China currently leads the world in the refining of critical minerals essential for modern economies, including lithium, cobalt, nickel, natural graphite, and rare earth elements.
As the primary supplier of processed inputs for advanced technologies such as semiconductors, aerospace components, energy storage systems, and electric vehicle batteries, China’s dominance has raised significant concerns about U.S. dependence on its refining operations.
Even minerals extracted from other countries are often sent to Chinese-owned smelting and processing facilities, granting Beijing substantial leverage over global supply chains.
Recent export controls by China on processed rare earth elements, implemented in response to U.S. tariffs, highlight the strategic vulnerabilities faced by the United States.
The U.S. military, essential for national defense, relies heavily on these minerals for a variety of applications.
Gallium-arsenide chips are integral to electronic warfare systems that power the AN/ALQ-99 jamming pod, while neodymium-iron-boron magnets are critical components of the F-35’s flight control systems.
Additionally, antimony is utilized in ammunition and artillery shells.
Such dependencies underscore the national security risks linked to China’s control over critical mineral refining.
While there have been efforts to encourage private sector investments in refining, friendshoring, stockpiling resources, and streamlining permits, these measures do not fully address the core issue: the United States lacks adequate domestic refining and advanced processing capabilities.
To achieve true mineral independence, the United States should consider implementing offensive industrial policies aimed at bolstering the mineral refining sector.
This endeavor would necessitate the establishment of a federal initiative for critical mineral processing, which would build on existing efforts by expanding funding, prioritizing states well-suited for mineral refining facilities, streamlining permitting processes, investing in workforce development, and securing allied supply chains.
Current defensive solutions have been helpful, yet they face several significant hurdles.
Historically, China has used its dominance in the mineral sector as a weapon by imposing export restrictions on strategic materials to pressure rival economies.
In 2010, for example, China restricted rare earth elements exports to Japan amid a territorial dispute, which resulted in global price spikes.
More recently, in 2023 and 2024, China implemented export controls on germanium and gallium, critical components for semiconductor production.
In response to such restrictions, the United States has taken various approaches.
After the 2010 rare earth elements embargo, the U.S., European Union, and Japan filed a case against China at the World Trade Organization, ultimately compelling Beijing to remove export quotas by 2015.
Additionally, efforts to revive U.S. rare earth mineral processing have included initiatives to reopen the Mountain Pass Rare Earth Mine in California.
By 2023, Washington had intensified its “friendshoring” strategy, allocating further resources to domestic mining and refining through the Department of Defense and Department of Energy budgets, while also working to strengthen supply chain partnerships with allies like Canada and Australia.
However, U.S. attempts to reduce its reliance on China for critical minerals face numerous substantial obstacles.
Firstly, the expansion of domestic refining capabilities has been slow, as new processing plants and smelters typically take 10 to 20 years to become operational.
For instance, the Mountain Pass Rare Earth Mine, which reopened after China’s 2010 export controls, was still sending 98 percent of its raw materials to China in 2019 due to the lack of U.S. processing capacity.
Investors are often reluctant to fund U.S. refining and processing facilities, citing uncertain returns, fluctuating federal policies, political instability, and environmental opposition as key concerns.
High capital expenditures make mining and processing less attractive compared to tech sectors that demand minimal upfront investment and offer higher returns.
Moreover, China has a fully integrated supply chain that encompasses extraction, refining, smelting, and manufacturing, making it significantly cheaper and more efficient to process minerals domestically than in the United States.
Expanding U.S. mineral extraction is also complex, as the transition from exploration to consultation and subsequent full-scale operations can take at least a decade.
Even if extraction increases, fears persist that Chinese firms may flood the market with minerals, driving prices down and rendering U.S. operations financially unviable.
This scenario was evident in 2023 with lithium, when oversupply led to a sharp price drop.
Similarly, nickel prices fell in 2024 due to overproduction by Chinese firms concentrating on short-term profits, exacerbated by the introduction of new chemical processing techniques that significantly increased output.
The need for extraction and refining to scale together to establish a cost-effective, fully integrated U.S. supply chain presents additional challenges that severely hinder progress.
