It’s Time for a Strategic Minerals Reserve

In 1977, in the aftermath of a devastating oil embargo by Arab members of OPEC, America's political leaders called for strong action. Congress responded by creating a strategic petroleum reserve to reduce the threat of another oil cutoff.

Today the nation faces a similar menace from abroad and the need for similarly decisive action. The United States depends heavily on imports of critically important minerals and metals, particularly from China. China’s control of global mineral supply chains now far eclipses the highwater mark of OPEC’s control over global oil production. And China has already repeatedly demonstrated its willingness to use its minerals chokehold as geopolitical leverage.

In just the past year, under both the Biden and Trump administrations, China has cut off or severely curtailed exports of essential minerals needed for both key U.S. industrial sectors as well as our defense industrial base.  This problem is emblematic of our country's dangerous dependence on China for minerals considered crucial to our economy and national defense. 

It may be hard to grasp the severity of the situation without the fuel rationing that punctuated the Arab oil embargo, but the threat to our economy as well as our national security should not be overlooked. The competitiveness of entire industries and our ability to produce critical weapons systems now hang in the balance.

Troublingly, despite years of tough talk about rebuilding our mineral security and notable steps to confront the challenge, this crisis is showing alarming signs of worsening.

A new report by the International Energy Agency (IEA) warns that control of global supply chains of vital minerals like rare earths, copper, lithium and graphite have become increasingly concentrated in China. In fact, the IEA found that China is now the dominant producer of 19 of the 20 minerals it analyzed in the report, holding an average market share of around 70%.

Further, the IEA warned that in the face of market interference from dominant mineral producers, diversification of global mineral supply chains can’t be achieved through market forces alone. In other words, rebuilding American mineral security will require robust federal support.

While the government has worked to improve mine permitting, provide loans, grants and targeted tax credits to some mining and processing projects, the scale of the challenge requires even bigger thinking. The time for decisive action is now.

Our nation's national security and economy are under threat. A strategic minerals reserve patterned after the petroleum reserve is the answer.

One of the key challenges a minerals reserve can fix is China’s strategy of over production to capture market share. China floods the market with cheap mineral supplies to discourage western competition, cornering the market.

A robust U.S. minerals reserve, sourced largely from domestic production, could provide much needed certainty for domestic miners and financers while countering Chinese efforts to flood the market.

The government could fill the reserve when prices are low and sell from the reserve – as we do with the petroleum reserve – when prices are high. Doing so would maintain affordable mineral feedstocks for U.S. manufacturers producing the semiconductors, defense systems and other cutting-edge technology at the very heart of our economy and undergirding  national security.  And it would provide a backup supply of minerals for domestic use in the event of a market disruption.

Global mineral demand is soaring, and the importance of these minerals is only growing. We must not let China further capture this foundational piece of industrial power. In short, to counter China, we must revisit strategic storage, a great policy success, and invest once again in American security.

Dr. Robert W. Chase holds B.S., M.S., and Ph.D. degrees in Petroleum and Natural Gas Engineering from Penn State and is a registered professional engineer in Ohio.  He is a member of the Society of Petroleum Engineers (SPE), the Ohio Society of Professional Engineers (OSPE), and the Southeast Ohio Oil and Gas Association (SOOGA).  He served as professor and chair of the Department of Petroleum Engineering and Geology at Marietta College from 1978 to 2015.