, policy analysts situation to date.”6 Additionally, the Department
and decision makers did not foresee this challenge. of Energy (DOE) launched a multiyear effort to
Feeling blindsided, some in the United States char- explore potential vulnerabilities in supply chains
acterized the situation in a manner that demonized for minerals that will be critical to four distinct
China rather than using the opportunity to better areas of energy technology innovation.
understand the true nature of U.S. supply chain
vulnerabilities. While concern is growing, the media and policy-
makers often focus too narrowly on what may seem
The 2010 rare earths case and others are increasing the most compelling indicators – usually import
interest in critical minerals among U.S. policy- dependence or scarcity – in prescribing solutions to
makers. Congress held hearings on the strategic reduce U.S. vulnerabilities, in particular to supply
importance of minerals between 2007 and 2010, disruptions in critical minerals such as rare earths.
and the 2010 National Defense Authorization This focus is sparking protectionist attitudes, with
Act required DOD to study and report on its some worrying that import dependence poses an
dependence on rare earth elements for weapons, inherent risk to the U.S. economy. Discussion of
communications and other systems.3 During a minerals also frequently focuses on supply scarcity
2009 hearing on minerals and military readi- and resource depletion in absolute terms. However,
ness, Republican Representative Randy Forbes of both the rhenium and rare earth minerals dis-
Virginia called minerals, “one of those things that ruptions of the past five years were triggered by
no one really talks about or worries about until deliberate decisions made by political leaders to
something goes wrong. It’s at that point – the point leverage their positions of strength, not by market
where we don’t have the steel we need to build forces, disorder or scarcities of these minerals.
MRAPs [Mine Resistant Ambush Protected vehi- Countries often revert to hoarding, pressuring
cles] or the rhenium we need to build a JSF [Joint suppliers and otherwise behaving as if scarcities
Strike Fighter] engine that the stockpile becomes are present even when they are not, based solely on
critically important.”4 In October 2010, Secretary of concerns that shortages are likely in the near term.
State Hillary Rodham Clinton stated that it would In fact, neither scarcity nor import dependence
be “in our interests commercially and strategically” alone is sufficient to signal vulnerability, and a
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TaBlE 1: SElECT CRITICal MInERalS and ThEIR uSES

MInERal BRIEf dESCRIPTIon ExaMPlES SPECIfIC aSSETS
of uSES
A class of minerals that • Automotive catalytic • Joint Direct Attack
share properties critical converters Munitions (JDAMs)
for advanced technologies • Petroleum refining catalysts • BGM-109 Tomahawk
and require extensive • Metallurgical additives and • Jet fighter engines
processing. today, China alloys • Antimissile defense
controls more than 90 • Glass polishing and systems
Rare percent of global reserves. ceramics • AGM-84E Standoff Land
Earths • Computer monitors Attack missile
Elements • Radar • Smart bombs
(REEs) • Permanent magnets • Night vision goggles7
• Lasers
• Range finders on tanks and
other equipment
• Target designators

gallium is an element with • Integrated circuits • Joint Land Attack Cruise
unique properties useful in • Semiconductor chips missile Defense Elevated
manufacturing. Because it is • Light-emitting diodes (LEDs) Netted Sensor (JLENS)
found only in other mineral • Laser diodes system
Gallium ores and does not exist • Solar cells • Satellites
(Ga) alone in nature, reserves • Opto-electronic devices • Radar and high-
are difficult to estimate, and (esp. in aerospace) power radio-frequency
there are a limited number • Telecommunications applications and jammers8
of suppliers. equipment

A particularly heat-resistant • Petroleum refining catalysts • F-16, F-18, F-22 Raptor,
mineral, rhenium is critical • Superalloys used in high- F-35 Joint Strike Fighter
in building many aerospace temperature turbine engine • C-40 Clipper
components. Supplied by components • Divert and Attitude
Rhenium few countries, its prices • Semi-conductors Control System (DACS)9
(Re) have seen dramatic spikes in
times of supply uncertainty
and demand growth.

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MInERal BRIEf dESCRIPTIon ExaMPlES SPECIfIC aSSETS
of uSES
used frequently in • Steel production • Divert and Attitude
producing superalloys and • Alloys and metals used Control System (DACS)
steel, known reserves are in aerospace production • Jet engines
Niobium today primarily located in • Missiles10
(Nb) Brazil and Canada.

tantalum is used in a wide • Tantalum capacitors used in • Missile defense systems
array of applications for its automotive electronics • Unmanned aerial vehicles
high resistance to heat and • Specialty steels • Smart phones11
wear, and other properties. • Personal computers
Tantalum it is critical in several high- • Portable phones
(Ta) tech components.

the focus of much media • Energy storage and • Improved Target
attention due to its advanced batteries Acquisition System (ITAS)
increasing use in advanced • Alloys and metals for aircraft used in the toW missile
batteries, lithium is a and space components • Non-Line-of-Sight
commonly found mineral, • Medicinal uses Cannon (NLOS-C)
Lithium but one that is often not • High-strength ceramics • Hybrid-electric Humvees
(Li) economical to produce. • Reconnaissance,
Surveillance, targeting
Vehicle (RST-V)
• Missile defense systems12

Note: Given the challenges described in this report of tracing what minerals are used in assets important to the U.S. government – let alone quantities needed –
this table is intended to convey the types of systems that require these minerals. While some of the assets listed are no longer in high production or may represent
future procurement, this table shows that policymakers should seek greater information on U.S. vulnerabilities to supply chain disruptions for a wide range of assets.
Sources taken from those listed throughout this report’s endnotes, and others as specified.

