Five takeaways from S4GEO’s webinar with Melissa Sanderson, Co-Chair of the Critical Minerals Institute
Hosted by Rodger Baker, Advisory Board Chair, S4GEO
Bottom Line: The United States needs a better long-term industrial strategy connecting the needs of essential industries to every stage of production.
What is a critical mineral? Under the U.S. Energy Act of 2020, a critical mineral must meet three criteria:
The Secretary of the Interior makes the designation, acting through the U.S. Geological Survey. The Act also allows the Secretary to designate a material that another federal agency determines is strategic and critical to U.S. defense or national security, even if it does not meet the standard criteria.
In this webinar, Sanderson argues that the United States’ critical-minerals problem does not necessarily stem from a shortage of mines or materials. Rather, it arises from the absence of a long-term industrial strategy that connects the needs of essential industries to every stage of production. Resilient supply chains cannot be built while U.S. policy continues to shift with short-term political priorities. Sanderson proposes starting with the specific needs of the sectors, such as technology, automotive, and defense, then working backward through finished products, processing, feedstocks, mining, and exploration.
Five takeaways from the discussion:
Sanderson placed U.S. critical-mineral supply chains within the larger context of intensifying strategic competition with China. Over several decades, China built mining and processing capacity, secured access to mineral deposits abroad, and developed a detailed understanding of how critical inputs move through global industries. She argued that China’s 2010 rare-earth dispute with Japan and subsequent WTO decision against China taught Beijing to use export controls as a more defensible instrument of state power. It also learned to identify where restricting a single input could create consequences across critical industries such as semiconductors, automobiles, defense systems, and artificial intelligence, giving it a way to obstruct U.S. strategic objectives without controlling every stage of production.
Supply-chain vulnerability can emerge at any and every stage. Sanderson noted that finding mineral deposits only addresses the first stage of a supply chain. Raw materials must be processed into forms manufacturers can use, but additional bottlenecks can emerge farther downstream. Rare-earth magnets are one example: relatively few companies produce them. Baker illustrated the downstream consequences with tungsten hexafluoride: China slowed tungsten-powder exports to Japan, Japan stopped exporting the processed gas to South Korean semiconductor manufacturers, and a resulting chip disruption could reach automakers. Sanderson also emphasized that processing facilities are useless without material to feed them and that vulnerable transportation routes must be assessed for physical alternatives, cost, and fragility. Resilience requires understanding the entire chain and how vulnerability shifts within it.
The United States needs to establish a comprehensive industrial development policy. Sanderson says responsibility is currently scattered, no single entity sets strategy, and short political cycles prevent comprehensive, national, long-term strategic planning. The Bureau of Mines once had primacy, but after it was abolished, responsibility was dispersed among several agencies, none of which has overall authority. Sanderson describes the Department of Defense as the government’s only long-term planner, while noting that its efforts have not yet produced a national strategy. That can make it difficult for businesses to plan investments that require decades.
The U.S. is approaching its critical minerals policy from the wrong starting point. Rather than starting with the minerals, Sanderson argues, governments should first identify the needs of companies working in critical industries, including technology, automotive, and defense, then work backward through finished products, processing technologies, concentrates, feedstocks, mining, and exploration. She noted that a miner supplying Boeing may face completely different processing requirements from one supplying Apple. Understanding those requirements would help identify companies that possess, are developing, or could develop the necessary technologies and determine where funding could accelerate that work. Otherwise, public funds may support acquiring and stockpiling materials that cannot meet the country’s actual needs.
You cannot understand problems within a complex system by beginning with the whole system. Complex systems must be analyzed one element at a time. Good analysis requires three disciplines: Setting aside assumptions, taking a long view, and breaking a large problem into manageable parts. For example, one can examine a single mineral, processing stage, product, or transportation route deeply. Ask what alternatives exist, who could provide them, what they would cost, and where they would remain vulnerable. “Pick an element, concentrate on that, and you will find the pattern.”