Secondly, while capacity is gradually expanding, alternative processing options to Chinese facilities remain limited.
Japanese firms, such as Sumitomo Metal Mining, have historically focused on refining nickel and cobalt, with recent government efforts to expand rare earth refining.
The Australian government is also increasing its support for rare earth processing, providing grants to companies like Australian Strategic Materials Limited and extending financing to Iluka Resources.
Similarly, South Korean firms, including Korean Zinc Company, Ltd., POSCO Future M Company, Ltd., and LS-Nikko Copper Inc., are active in mineral processing.
Despite these countries’ efforts, China still dominates over 85 percent of rare earth refining, 90 percent of global graphite processing, and nearly all germanium, gallium, and tungsten refining.
Japan, Australia, and South Korea confront their own capacity constraints, elevated processing costs, and competing domestic priorities that limit their capacities to meet U.S. demand fully.
Furthermore, their geographic proximity to China renders them more vulnerable in the event of armed conflict.
Thirdly, while stockpiles can serve as a temporary buffer, they do not completely eliminate the need for secure, long-term supply chains, as reserves will eventually dwindle.
China’s supremacy in the sector complicates the U.S. efforts to determine optimal stockpile levels, particularly given competing demands from military and civilian industries.
Forecasting models, such as those created by the Institute for Defense Analyses, consider critical civilian sectors but often overlook the downstream impacts of supply disruptions across the broader industrial base.
Additionally, stockpiling is a costly endeavor, necessitating specialized storage, maintenance, and regular replenishment to prevent material degradation.
To compound the situation, China’s capability to manipulate mineral markets complicates U.S. procurement strategies; if prices soar, replenishing stockpiles can become prohibitively expensive, while price crashes diminish incentives for domestic extraction and refining.
Fourthly, while some suggest streamlining permits as a component of the solution, that alone does not ensure rapid resource extraction.
Mining projects typically take 15 to 20 years to achieve full-scale production due to the complex processes involving exploration, feasibility studies, environmental assessments, and construction.
Frequent political shifts between administrations often produce policy reversals on environmental regulations, creating uncertainty for long-term investments.
Local opposition and legal challenges can lead to considerable delays, as evidenced by the Thacker Pass lithium mine in Nevada, which, despite its potential to produce 40,000 metric tons of battery-quality lithium carbonate, has encountered years of lawsuits and protests that have stalled progress.
In sum, efforts to secure mineral independence remain unfinished, with the most pressing issue being the lack of robust domestic refining and smelting capacity in the United States.
Funding initiatives created during the Biden administration were aimed at bolstering critical mineral supply chains but ultimately fell short.
Programs like the Inflation Reduction Act, Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act, and Defense Production Act contributed to domestic industry support, forming a multi-faceted approach.
The Inflation Reduction Act generated over $224 billion in investments through subsidies for battery production and clean energy initiatives.
The CHIPS Act allocated $30 billion for private sector projects across 15 states, leading to the construction of 16 new semiconductor manufacturing facilities and the creation of over 115,000 manufacturing jobs.
However, these initiatives exhibit fragmentation, with resources distributed across various agencies competing for prioritization, rather than concentrating on scaling up refining and metallurgical processing.
Although the Defense Production Act provided $150 million specifically for critical minerals, funding key projects such as a $19 million tin smelting and refining facility in Pennsylvania, $37.5 million for Alaska’s Graphite Creek deposit, and over $100 million to establish a U.S.-based rare earth separation plant, these measures still represent a mere fraction of what is necessary.
President Biden also expanded Department of Energy initiatives and boosted Department of Defense contracts to elevate domestic production.
The Department of Energy allocated $19.5 million for securing domestic supply chains and budgeted an additional $43 million to enhance battery technologies for electric vehicles.
Yet, much of the Department of Energy’s funding, particularly the $500 million open call from the Office of Science Financial Assistance Program, distributed resources across fields that are only marginally connected to critical resources or mineral processing.
The Defense Department awarded a $26.4 million grant to support a niobium refining plant in Pennsylvania, yet this is merely one project among many shortcomings in the overall effort to establish a self-sufficient U.S. supply chain.