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combination of factors including concentration of for the United States given its purchasing power. In
suppliers is most often required for mineral issues between these extremes, even staunch pragmatists
to become security or foreign policy problems. will point to the 2010 China rare earths episode
as proof of one basic tenet: The United States and
This report, based on two years of research, site visits other market-based economies no longer deter-
and discussions with stakeholders, explores how the mine all the rules of global trade.
supply, demand and use of minerals can impair U.S.
foreign relations, economic interests and defense Central to this narrative is a conundrum for
readiness. It examines cases of five individual min- policymakers. Reserve estimates show that
erals – lithium, gallium, rhenium, tantalum and global supplies of almost all minerals are ade-
niobium – and rare earth elements, such as neo- quate to meet expected global demands over
dymium, samarium and dysprosium, as a sixth group the long term, and for decades into the future
in order to show the complexity of addressing these for most minerals. The U.S. Geological Survey
concerns. Each of these minerals is critical for defense (USGS) indicates, for example, that world sup-
technologies and U.S. economic growth plans. They plies of rare earths will be adequate for more
share characteristics with minerals that have caused than 100 years.13 These estimates, however,
important political or economic concerns for the can be meaningless in the near term if supplies
United States in the past. Additionally, lithium is fre- are insufficient, or if suppliers reduce exports
quently cited in the media and in discussions of how or otherwise manipulate trade. For example,
clean energy supply chains are critical to meeting most experts project that global production of
America’s future economic, energy and environmen- rare earths will likely be insufficient to meet
tal goals. Within the past five years, two of these cases the world’s demand over the next two to three
– rhenium and rare earth minerals – have involved years. The long-term sufficiency of supplies has
supply disruptions or important threats of disrup- no practical effect because it takes years and
tions for the United States and its allies. Each of these high capital costs to start up new mining and
minerals will require federal government attention in processing businesses for rare earths. Thus, the
the coming years. risks of inaction are high. A range of political,
economic and geographic factors can disrupt
assessing u.S. Vulnerability supplies and cause price spikes that can create
Analysts vary widely in assessing the implications rifts in bilateral relations, trade disputes, accu-
of U.S. dependence on critical minerals, despite sations of economic sabotage and instability in
broad acceptance of the physical reality that min- countries that possess rare reserves of prized
eral resources are finite and the economic realities minerals. They can also give supplier countries
that requirements are ubiquitous and demand is extraordinary leverage that can alter geopoliti-
growing. On one extreme, some analysts believe cal calculations, especially when single countries
the 2010 incident between China and Japan sug- control most world supplies.
gests an approaching Hobbesian world in which
resource demands outstrip supplies for minerals, For U.S. policymakers, the risks fall into two rough
nonrenewable energy sources and even food sup- categories: Disruptions, delivery lags and price
plies. History indicates that conflict over absolute spikes that affect military assets and place unan-
scarcities is unlikely. At the other end of the ticipated strains on defense procurement budgets;
spectrum, many still believe that an open market and lack of affordable access to minerals and raw
and its invisible hand will continue to determine materials preventing important national economic
winners and losers with no serious repercussions growth goals.
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The defense industrial base in the modern era dif- Countries (OPEC) oil embargo and related oil cri-
fers greatly from any previous time. Often, actual ses of the 1970s further brought into question the
scarcity is not required for problems to arise, as assumption that the United States could depend
concerns about future scarcities often drive coun- on imports, as it became apparent that broader
tries to behave as if shortages are occurring. The global conditions and political decisions by other
National Academies recently reported, “The risk countries could dramatically hinder the U.S. abil-
of supply interruption arguably has increased or, ity to openly purchase sufficient commodities at
at the very least, has become different from the affordable costs. This conclusion was reinforced
more traditional threats associated with the more when supply disruptions and threats of disruptions
familiar ideas of war and conflict.”14 During World by apartheid-era South Africa, the hostile Soviet
War I and World War II, for example, governments Union and its satellites led to a wave of congressio-
counted on domestic steel production – and even nal hearings, government reports and independent
civilian willingness to contribute scrap materi- analysis of the conditions contributing to U.S.
als for reuse and recycling – for tanks and other vulnerability.15
equipment. In contrast, modern warfare relies on
globalized and privatized supply chains rather than Following these Cold War-era events, policy-
a primarily domestic (and often government-run) makers held hearings and commissioned studies
network. Vulnerability to mineral supply disrup- in order to understand which specific factors
tions is likewise far broader and more complicated were most important in signaling that U.S. eco-
than it was in previous eras. nomic and security interests may be in jeopardy.
American analysts generally agreed that the fol-
Policymakers should also consider minerals that lowing factors were the most important to track:
play uniquely important roles in the American
economy. Rare earths, for example, are important • Level of substitutes and the uniqueness of spe-
in petroleum refining, which today enables the cific minerals.
smooth functioning of the economy. Looking to • Level of U.S. domestic supplies and dependence
the longer term, much concern is turning toward on foreign sources.
minerals that may see booming demand as the • Geographic concentration of supplies.
economy develops a greater reliance on energy
• Stability of producing countries and their region.
efficiency and renewable energy technologies,
such as the lithium used in advanced batteries • Distances and routes of supply chains.
and hybrid and electric vehicles. These minerals • Availability of technology to recover and process
will directly affect U.S. economic competitive- the minerals.
ness, and plans for improving economic growth
• Economic price of the resources themselves.
and job development.
• Inability of foreign governments to coordinate
This vulnerability is not a new concern. Since the minerals policies.
early 1900s, U.S. defense analysts and national
• Level of domestic demand in producing
policymakers have worried about U.S. vulnerabili-
countries.
ties to supply disruptions of the minerals critical
to manufacturing defense systems, from tanks Some of these concerns remain today, but changes
and munitions to communications equipment. in technology, economics and the international
These concerns were generally heightened in war- security environment will pose new challenges as
time. The Organization of Petroleum Exporting well. Analysts often pinpoint China’s rising resource
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demand as the major new cause for concern, yet complicated by both often-long global supply chains
limited transparency and the changing nature of and the nature of transactions. In some cases, natu-
the defense industrial base and the broader econ- ral disasters or strikes halt production at specific
omy will also affect U.S. mineral supplies in the mines that produce large proportions of global
coming decades. Looking forward, major concerns supplies. In murkier cases, “disruptions” manifest
for the U.S. government will include: Lack of suffi- as long contracting or legal delays (often intentional,
cient information for policymakers; understanding for pricing or political reasons) or long lags in
the evolving energy paradigm; increasing explora- delivery. Whether disruptions are abrupt and clear,
tion of space and seabed territory; and a changing or long and uncertain, delivery times and prices of
defense industrial base. important energy technologies and military equip-
ment can rise significantly. Today’s global supply
chains are incredibly efficient, as companies have
Poor information is a major worked to reduce the slack in their transit routes
and shipping plans. This efficiency can save energy
obstacle to addressing critical and money, but as infrastructure, routes and people
are taken out of service, it also reduces options when
mineral vulnerabilities, and it things go wrong.17
is creating conditions in which Four other trends are changing the ways in which
hype could drive policy debates. minerals affect U.S. security and foreign policy
interests.

