The White House released its findings on June 8 from the 100-day assessment of critical supply chains. In general, the report identified immediate and longer-term actions to bolster domestic manufacturing of critical goods, reduce dependence on nations like China for supply chain needs, create good-paying jobs and address unfair trade practices. With regard to critical minerals, the White House identified actions to invest in sustainable domestic and international production, refining and recycling of critical minerals to reduce reliance on adversarial nations like China while ensuring strong environmental and labor standards.
The assessments were carried out under Executive Order (EO) 14017 “America’s Supply Chains.” EO 14017, signed on Feb. 24, directs federal agencies to assess vulnerabilities in critical supply chains and provide recommendations on strengthening supply chains that would also create jobs.
The findings released on June 8 relate to the supply chains of four critical products: semiconductor manufacturing and advanced packaging; large capacity batteries, such as those used in electric vehicles; pharmaceuticals and active pharmaceutical ingredients; and critical minerals and materials. The Department of Defense was designated as the lead agency for assessing the critical minerals supply chain.
Critical Minerals Supply Chain Findings
The report described the importance of strategic and critical minerals for a number of goods, including consumer electronics, renewable energy technologies, manufacturing and telecommunications. China has captured much of the global market for strategic and critical minerals production, refining and processing through state-led non-market interventions. The report notes that the number of non-fuel mineral commodities for which the United States has become at least 25% import-reliant has increased from 21 minerals to 58 minerals since 1954. Even if the United States were to achieve a 100% recycling rate for critical minerals, increased domestic production of these minerals would be needed to meet the increasing demand.
The Department of Defense identified a number of risks that make the supply chain for critical minerals vulnerable. Risk factors include: a concentration of supply in a few countries; single-source production of minerals domestically or globally; a shrinking advanced manufacturing workforce; vulnerabilities related to human rights violations, pollution, conflict minerals, organized crime and corruption; and price shocks.
Additionally, the report outlines a number of challenges to domestic critical minerals, including a lack of transparency for individual critical minerals markets; asymmetric information between market participants and outside observers; and elastic demand and inelastic supply. With regard to increasing the recycling of critical minerals, the report describes a number of challenges, including a patchwork of state and local regulations for the collection of end products; dependence on the recovery of other metals with high intrinsic value to recycle critical minerals; end products that are not designed for recycling; and variable take-back and collection schemes for end products.
The report calls for an “all of the above” strategy to secure the strategic and critical minerals supply chain in a way that expands sustainable production and processing, while at the same time working with allies and partners to secure the global supply chain. The Department of Defense included a number of recommendations, which include:
- Developing sustainably produced content standards for critical material-intensive industries. The report recommends that the federal government work with industry, labor organizations and NGOs to develop sustainably produced content standards for critical mineral-intensive industries. The federal government should then publish regulations incorporating this standard into procurement practices.
- Expanding sustainable domestic production and processing capacity, including recycling and recovery from secondary and unconventional sources. In order to increase domestic production of critical minerals, the report recommends that the U.S. Geological Survey and public land agencies identify locations of key critical minerals that can be sustainably produced. To increase domestic recycling and recovery of critical minerals, the federal government should reduce market barriers to critical minerals recycling, as well as work with states, tribes and NGOs to develop a uniform strategy for mining waste reclamation.
- Deploying the Defense Production Act and other programs. The Departments of Energy, Commerce, Interior and Defense are advised to use the Defense Production Act and other existing authorities to incentivize production across the supply chain. These authorities should also be utilized to support research and development capacities and emerging technologies. Additionally, sustainable production should be encouraged through incentives conditioned on stringent environmental standards in mines and in U.S. states.
- Convening industry stakeholders. The federal government should utilize the Defense Production Act to convene a government-industry working group to expand sustainable production and find opportunities to form public-private partnerships for sustainable domestic processing of strategic and critical minerals.
- Promoting interagency research and development in order to support sustainable production and workforce development. The report recommends a coordinated interagency approach to research and development for emerging technologies to aid the transition from the laboratory to the marketplace. Investments in workforce development should also be coordinated to ensure workers have the skills needed for the sustainable production of critical minerals.
- Bolstering U.S. stockpiles. The Department of Defense is advised to seek increased appropriations for the National Defense Stockpile program, as well as new authorities for the program to purchase critical minerals identified in shortfall and loan material from stockpiles to industry to mitigate supply disruptions.
- Working with allies and trading partners to strengthen global supply chain resiliency. To strengthen collective supply chain resilience among allies and trading partners, the United States should promote a values-based approach to critical minerals production based in sustainability and encourage the alignment of domestic and foreign product sustainability standards. The Export-Import Bank and the U.S. International Development Finance Corporation should provide loans and investments to projects in the strategic and critical minerals sector. Materials supply chain transparency should be promoted through recommitting to the Extractive Industries Transparency Initiative; developing a coalition of stakeholders to increase transparency in materials with a high risk of human rights abuse and corruption; and providing funding for federal agencies to trace critical minerals supply chains and implement appropriate enforcement actions for criminal activity and human rights abuses.