Despite these noteworthy investments, the initiatives under the Biden administration largely failed to effectively address the pressing needs of refining and smelting, leaving a critical gap within the supply chain.
Current funding levels remain inadequate to close the structural deficit in domestic processing capacity, resulting in continued dependency on foreign supply chains for critical minerals.
To eliminate U.S. dependence on China for critical minerals, a federal critical mineral processing initiative is essential.
The Department of Defense currently lacks a compelling rationale for investing billions into processing facilities or mines, as military demand for critical minerals is recognized to represent only a minuscule fraction of overall usage.
Though precise figures indicating defense consumption of these materials are challenging to estimate, U.S. military consumption of rare earth elements comprises less than 0.1 percent of global demand.
Regardless, there are compelling national security arguments for subsidizing this industry.
Military demand is projected to triple, rising from $15 billion in 2022 to $46 billion by 2046.
Most global processing capacity is concentrated in China, posing a strategic challenge to U.S. interests.
The private sector is unlikely to make significant investments without substantial government backing; furthermore, many of these materials are irreplaceable in key defense systems.
Any supply disruption could lead to production delays and consequently undermine combat readiness.
A comprehensive federal critical mineral processing initiative is crucial to eradicating U.S. dependence on China for critical minerals.
Congress will need to allocate hundreds of billions of dollars over the upcoming decades, recognizing that replacing China’s copper smelting and refining capacity alone would require an estimated $85 billion.
To initiate this ambitious undertaking, Congress should consider allocating $20 to $40 billion in seed and debt funding over the next decade through a Critical Minerals Industrial Act, fostering a strategic public-private partnership that encourages U.S. firms to invest in and expand refining and smelting facilities.
This legislation should diverge from the Critical Minerals Security Act of 2024, which is focused on reporting and recommendations, and the Critical Mineral Consistency Act of 2025, which prioritizes transparency.
After securing funding, the initial step would be to effectively distribute these funds across key investment areas.
Grants and tax rebates should be provided to U.S. companies investing in refining, smelting, and metallurgical processing.
Further, public-private partnerships should be established, permitting U.S. companies across the tech, aerospace, energy storage, automotive, and defense sectors to act as offtake partners, ensuring lower refining and smelting costs in return for long-term supply commitments.
Federal agencies, including the Department of Energy and the Department of Defense, should expand low-interest loan programs to support domestic processing facilities.
To shield these investments from political fluctuations, funding for these projects should be fast-tracked utilizing the Defense Production Act.
The second step entails strategically selecting U.S. states that present optimal conditions for large-scale refining and smelting operations.
Such states must possess ample land, mining-friendly regulations, proximity to ports or mineral deposits, and existing infrastructure.
Promising locations include Texas, Arizona, Utah, and West Virginia, which provide robust regulatory environments and industrial capabilities.
Oklahoma also presents possibilities, with Governor Kevin Stitt offering incentive packages to attract processing facilities.
Utah has lithium, beryllium, and tungsten deposits and is home to Kennecott Utah Copper, a division of Rio Tinto, which operates the Bingham Canyon Mine equipped with smelting and refining facilities contributing to 8 percent of U.S. annual copper production.
Additionally, West Virginia possesses rare earth elements in coal-related streams, including acid mine drainage and coal waste byproducts, although processes for commercial extraction are not yet viable.
Texas boasts a pro-business legal environment, no state income tax, and strong port infrastructure for importing raw materials.
Arizona has also fast-tracked mining permit laws and has access to significant reserves of copper, lithium, and rare earth elements.
Currently, California’s Mountain Pass Rare Earth Mine, run by MP Materials, remains the sole active rare earth mining and processing facility in the United States.
The third step involves streamlining the permitting process for refineries and smelters.
In China, smelters often secure permits in two to three years, whereas in the United States, the process can stretch to seven to ten years.
According to an S&P Global Report, on average, it takes 29 years to bring a new mine online in the United States, positioning it as the second slowest country globally for mine development.
For instance, the Thacker Pass lithium project submitted its initial operations plan in August 2019 but did not see the Department of Energy finalize a loan to support its development until 2024.