a nEw EnERgy PaRadIgM
Poor information is a major obstacle to address- Efforts to develop alternative energy sources
ing critical mineral vulnerabilities, and it is will influence the global demand for minerals.
creating conditions in which hype could drive Governments around the world are promoting a
policy debates. For example, the media and oth- more sustainable, lower-carbon energy paradigm
ers focused heavy attention throughout 2009 that includes increasing adoption of renewable
and 2010 on Bolivia’s potentially large lithium energy sources, energy efficiency technologies,
supplies, often noting the populist, and at times advanced batteries and other products. Just as
erratic, behavior of the Bolivian president as rare earths and other minerals are critical to
a reason for great concern over future lithium petroleum production, developing and manufac-
availability. In reality, many independent experts turing wind turbines, solar energy systems and
agree that reliable exporters such as Chile and efficient batteries on a large scale will drive new
Argentina will prove to be the most important mineral demands. In particular, energy storage
lithium suppliers for years, and supply gluts in will be critical in the coming decades for military-
the lithium market will continue for the foresee- specific energy innovation, electric grid security,
able future even in the face of rising demand. Yet clean energy development and much more. As
the popular media focus on lithium rarely, if ever, a result, the Obama administration has already
includes this market information.16 identified energy storage as a key technology area
for research and development investment. The
Identifying when and how mineral supply disrup- Department of Energy has increased loans and
tions (or threats of disruptions) could affect U.S. grants related to energy storage, and DOD has
defense industries or foreign relations is further begun fielding renewable energy generation and
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advanced energy storage units in Afghanistan. in the South China Sea – areas seen as having great
Such significant investments in research and mineral supply potential – are already concerning
development are likely to produce new technolo- U.S. military strategists and diplomats. The possibil-
gies that trigger major changes in global mineral ity of seabed mining is already fueling a renewed
requirements over the decades ahead, making it debate about whether the United States should ratify
crucial for the U.S. government to monitor min- the U.N. Law of the Sea Convention (UNCLOS).
eral supply chains.
a gloBal dEfEnSE InduSTRIal BaSE
a nEw SPaCE RaCE Given the state of the modern defense industrial
Due to requirements for advanced technologies base, the National Academies of Science deter-
and components that can withstand extreme mined in 2008, “The Department of Defense
conditions, the expansion of countries’ space appears not to fully understand its needs for
capabilities over the coming decades will influence specific materials or to have adequate information
demand for critical minerals. A range of nations on their supply.”19 In the information age, the U.S.
– from India to Iran – aim to bolster their reputa- military increasingly relies on dual-use equip-
tions as space powers and develop more advanced ment and depends on globalized supply chains.
satellite systems and launch capabilities. The Military equipment for the modern battlefield
U.S. government must therefore expect demand includes communications technologies, robotics,
growth (and potentially growth that is not linear computer systems and space assets that are used
or predictable) for minerals like rare earths that by DOD, civilian government agencies and private
are critical in space technologies. On the supply enterprises alike. Indeed, a 2008 Defense Science
side, many countries are considering the possibil- Board report noted, “Military-relevant technol-
ity of mining space objects, and even the 2010 U.S. ogy will continue to change rapidly and will be
National Space Policy suggests that the United increasingly global.”20 Defense supply chains are,
States should “identify potentially resource-rich therefore, less distinct from those in the broader
planetary objects.”18 economy as they once were, and the dual-use
nature of a broad range of assets also means that
a REVoluTIon In SEaBEd ExPloRaTIon many supply chains are more globalized than ever.
Seabed mineral exploration is high on the agenda Moreover, “higher risk of and uncertainty about
for a range of countries and companies and, if major supply disruptions owing to the fragmentation
new supplies are discovered, will substantially of global supply chains”21 can further threaten
change the global market for critical minerals. After assured access to critical minerals. Much of
decades of major investments in seabed exploration today’s defense equipment is purchased directly
by scientists, petroleum producers and others, the from civilian vendors and designed to meet both
world is experiencing great advances in the technical civilian and military needs. Consider modern
and economic viability of undersea exploration and warfare’s dependence on computer systems,
exploitation. Countries seeking to mine these poten- satellites, radar and Global Positioning System.
tially important seabed mineral reserves may engage The National Academies study notes, “The glo-
in territorial disputes as a result, even though doubt balization of materials production and supply
remains over whether, where and at what price has radically changed the ability of the United
seabed mineral supplies may become economical to States to produce and to procure materials vital to
produce. For example, territorial disputes over areas defense needs,” and that the stockpiling system is
of the Arctic that are opening up to exploration and inadequate given today’s global supply systems.22
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The Evolution of Stockpiling

After experiencing several supply always shared with the government. the expert argued that assessing
disruptions for minerals critical the lack of government-operated stockpiling needs should more
to war efforts, the United States reserves can therefore prove wor- broadly “encompass a range of less
established a stockpile of defense- risome in times of disruptions and than full-scale emergency condi-
critical minerals and raw materials allow suppliers to leverage exports tions [to] plausibly include potential
in 1939. this stockpile has mor- for political ends. material supply disruptions due to
phed greatly over the past seven natural disasters, political instability
decades, and its management is to address this challenge, the in key foreign countries and selec-
under renewed scrutiny now that Department of Defense is in the tive terrorist attacks.”26
minerals are once again emerging process of changing its stockpil-
as strategically important. ing system. in 2008, a National Despite Pentagon efforts to
Academies report declared, “the improve u.S. stockpile manage-
Since the 1990s, Congress has design, structure, and operation ment, many members of Congress
instructed the Department of of the National Defense Stockpile still worry that DoD is not taking
Defense (DOD) to sell off minerals render it ineffective in respond- threats of minerals supply disrup-
from the National Defense Stockpile ing to modern needs and threats,” tions seriously enough, and that
Center due to budgetary consider- and, “the Department of Defense it may be placing too much faith
ations, and because the minerals appears not to fully understand its in the private sector to address
critical to defense assets at the needs for specific materials or to the strategic threats posed by
height of the Cold War are no longer have adequate information on their threats of supply disruptions to
as relevant to modern military tech- supply.”24 the Pentagon responded critical minerals. to mitigate these
nology. however, Congress did not to this critique in April 2009 by set- concerns, DoD should be more
replace these stockpiles with miner- ting plans to establish a Strategic transparent about its mineral
als necessary for today’s military materials Security management policies, including its process of
and economy. For example, the u.S. System to evaluate DoD mineral reconfiguring the stockpile. Even if
government appears to stockpile needs and develop stockpiling Pentagon officials believe that they
tantalum and niobium, but it does strategies more comprehensively.25 can develop proper inventory strat-
not stockpile rhenium, gallium, yet, at a hearing just a few months egies to hedge against challenges
lithium or rare earths.23 While pri- later, one expert noted that this to military readiness, they will still
vate companies may have reserves stockpiling approach focuses on require congressional support for
of these minerals in their own mineral shortages during “a full- their efforts to continue modern-
stockpiles, this information is not scale national security emergency.” izing the stockpiling system.

