Adams: U.S. mining policy failures embolden Russia and China
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John Adams
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By John Adams | President, Guardian Six Consulting
America faces a mineral supply chain crisis. Chinese and Russian domination of the minerals and metals essential to our economic and national security grows more suffocating as Washington struggles to formulate a coherent response. The clock is ticking.
Decades of industrial offshoring and an adversarial approach to domestic mining have created an alarming vulnerability that Beijing and Moscow are all too happy to exploit. Of the 50 minerals the U.S. government deems critical, China is the leading supplier of more than half. Add in Russia, and the unnerving reality is that the irreplaceable building blocks of the nation’s industrial capacity are dominated by our chief geopolitical adversaries.
In the last year, China imposed export restrictions on a growing list of metals we have little current capacity to produce. These restrictions have been used to influence trade negotiations or as retaliation against U.S. efforts to combat unfair Chinese trade practices. Make no mistake, China is using its control of mineral supply chains to influence far more than trade.
China’s latest export restrictions came on antimony, a metal essential to various technologies but most notably weapons systems. Antimony is used to produce more than 300 munitions. Beijing now boasts it controls critical pieces of our military-industrial base.
Congress and the administration are increasingly aware of the threat posed by our astonishing reliance on Chinese and Russian minerals. While some steps have been taken to confront the challenge — such as loans, grants and tax credits extended to domestic mining and minerals processing projects — our efforts remain woefully uncoordinated and constitute a fraction of what’s needed.
We’re trying to dig ourselves out of a deep hole with one arm tied behind our back. Not only does our broken domestic mine-permitting system remain an enormous hurdle but Congress has provided limited support to domestic producers, which isn’t even being implemented as intended.
Consider the 45X advanced manufacturing tax credit, passed by Congress as part of the Inflation Reduction Act, intending to include support for domestic mining and materials processing to help level the playing field against overseas producers. The Treasury Department and the Internal Revenue Service have interpreted the credit differently, excluding mineral production and processing.
Congress — including the senators who wrote the law expanding the credit — are livid. And they should be. While the Treasury drags its feet — currently taking additional comment on how the credit should be interpreted — U.S. producers drown under Chinese and Russian market manipulation.
As we dither, Chinese and Russian producers, using government-backed financing and labor and environmental standards that pale compared to ours, flood the marketplace with cheap minerals to keep Western producers from establishing alternative supply chains.
In September, Sibanye-Stillwater, a palladium producer in Montana, announced it would lay off hundreds of employees in November, citing “Russian dumping,” and — you guessed it — failure to extend the 45X tax credit to mineral production.
At the time we need a smart policy more than ever to secure our mineral supply chains, our policy failures directly aid Chinese and Russian efforts to corner mineral markets. That’s an outrage.
Mine-permitting reform and proper implementation of the 45X tax credit aren’t cure-alls for the scale of our minerals crisis, but they can get us on the right track. They’re also common sense. It’s past time we make them a reality.