Similarly, although the Mountain Pass Rare Earth Mine received its environmental permits in 2010 to construct a new processing facility, construction wasn’t completed until 2014, despite existing on-site facilities capable of smelting and refining rare earth ore into finished products.
These delays might be alleviated by utilizing the existing fast-track approval process established under the Fixing America’s Surface Transportation Act of 2015, which can expedite critical mineral infrastructure development projects that already exist and are supported by federal investment programs.
Workforce development forms the fourth step to guarantee that the United States has the necessary manpower to operate these facilities effectively.
By 2029, it is estimated that 221,000 workers in the mining sector will retire.
To support the scale of expansion required in both mining and refining, the U.S. will need four to five times that number of individuals.
The workforce challenge is exacerbated by aging labor trends, as many experienced workers retire, and a decline in academic programs, as numerous universities have discontinued metallurgy and materials science programs due to diminishing student interest.
Further, the economic shift away from heavy industry has contributed to a lack of training opportunities for younger professionals looking to enter the field.
Currently, only 14 Accreditation Board for Engineering and Technology-accredited programs exist, including those at the University of Utah, West Virginia University, and the Colorado School of Mines.
The U.S. government provides limited financial support for such initiatives, like the Materials Research Science and Engineering Centers, yet recent legislation and programs, such as the Mining Schools Act (which has allocated $10 million from 2024 to 2031) and the National Science Foundation’s Regional Innovation Engines Program, provide funding for these partnerships.
While the government has correctly maintained support for these initiatives, they remain insufficient for addressing the scale of the challenge ahead.
Alternatively, the United States could consider importing skilled professionals from abroad.
However, the U.S. immigration process for highly skilled workers is notoriously tedious, while national security concerns may restrict foreign student enrollment in metallurgy programs.
In addition, global competition for talent is fierce, as nations such as China, Australia, Canada, and Germany actively seek to recruit the same workforce.
To tackle this issue effectively, the U.S. government must allocate substantial sums to expand training programs and rebuild the talent pipeline.
Finally, once these four steps are established, the United States should strengthen allied supply chains by mandating that all federally funded defense, infrastructure, and energy projects utilize 100 percent U.S.-processed critical minerals.
Additionally, the U.S. should deepen trade partnerships with Canada, Australia, Japan, and South Korea to collaboratively invest in refining and diversifying raw materials, securing long-term offtake contracts with both private and government partners.
Existing frameworks like the State Department’s Minerals Security Partnership—a multilateral initiative with 14 countries aimed at enhancing critical mineral supply chains—along with AUKUS, a trilateral security partnership focused on advanced technologies and critical materials, provide a robust foundation for advancing this strategic approach.
In conclusion, the urgency to shift away from Chinese dependence necessitates pursuing these five steps to secure U.S. mineral independence, emphasizing that it is not merely an economic issue, but one of national survival.
Without initiating a federal critical minerals processing initiative, the U.S. government can leverage the Defense Production Act to gain access to raw materials; however, such powers are limited for ensuring sustainable long-term production.
The government could also seize domestically available mineral stockpiles; however, as of 2022, the U.S. remained over 50 percent import-dependent for 51 nonfuel mineral commodities and entirely reliant on imports for 15 of these commodities.
When it comes to processing and smelting, seizing materials is merely the initial step.
Without the domestic capacity to refine these materials, they lose military utility.
In the event of an armed conflict with China, the United States would find itself cut off from essential processing facilities.
Existing U.S. processing capabilities are limited, and absent serious investment, the Department of Defense would encounter considerable constraints in scaling production efforts.
The repercussions of underinvestment are not theoretical.
During the COVID-19 pandemic, although the government invoked the Defense Production Act to expedite ventilator production, significant delays occurred due to limited industrial infrastructure.
Moreover, the U.S. reliance on foreign-owned intellectual property for critical defense technologies further complicates matters.
The Defense Production Act cannot circumvent or replicate proprietary intellectual property in vital sectors such as microelectronics, rare earth processing, advanced battery chemistries, or specialty alloys utilized in hypersonic and stealth systems.
Without access to these innovative technologies or the means to substitute them, even seized raw materials remain ineffective for military applications at scale.
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