These risks, coupled with long-enduring vulner- chains and can help analysts identify potential
abilities, are heightening concerns about U.S. points of vulnerability. Once potentially profitable
access to minerals. We can gain an even deeper reserves are discovered, companies must obtain the
understanding of the security challenges involved technology, permits and capital needed for min-
by examining specific minerals in detail. eral extraction. Since most minerals are not pure
ores – extracted resources typically contain many
Economic, geographic and Political Risks different materials in various concentrations – the
Though supply chains differ for every mineral, sev- minerals must be processed and separated. Unless
eral steps are common across most of these supply the deposits are processed on site, the minerals
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may be shipped multiple times before they are term availability, as eventually supplies will be
ready to use. Many minerals are sold in commodi- developed elsewhere.
ties markets, which requires additional physical
shipment or financial steps. Finally, the minerals Similar to rare earths reserves, lithium is not
are purchased, shipped to the consumer and used. highly concentrated despite its small number of
current suppliers. Chile holds about 58 percent
Analyzing this supply chain prompts the ques- of currently known lithium reserves, but at least
tion: What factors should serve as warning signs seven other countries have identified signifi-
to policymakers who want to better anticipate and cant reserves. Additionally, Bolivia, Afghanistan
mitigate mineral supply disruptions, trade dis- and other countries possess significant lithium
putes and other challenges? Most headlines focus resources that are not yet quantified due to lack
on import dependence and the concentration of of existing infrastructure and because prices are
supplies in the hands of a single country. As this not high enough to make their estimation and
section will show, however, additional geographic, production profitable.28 Gallium presents a diffi-
economic and political factors also affect the cult case, as it is found only in other mineral ores;
degree to which mineral supplies challenge U.S. deposits do not exist alone in nature. According
interests. These factors include whether substitutes to the USGS, “Only part of the gallium present in
are readily available, whether minerals can be bauxite and zinc ores is recoverable, and the factors
recycled and reused, and whether the United States controlling the recovery are proprietary. Therefore,
stockpiles them. an estimate of current reserves comparable to the
definition of reserves of other minerals cannot be
gEogRaPhIC faCToRS made.”29 However, neither bauxite nor zinc (the
The geographic locations of mineral resources are two minerals most often found with gallium) is
mostly static, since the composition of the earth highly concentrated geographically.30
does not change dramatically on human times-
cales. However, our understanding of geology does Other minerals important to the U.S. economy
change, which affects supply estimates. Geographic appear to be more geographically concentrated.
concentration of supplies is therefore a critical fac- Chile holds about 52 percent of quantified world
tor in determining vulnerability to disruptions. reserves of rhenium, followed by the United States
(with about 15 percent of reserves) and many other
Looking at the minerals examined in this report, smaller-scale producing countries. Known tanta-
in the past decade the most severe case of disrup- lum reserves are even more concentrated, mostly
tions with national security implications involved in Australia and Brazil, and Brazil also possesses
rare earth elements, which are not particularly between 80 percent and 90 percent of the world’s
concentrated geographically. At least eight coun- niobium deposits.31
tries have known reserves, and unknown reserves
are expected to be high. The media often refers Geography affects supply in ways that are not
to China as dominating the rare earths market always intuitive. For instance, it seems logical
because it produces and exports almost all of cur- that vulnerability would correlate directly with
rent world supplies, but it possesses only about distance: The further minerals must travel to
half of known world reserves – not a terribly high their end user, the greater the risk that something
concentration.27 The loss of a single major supplier will go wrong. The globalization of supply chains
such as China may therefore increase the costs of discussed above, however, has made the length of
rare earths. However, it may not affect their long- routes increasingly irrelevant.
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Today, chokepoints and routes through unstable problematic, but it can cause great problems for the
locations are more important. In some cases, United States if suppliers refuse to meet demand
air transit is more economical or practical than for political reasons or to ensure supplies for their
maritime freight, which could reduce opportuni- own manufacturing sectors, as occurred with
ties for disruptions despite long distances between China’s reduction of rare earths exports.
exporter and importer. Likewise, supplies traveling
through unstable or inefficient Latin American Though the economics of most every mineral are
countries, or through the most violence-plagued unique, those examined in this report share several
Mexican cities, could potentially be vulnerable to important dynamics.
disruption despite their relatively short journey to United States demand for minerals changes over
the United States. time as the government and industries develop
new military platforms and invest in new tech-
EConoMIC faCToRS
nologies. As DOD makes acquisition decisions,
When examining whether specific minerals will
for example, it creates new dependencies and
be available to meet U.S. government needs, it
increases demand for specific minerals and raw
can be tempting to look simply at whether world
materials. Other countries often design interoper-
supply is adequate to meet global demand over the
able systems, similar capabilities or purchase from
long term. This is an accessible metric, and one
U.S. manufacturers, thereby amplifying global
that USGS estimates regularly. According to USGS
demand. Changes in domestic demand in mineral-
calculations, the world’s supplies are adequate to
producing countries can also affect export levels or
meet long-term demand for each of the minerals
prices if supplies do not increase commensurately.
examined here – gallium, lithium, niobium, rare
However, clear information on domestic demand
earths, rhenium and tantalum – for decades in
in foreign countries can be elusive, since many
absolute terms.
countries do not thoroughly collect or publicize
This long-term picture is deceptive, however. this information. Translation and financial costs
Policymakers should instead consider a range of can also present barriers.33
nuances in evaluating mineral-related vulner-
The overlap between military and private sec-
abilities. For instance, when production costs are
tor needs can complicate tracking shifts in
too high relative to prices, mines can shut down –
demand and their implications given the mili-
temporarily or for years – and supplies can decline
tary’s dependence on dual-use technologies such
in the short term regardless of long-term supply
as communications equipment, computers and
sufficiency. Many countries that hold large reserves
satellites. This makes the defense-related supply
also lack the technology, expertise or funding to
of critical minerals vulnerable to the rise and fall
develop these minerals on their own, which can
of commercial demand. All minerals examined
lead to greater concentration of suppliers. Today
in this study are dual-use in U.S. consumption:
this is of greatest concern for gallium, rare earth
Niobium is used mostly in steel production and
minerals and rhenium given their limited number
aerospace applications; rare earth minerals are
of suppliers.32
in everything from computer monitors to sat-
Many economic factors can influence the sup- ellites; and rhenium is used in turbine engine
ply of critical minerals to the United States, but components and in superalloys because of its heat
they are often oversimplified or misinterpreted. resistance and other properties.34
Import dependence, for example, is not inherently
16 |

