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Opinion

A Critical Moment for U.S. Industrial Policy

America’s technological future depends on access to the materials essential to nearly every dimension of our economy. It may seem counterintuitive, but our ever-growing dependence on tech and data, the cloud, smart devices and advanced clean-energy technologies renders us far more dependent on mining and resource development than ever before.

Yet, U.S. industrial policy hasn’t connected the dots, much to the benefit of our geopolitical rivals. As a result of complacency and inattention, we are now alarmingly dependent on imports — often from strategic rivals like China and Russia — for these essential materials.

China has developed and implemented a plan for its materials industry to achieve unrivaled superpower status. And China has dominated control of the raw materials and processing infrastructure necessary to the digital economy for some time.

But since fall 2016, Beijing has doubled down. A new report from Foreign Policy explains, “By directly acquiring mines, accumulating equity stakes in natural-resource companies, making long-term agreements to buy mines’ current or future production (known as ‘off-take agreements’), and investing in new projects under development, Chinese firms traded much-needed capital for outright control or influence over large shares of the global production of these resources.”

The practical reality of this strategy is a startlingly tight grip on many of the resources that are the irreplaceable building blocks of critical technologies. Consider rare earth elements, essential to everything from smartphones and satellites to advanced weapons systems. China holds control or influence of 80 percent of the global supply and now is threatening to stop rare earth exports to the United States as a bargaining chip in trade negotiations.

For graphite, which is essential to electric vehicles, solar panels and wind turbines, it possesses 70 percent of global supply. For lithium, the key ingredient to lithium ion batteries and the energy storage revolution, it’s 59 percent. The list goes on.  

While China’s position as the center of the metals universe grows ever-stronger, U.S. industrial policy hangs in tatters. Despite vast mineral reserves and a proud mining history, U.S. mineral import reliance is spiraling out of control — doubling over the past 25 years.

The United States is now 100 percent import-reliant on 18 minerals and 50 percent or more import-reliant for another 30. Sen. Lisa Murkowski (R-Alaska) has acutely observed that this growing reliance on minerals imports is the nation’s “Achilles’ heel.”

While there is growing appetite in Washington to tackle this strategic vulnerability, federal mining policy has arrived at a dangerous fork in the road. One path leads to aggressive action to address the problem head on: Consider the 2017 executive order on critical minerals or recent legislation that would streamline mine permitting.

However, the alternative path would not only exacerbate the problem, it would cripple domestic mining when we need it most. A group of lawmakers wants to overhaul the General Mining Law that governs hardrock mining on federal lands. Their “overhaul” is little more than a punitive attempt to make it so expensive and difficult to mine in the United States that no one will want to do it.

If these wrongheaded lawmakers get their way, the results would be catastrophic. They would not only cripple the economy of mining states but hand China a geopolitical win so unimaginable, even the most optimistic bureaucrats in Beijing would never think it possible.

Instead of taking the decisive action needed to address our minerals and metals import reliance and rebuild the materials supply chain needed by our defense, energy and high-tech manufacturing industries, we may instead be on the verge of doing irreversible damage to the very industry that should be a strategic priority. The stakes are enormous. We simply cannot afford to make a blunder of this magnitude.  

 

Retired U.S. Army Brig. Gen. John Adams served more than 30 years in command and staff assignments as an Army aviator, military intelligence officer and foreign area officer in Europe, Asia, the Middle East and Africa, and he is president of Guardian Six Consulting.

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