The New Industrial Age Means Getting Serious About Critical Materials Supply

The New Industrial Age Means Getting Serious About Critical Materials Supply
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Throughout this unnerving year, China’s industrial and technological momentum has continued without break, prompting fears of further comparative decline for the US. But let’s step back a bit: America’s industrial economy remains resilient, and a growing bipartisan consensus has emerged favoring the use of government policy to bolster manufacturing competitiveness and innovation.

To be sure, we have been asleep at the wheel for decades, lulled by siren calls promising ‘win-win’ globalization. Big challenges confront hopes for regaining our previous status as a leading manufacturing exporter. Yet many also sense the onset of a new industrial age showcasing US manufacturing and technology.

While earlier naivete about China has largely disappeared, today’s bad politics and the pandemic make it hard to focus on industrial policy, in which the US cannot apply a top-down approach as in China. But whatever direction the incoming Biden administration takes, metals and minerals will figure prominently as industrial innovation accelerates. Whatever the path, reforming the rules for (and removing investment constraints on) domestic mining can counter both looming shortages and predatory competition from China.

Looking ahead, reconstituted supply chains can kickstart an industrial turnaround. Recent studies show China controlling most mineral supply chains, thus shifting in the global balance of industrial power. From semiconductors to electric vehicles (EVs), China’s future economy rests on a platform of metals & minerals.

With regained public health and political stability, the Biden administration should move aggressively to rebalance natural resource mineral supply, ‘reshoring’ this essential piece of the industrial base. Luckily, the emerging consensus for reversing US industrial decline draws support from a range of powerful interests.

Rebuilding secure supply chains has a strong national security rationale. Both political parties have seen the folly of depending on China for basic health supplies (pharmaceuticals and basic PPE such as face masks). Beyond that, relying on China for the supply of metals/materials needed by our defense industries seems almost willfully stupid.

Other convergent interests buttress the growing consensus. The industries going green by moving away from hydrocarbon fuels have an array of special metal and mineral needs; indeed, the epochal energy transition especially favored by progressives requires more, not less, mining for minerals. Whether it’s solar, wind power, EVs, or grid-scale battery storage – technologies indispensable to a green future need specialized metals and minerals.

This requirement comes not from some far-off, comfortably distant Never-Never land. The energy transitions already under way in China and the West cannot occur without specialized materials. For the next generation of efficient long-life batteries, studies show that demand for aluminum, cobalt, lithium, manganese, and nickel could rise by one thousand percent at mid-century point.

Consider EVs and lithium batteries. Tesla aims to produce 20 million EVs per year by 2030. Global lithium supply must therefore grow eightfold just to meet anticipated demand from Tesla, just one of many in the EV and battery race. Total mineral imports nearly doubled during the past two decades, with the US becoming import-reliant for almost fifty of these. The departments of defense and the interior say thirty-five of these have become ‘critical’ to economic and national security. China controls supply chains for 23 of these critical materials. Of global rare earth minerals, China has ninety percent control. (US firms dominated this market until the 1990s.)

What happened? Domestic mining policy, federal and state, turned against minerals prospecting. Today, mineral supply chains into the US are stretched to breaking point. The departing Trump administration focused intermittent attention on the issue. Now, ‘Building American’, as envisaged by president-elect Biden, means using American-produced materials, mined and refined under world-leading regulations.

Over the years, mine-permitting in the US has slowed to a crawl, a much more dilatory process than in Australia and Canada, both big continental-sized countries comfortable with well-regulated mining. Increased mine production can prompt US manufacturers to use materials mined and refined at home. As new battery mega-factories rise, the copper, graphite, lithium and nickel enabling the EV revolution can and should come from American mines, produced by American miners.

As these examples attest, freeing up mineral supply chains goes hand in hand with smart industrial and natural resources policies. Boosting our industrial competitiveness involves (a) a frontal assault on China’s monopolistic industrial policy, (b) an increasingly ‘green’ foundation for energy production, and (c) new capacity investment at home in metals and minerals.


A former deputy assistant secretary of defense for Asia, James Clad is a senior adviser to Arcanum, a global intelligence company serving sovereign governments and multinational corporations.

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