An important factor is whether a given mineral has States may become tolerable, making domestic
unique properties that make substitution difficult supplies economical. For example, although the
or impossible. For many minerals and raw materi- United States has been 100 percent dependent
als, consumers have options to substitute different on imports of rare earths for years, this was not
minerals with similar properties if something is always the case. Several companies once extracted
unavailable or too costly. Others possess proper- rare earths in California. The United States also
ties for which scientists and manufacturers have imports 100 percent of its gallium, and it has not
yet to find substitutes. Rare earth minerals fall into produced niobium or tantalum for decades.37 From
this category. In many defense applications, for 2006 to 2010, import dependence for rhenium hov-
example, certain rare earths retain magnetism at ered between 80 and 86 percent, and dependence
extreme temperatures to a degree not readily found on foreign suppliers for lithium is only about 43
in other minerals. Niobium and tantalum can be percent as of early 2011.38 High import dependence
replaced in some applications but with reduced for some minerals also coincides with reduced
effectiveness. For rhenium and lithium, however, demand within the United States, given the dra-
there are a variety of substitutes in use today, with matic changes in the American manufacturing
additional substitutes currently being tested and sector over the past several decades. At the same
developed. Gallium can be replaced for many of its time, the United States relies on imports to meet
uses, although some substitutes are also vulnerable 100 percent of its needs for at least 17 commodi-
to disruptions and price spikes.35 ties,39 and in most cases, this dependence has had
no geopolitical or foreign policy repercussions.
The ability to recover and recycle minerals eco-
nomically can expand sources of supply. Minerals Finally, examining the concentration of suppli-
can be removed from manufactured items that ers helps identify vulnerabilities to disruptions.
are headed for the landfill, extracted and then Various economic conditions can lead to concen-
recycled. Lithium, for example, has good recy- tration of suppliers, for example when low labor
cling potential, and economical recycling and costs or environmental advantages in one country
reuse is being researched extensively. Gallium can price other potential producers out of the market.
be recovered and reprocessed in some cases, as The United States has relied on China for an aver-
can rhenium, niobium and tantalum. However, age of 92 percent of its rare earths supplies since
for most rare earths, very little material can be 2006. It also relies on Brazil for 84 percent of its
recycled or recovered economically given current niobium supplies, on Chile to meet 93 percent of its
technologies and methods.36 rhenium metal powder demand and Kazakhstan
for more than half of its supplies of ammonium
A lack of domestic supplies and the resulting perrhenate, a common form in which rhenium
dependence on foreign sources is the economic is traded. In contrast, the United States imports
factor identified most frequently as an indicator tantalum from a far more dispersed network of
of U.S. vulnerability. This, however, is somewhat suppliers; it imports only 17 percent of supplies
misleading. Many minerals are not (or are no from its top suppliers, Australia and China, and
longer) produced in the United States for environ- receives tantalum from more than a half dozen
mental reasons or because U.S. production is more additional countries. Likewise, Germany, the top
expensive than in other countries – not necessarily single U.S. supplier of gallium, supplies only about
because American deposits of the minerals can- 26 percent of U.S. demand.40 Lithium provides a
not be found. As global demand growth generates mid-range case in this area. Chile supplies about
higher prices, the costs of extraction in the United
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Known RESERVES of RaRE EaRTh MInERalS

Known reserves, in
metric tons of rare
earth oxide content.
50 million +
25 - 49 million
1 - 24 million
< 1 million

Source: USGS Mineral Commodity Summary 2011

Known reserves worldwide totaled 110 million metric tons as of January 2011. The Commonwealth of Independent States combined hold 19 million metric tons.
Additionally, other countries hold a combined 22 million in known reserves.

IMPoRT SouRCES of RaRE EaRTh MInERalS

Percentage of imports
supplied to the United
States, 2006-2009.
75% +
50 - 74%
25 - 49%
1 - 24%


Other countries produced 2 percent of supplies to the United States.
18 |

Known RESERVES of lIThIuM

Known reserves, in
metric tons of lithium
content.
1 million +
500,000 - 999,999
50,000 - 499,999
< 50,000


Total known reserves worldwide totaled 13 million metric tons as of January 2011. Note that Bolivia and other resource holders are not listed by USGS until their
known reserves are quantified.

IMPoRT SouRCES of lIThIuM

Percentage of imports
supplied to the United
States, 2006-2009.
75% +
50 - 74%
25 - 49%
1 - 24%


Other countries produced 2 percent of supplies to the United States.
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59 percent of U.S. lithium consumption, with 38 Potential rare earth minerals-producing countries,
percent of the remaining demand being met by including the United States, Australia, Brazil and
Argentina. Although global supplies of lithium Malaysia, all rank as even more stable. Rhenium-
are not at all concentrated, Chile’s uniquely dry and lithium-producing countries generally rank as
environment, high-quality resources and well- moderately or primarily stable, including the United
developed infrastructure make it by far the most States, Canada, Australia and Chile, with Zimbabwe,
economical place in the world to produce lithium.41 Russia and Kazakhstan among the less stable export-
ers of these two minerals. For gallium, all but two
PolITICal faCToRS important producers (China and Russia) are among
Supply disruptions can result from political or pol- the most stable half of countries. The major produc-
icy decisions, either by the United States or other ers of niobium (Brazil and Canada) and tantalum
governments. Many political factors, however, are (Australia and Brazil) are also generally stable.43
difficult to quantify. Beyond regulations, important
political factors include: instability in producing Though this index evaluates political conditions
countries and their regions, labor strikes and insuf- only at the state level, political disruptions can occur
ficient U.S. government stockpiles. at the local level as well, most notably in the form of
labor strikes. The 2010 USGS minerals commodity
Geopolitical calculations and domestic political summaries and other U.S. government assessments
factors can both influence mineral supply availabil- highlight three cases of strikes disrupting minerals
ity. In some cases, producers (whether companies supplies over the past five years (to bismuth, cobalt
or countries) deliberately withhold supplies. Their and nickel), but do not indicate that strikes affected
decisions to do so depend, in part, on their calcula- any of the minerals examined in this report.44
tion of the economic impact of disrupting supplies,
and their ability to control the global market. The At the national level, leaders alter export quotas,
2010 Japan dispute with China over a skirmish in subsidize domestic production or increase the
the East China Sea serves as an example. In this stockpiles of minerals critical to defense needs
case, Chinese officials denied that the country had based on political considerations – including
instituted an official embargo, but Japanese firms misperceptions. Overconfidence in or lack of atten-
continued to report supply disruptions for several tion to minerals markets can also lead to political
weeks.42 These types of bold geopolitical moves can complacency. In the United States, for example,
generate sticky foreign policy problems in addition Congress has instructed DOD to sell off minerals
to the direct effects of supply disruptions. from the National Defense Stockpile Center since
the early 1990s due to budgetary considerations
Interestingly, while political stability of producing but did not invest in increasing stocks of minerals
countries and their regions has influenced the supply important to emerging technologies.45
of minerals historically, stability of supplier countries
does not appear very important for the minerals Sometimes internal politics motivates foreign
discussed in this report. Every year, Foreign Policy suppliers’ decisions about whether to export
magazine and the Fund for Peace produce the Failed critical minerals. For example, in 2007, the U.S.
States Index, an annual report on state stability that State Department was forced to intervene when
ranks all the countries of the world. China, today’s China halted shipments of rare earths to a U.S.
primary producer of rare earths, ranked as the 57th- petroleum refining and chemicals company for so
least stable country in the world in 2010, though it is long that it drove concerns for nationwide refined
not classified as being within the index’s “alert” zone. petroleum shortages.46 From China’s perspective,
20 |

policy prescription aimed at a single geographic,
Since the United States economic or political variable will reduce U.S.
vulnerability to supply disruptions. Policymakers,
depends on minerals for its nongovernmental analysts and the media must pay
far less attention to singular factors like import
defense and economic vitality,
dependence and focus on the full range of eco-
it is time to update American nomic, geographic and political factors.

policies to reflect current In developing new policies related to minerals,
policymakers must remember that substantial
global conditions. government intervention already exists, includ-
ing permitting exploitation on government lands
and regulating environmental impacts. However,
domestic demand was rising quickly, and rare
policymakers must navigate a market that is not
earths production was already creating major
always easy to predict and in which the need
environmental problems that could unleash local
for federal government intervention (or nonin-
unrest. The country’s political leaders therefore
tervention) is not always obvious. In the recent
began restricting exports and promoting efficient
rare earths case, the private sector responded by
consumption.
providing some capital for a domestic mining
Political crises can also disrupt supplies. In 2005 operation to resume. This does not always solve
and 2006, the United States experienced a supply the foreign policy and geopolitical challenges the
disruption in rhenium, triggered by a domestic U.S. government experiences. In particular, for
dispute in Kazakhstan. Exports from Kazakhstan, minerals that private companies will not reliably
which supplied 25 percent of the U.S. demand produce or more defense-specific applications,
at that time, “were halted from the third quar- U.S. government interests may be at stake while
ter of 2005 until the fourth quarter of 2006.”47 A private interests are not.
supplier to Kazakhstan’s state-owned rhenium
To manage circumstances where the federal
producer blocked trade over a financial dis-
government must act to protect U.S. interests
pute amid additional political tensions between
against the threat of supply disruptions, various
governing officials who variously wanted to open
federal agencies have existing mechanisms that
rhenium reserves for foreign investment and, on
must be preserved and utilized. The Departments
the other side, expand the state’s monopoly.48 By
of Defense and Energy already have mechanisms
early 2006, rhenium prices were rising precipi-
for offering low-interest loan guarantees for busi-
tously just as demand was increasing for use in
nesses in a broad range of strategically important
petroleum refining and, important for DOD, in
fields, from semi-conductors to military assets to
jet engine production.49
energy infrastructure. Similarly, these agencies
Recommendations for u.S. Policymakers can use loan guarantees to facilitate production
Since the United States depends on minerals for or advance research and development related to
its defense and economic vitality, it is time to minerals, including lending funds to support
update American policies to reflect current global research on the more efficient use of rare earths,
conditions. As policymakers address these issues, rhenium or lithium in defense or energy appli-
they must understand the complexity of the chal- cations. Only a willingness to use these tools is
lenge and develop multifaceted solutions. No required.
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TaBlE 2: KEy VulnERaBIlITIES foR SElECTEd MInERalS

TyPES of VulnERaBIlITIES REEs nb Ta Re ga li

Lack of substitutes/uniqueness of specific yes yes/ yes/ yes No No
minerals (esp. in defense applications) No No

Importance of specific minerals for yes yes yes yes yes No
producing defense equipment

inability to recover and recycle economically No No No No No No
Economic

import dependence for more than yes yes yes No yes No
90 percent of supplies

known supplies inadequate to meet yes, in No No No No No
projected global demand 2011/2012

Concentration of suppliers to the united yes yes No yes yes yes
States (fewer than three suppliers for
2/3 or more of supplies)50

geographic concentration of supplies No yes yes yes No No
Geographic

(more than 50 percent known reserves
in single country’s possession)

major natural disasters (that created No No No No No No
major disruption to United States)

instability of producing countries and No No No No No No
their regions
Political

Strikes No No yes No No No

lack of u.S. government stockpile yes No No yes yes yes

Note: Table 2 lists the vulnerabilities identified through this report, and notes which minerals have exhibited each one between 2005 and the present. The “Yes/No” label
in the first row indicates that substitutes may be available, but with a loss of characteristics that may be critical to defense assets. The only two minerals for which the
United States experienced disruptions in the past five years, rhenium and rare earths, differ in whether reserves are geographically concentrated and in most economic
factors. This indicates a need for policymakers to examine a wide range of factors specific to each critical mineral in order to best hedge against disruptions.
Source: Compilation of sources listed in the endnotes; table compiled and created by the author.
22 |

In making policy choices, policymakers should The Department of Defense should conduct new
embrace one key principle: avoid blanket protec- assessments of defense supply chains. Developing
tionism. While supporting domestic production a proactive and prioritized approach will require
may be a useful remedial action for some specific serious consideration of the future of warfare,
minerals, domestic production is not a panacea. drawing on expertise from other government
Often, protectionist tendencies reflect a misdiag- agencies, academia, non-governmental orga-
nosis of U.S. mineral problems as a result of import nizations, think tanks and private industries.
dependence, which this report shows is not the While DOD is currently reviewing rare earths
core problem in most cases. Moreover, protection- in its supply chains and will deliver its report to
ism could be an overly narrow policy solution Congress in the summer of 2011, its efforts must
that would not mitigate other serious risks. Since not end with consideration of rare earths. The
increased domestic production is not always Defense Science Board should conduct a new
possible or economical for all minerals, some assessment building on its 1999 and 2008 stud-
dependence on imports is unavoidable. ies examining the changing nature of defense
supply chains, to include more extensive consid-
To protect against the risks of dependence on eration of minerals and raw materials.52 These
critical minerals at an acceptable cost, the U.S. two studies outlined many of the key dynamics
government should take the following steps: that are heightening mineral and raw material
Administration officials and Congress should concerns today and described DOD’s increasing
identify the minerals most important to defense dependence on dual use technologies and global
acquisitions, energy innovation and other key supply chains. However, neither study focused
functions as they build tailored strategies to specifically on control of minerals or raw materi-
mitigate potential supply disruptions. In other als, which could give suppliers strategic leverage
words, government officials should evaluate over the United States. Beyond these omissions,
mineral issues proactively as a regular, ongo- the nature of minerals trade and the global supply
ing part of their operations. The Department of system have changed enough in the past five years
Defense and Congress have been largely reactive, that an update is warranted. The Defense Science
responding to the recent rare earths disruptions Board would be sufficiently neutral and would
and issuing one-off reports. By contrast, DOE has complement the DOE’s ongoing work by focusing
adopted a proactive approach that prioritizes the specifically on defense needs.
minerals most important to its missions. A major To protect the U.S. government’s ability to man-
evaluation in December 2010 prioritized four age critical minerals appropriately, Congress
distinct areas of energy technology development should protect the government’s role in ana-
and explored mineral supplies of high importance lyzing critical mineral vulnerabilities and
to those particular categories, and DOE plans to producing its own data. As congressional leaders
regularly analyze potential risks and supply chain in both political parties strive to reduce spend-
vulnerabilities in these areas.51 The Department ing and seek efficiencies, they should maintain
of Energy’s willingness to prioritize is particularly a strong U.S. government capacity for research
noteworthy: Given that DOE’s work is global and and analysis – a public good that is both neces-
involves more than 100 distinct minerals, seeking sary to protect U.S. interests and undersupplied
to address all contingencies could have negative by the private sector. Without vigilance, the
side effects or be so broad as to lack effectiveness. United States risks being blindsided by regular
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trade disputes and supply disruptions, and by Major seabed mining sites should be included as
countries exerting political leverage. Improving strategic locations in games focusing on the East
how the U.S. government handles mineral issues and South China Seas and the Arctic, among other
should not require major increases in manpower locations, just as energy resources and storage
or spending. But the administration and Congress facilities are mapped in considering assets that
must maintain the existing capacities and pre- countries may protect or target today. Appropriate
serve the knowledge infrastructure that the scenarios would also include those involving great
government has redeveloped in the past few years unrest or major, long-term strikes that halt exports
(See Key U.S. Government Offices box). from Latin America or South Africa.

In addition to continuing to produce good data, Congress and the executive branch should update
the U.S. government can do more to leverage its stockpiling policies. Stockpiling critical miner-
relationships with contractors. The private sector als (for example, those important to current and
will continue to withhold important informa- future defense production, concentrated in the
tion in order to keep information proprietary or hands of only a few suppliers and also experienc-
because it could be harmful to the bottom line if ing high global demand growth) remains one of
shared with the government. But when DOD, for the best policies for ensuring supplies, especially
example, has billion-dollar contracts with suppliers for DOD. In a 2008 report, the National Academies
for critical military assets, it should be able to have recommended that DOD develop a new inven-
contractual requirements that these companies tory system (versus simply stockpiling) that would
share information about major supply chain vul- “assess the risks in order to make better-informed
nerabilities that can provide other countries with decisions on mitigating them (for example, decid-
leverage over the United States or potentially cause ing if stocks need to be held),” “spot vulnerabilities
major disruptions. The 2010 Dodd-Frank Wall in the supply chain and redesign it to eliminate or
Street Reform and Consumer Protection Act is an mitigate them before events occur” and “design
important model for requiring due diligence in and manage the supply chain to be more resilient
understanding and reporting supply chain infor- to disruption.”54 DOD has been working to update
mation among manufacturers that source minerals its stockpiling policies, and should fully embrace
from the Democratic Republic of the Congo.53 the National Academies report’s recommenda-
tions. Congress also has a role in supporting and
The Department of Defense should integrate funding these changes. (See the Evolving Tool of
conflicts over minerals and raw materials into Stockpiling box) However, DOD should be far
relevant war games. One of the chief risks in more open with Congress and the public regarding
ignoring access to critical minerals is the lever- how it intends to modernize its stockpiling policies
age such negligence can provide to suppliers, than it has been to date.
which alters the strategic context in which DOD
operates. Exploring how disruptions or threats of The U.S. government should create incentives
disruptions in mineral supplies could affect vari- to reduce consumption when its interests are
ous American interests would provide valuable on the line. This report focuses primarily on the
information for U.S. policymakers. Relevant games nature of current and potential supply challenges,
should include a range of scenarios in which sup- but solutions must also include reducing demand
plies of minerals critical to defense equipment are for minerals that see major disruptions or erratic
cut off for extended periods of time and supplier prices. Policymakers can maximize the potential
countries use embargoes for political leverage. of substitution and recycling by clearly identifying
24 |

Key u.S. government offices

the following offices and agen- The department of Energy’s identifying mineral supply chain
cies have in recent years proven to office of Policy and International concerns related to energy innova-
be among the most important in affairs has conducted the federal tion. it also funds unique research
mitigating mineral-related risks to government’s most important and development that may help
u.S. interests. work to date in analyzing how the reduce u.S. vulnerabilities, such
changing global minerals trade as developing substitutes for rare
The u.S. geological Survey’s and America’s goals for energy earths and permanent magnets
(uSgS) work is critical for the intersect. the Department of that may help minimize the risks for
government’s ability to make Energy (DOE) should maintain this defense-critical assets.56
sound policy given its unique capacity going forward, with sup-
ability to provide free, public data port from the Congress. The white house office of
on mineral trends. Beyond what Science and Technology Policy
is provided by the uSgS, most the obama administration’s (oSTP) is coordinating an inter-
data that policymakers need to fiscal year 2012 budget for DOE agency working group to prevent
make decisions is prohibitively recommends creating an “Energy u.S. government agencies from
expensive to purchase from pri- innovation hub” focused on miner- being blindsided by supply
vate vendors, if it available at all. als critical to energy innovation, disruptions and minimize broad
Without USGS efforts to provide modeled on existing hubs focused mineral-related vulnerabilities.
the government and public with on alternative fuels and energy in this role, oStP should include
neutral information and unbiased efficiency.55 Congress should representation from the State
analysis, the united States would approve this budget request, and Department’s regional bureaus
be forced into a persistent reac- take an active role in monitoring to improve u.S. government
tionary state whenever concerns the effectiveness of this hub as it is coordination among relevant
about minerals arise – and the u.S. established and begins operations. stakeholders. oStP could also play
government will be far less well an important role in developing
equipped to deal with episodes also at doE, the advanced accepted economy-wide defini-
like the 2010 rare earths dispute Research Projects agency-Energy tions for “critical” and “strategic”
with China. has played an important role in minerals.

the minerals for which U.S. government inter- the rule of law and freedom of navigation around
ests are affected most directly, and then offering the world and also to participate in important dis-
incentives to develop substitutes for these miner- cussions about critical minerals. Today, the United
als. Developing efficient solutions, however, will States cannot play a full role in the Arctic Council
require addressing the daunting information chal- because it has not ratified UNCLOS, and its position
lenges discussed earlier. of promoting the rules enshrined in this treaty rings
hollow to international audiences. Since American
The Senate should ratify the U.N. Convention concerns over seabed mining informed the initial
on the Law of the Sea (UNCLOS). While today refusal to ratify this treaty, these issues are likely to
the United States recognizes UNCLOS as custom- resurface in any debates about UNCLOS. To date,
ary international law, ratifying this treaty would efforts toward UNCLOS ratification have stalled
increase the ability of U.S. policymakers to promote out of a misguided notion that the treaty would
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Minerals and Conflict in the democratic Republic of the Congo

Black market and even legal stemming this problem, however, chain information among manu-
trade in minerals can directly would prove ineffective. Many facturers that source minerals from
fuel conflict, instability, corrup- minerals found in the DrC are pro- the DrC.58 the united Nations and
tion, human rights atrocities duced in only a few mines globally other nongovernmental organi-
and other broad foreign policy or can be purchased more cheaply zations are similarly working to
and security concerns. the most from sellers in this war-torn require greater transparency and
glaring current example is in the country than elsewhere, leaving source reporting in minerals sup-
Democratic republic of the Congo no shortage of buyers. Due to cor- ply chains as a means of curtailing
(DRC), where trade in minerals ruption and the informal nature of support for militant groups.59 the
such as tin, copper and Columbite- much of the DrC’s economy, even executive branch should continue
tantalite (coltan) funds militias that if Congolese officials wished to to enact the Dodd-Frank bill, and
have killed, raped and robbed mil- provide greater transparency on maintain direct involvement in
lions, and that perpetuate regional its minerals trade, they would have efforts by the United Nations, pri-
instability. great difficulty doing so. vate companies and other groups
that are working to establish cer-
international concern had grown At the same time, the DrC tification processes, due diligence
in recent years over the ways in example also highlights potential requirements and other transpar-
which minerals contribute to con- solutions available to u.S. policy- ency measures. this movement
flict in the DrC. During her August makers. to date there has been toward greater transparency can
2009 trip to the DrC, Secretary of little effort by manufacturers to make it easier to tell when money
State hillary Clinton remarked, “i track where the minerals they use is being transferred to militants
think the international community originate, providing little incen- and human rights violators, and
must start looking at steps we can tive for any company or country therefore easier to find ways to cut
take to try to prevent the mineral to cease purchasing minerals that off this minerals-related funding
wealth from the DrC ending up fuel conflict in the DrC. this is of rogue groups. though these
in the hands of those who fund beginning to change. the 2010 efforts are imperfect, they can
the violence here … this is a very Dodd-Frank Wall Street reform assist in minimizing the ways in
challenging problem but we’re and Consumer Protection Act which u.S. minerals procurement
going to address it.”57 Embargoes requires due diligence in under- fuels other security challenges.
and other traditional tools for standing and reporting supply

negatively affect U.S. sovereignty, as it recognizes the South China Sea. Growing mineral concerns
exclusive economic zones for countries around the will make ratification all the more pressing.
world. Ratification, however, has strong support
from the armed services, the private sector and a Finally, Congress and the executive branch should
wide range of security and foreign policy experts. promote information sharing with the private
Despite the lack of a strong political constituency for sector and internationally. Regular dialogues and
ratification, there is widespread belief that the treaty information sharing among the U.S. Departments
is integral to protecting U.S. economic and security of Energy, State and Defense, and industry and
interests in U.S. coastal areas, and in serving as a international stakeholders can be a cost-effective
neutral voice in territorial disputes in regions like means of helping the U.S. government prevent
mineral disruptions and trade disputes from
26 |

or else policy will be based on conjecture and
Complacency is perhaps the unproven assumptions about this area of trade.

biggest risk facing the United Complacency is perhaps the biggest risk facing the
United States. Given the global trends highlighted
States. Given the global trends in this report, a variety of mineral-related risks are
visible on the horizon. The U.S. government should
highlighted in this report, a be proactive in preventing mineral issues from
variety of mineral-related risks impinging on security, foreign policy or economic
growth plans, and not lose its newfound vigilance
are visible on the horizon. in the years ahead.

negatively affecting U.S. foreign policy goals,
defense readiness or economic growth. Over time,
regular dialogues and greater transparency can
help policymakers to access better information on
minerals, and can create an “in-group” mental-
ity in which companies and government agencies
alike increasingly see the professional benefit for
sharing certain types of information. For instance,
more open dialogue can provide important infor-
mation to companies on emerging government
concerns and geopolitical trends that may affect
their businesses.

Conclusion
It is time for the United States to reassess its
dependence on critical minerals. America’s vul-
nerability to mineral supply disruptions carries a
number of persistent risks: high cost overruns for
weapons that rely on key minerals, lags in military
equipment delivery, leverage provided to supplier
countries and an inability to fully develop clean
energy technologies. Global demand for minerals
– and the ways in which minerals affect security
and foreign policy concerns – will also continue to
evolve. Countries other than China may attempt to
use the leverage created through controlling major-
ity shares of global supplies. Technology will evolve
in non-linear ways, and new mineral demands may
challenge the United States in ways not predict-
able today. A systematic evaluation of the factors
involved with mineral supplies will be required,
| 27

Elements of Security: Mitigating the Risks of US Dependence on Critical Minerals (June 2011)

Elements of Security: Mitigating the Risks of US Dependence on Critical Minerals (June 2011)

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