Critical minerals in the crosshairs

2022.03.02

North America relies heavily on foreign supplies of critical minerals — the raw materials it needs to become a leader in high technology, transportation, energy, and defense. Metals like lithium, graphite, cobalt, nickel, palladium, platinum, zinc and tin.  

For years, the United States and Canada did not bother to explore for these minerals and build mines. Globalization brought with it the mentality that all countries are free traders, and friends. Why bother mining when we can just import the minerals needed?

According to data collected by the US Geological Survey, the United States is reliant on foreign countries for at least 50% of 47 minerals. The 2022 critical minerals list below, with a brief description of each, expands upon the 2018 list that detailed 35 mineral commodities considered critical to the economic and national security of the United States. They are:

• Aluminum, used in almost all sectors of the economy.

• Antimony, used in lead-acid batteries and flame retardants.

• Arsenic, used in semiconductors.

• Barite, used in hydrocarbon production.

• Beryllium, used as an alloying agent in aerospace and defense industries.

• Bismuth, used in medical and atomic research.

• Cerium, used in catalytic converters, ceramics, glass, metallurgy, and polishing compounds.

• Cesium, used in research and development.

• Chromium, used primarily in stainless steel and other alloys.

• Cobalt, used in rechargeable batteries and superalloys.

• Dysprosium, used in permanent magnets, data storage devices, and lasers.

• Erbium, used in fiber optics, optical amplifiers, lasers, and glass colorants.

• Europium, used in phosphors and nuclear control rods.

• Fluorspar, used in the manufacture of aluminum, cement, steel, gasoline, and fluorine chemicals.

• Gadolinium, used in medical imaging, permanent magnets, and steelmaking.

• Gallium, used for integrated circuits and optical devices like LEDs.

• Germanium, used for fiber optics and night vision applications.

• Graphite, used for lubricants, batteries, and fuel cells.

• Hafnium, used for nuclear control rods, alloys, and high-temperature ceramics.

• Holmium, used in permanent magnets, nuclear control rods, and lasers.

• Indium, used in liquid crystal display screens.

• Iridium, used as coating of anodes for electrochemical processes and as a chemical catalyst.

• Lanthanum, used to produce catalysts, ceramics, glass, polishing compounds, metallurgy, and batteries.

• Lithium, used for rechargeable batteries.

• Lutetium, used in scintillators for medical imaging, electronics, and some cancer therapies.

• Magnesium, used as an alloy and for reducing metals.

• Manganese, used in steelmaking and batteries.

• Neodymium, used in permanent magnets, rubber catalysts, and in medical and industrial lasers.

• Nickel, used to make stainless steel, superalloys, and rechargeable batteries.

• Niobium, used mostly in steel and superalloys.

• Palladium, used in catalytic converters and as a catalyst agent.

• Platinum, used in catalytic converters.

• Praseodymium, used in permanent magnets, batteries, aerospace alloys, ceramics, and colorants.

• Rhodium, used in catalytic converters, electrical components, and as a catalyst.

• Rubidium, used for research and development in electronics.

• Ruthenium, used as catalysts, as well as electrical contacts and chip resistors in computers.

• Samarium, used in permanent magnets, as an absorber in nuclear reactors, and in cancer treatments.

• Scandium, used for alloys, ceramics, and fuel cells.

• Tantalum, used in electronic components, mostly capacitors and in superalloys.

• Tellurium, used in solar cells, thermoelectric devices, and as alloying additive.

• Terbium, used in permanent magnets, fiber optics, lasers, and solid-state devices.

• Thulium, used in various metal alloys and in lasers.

• Tin, used as protective coatings and alloys for steel.

• Titanium, used as a white pigment or metal alloys.

• Tungsten, primarily used to make wear-resistant metals.

• Vanadium, primarily used as alloying agent for iron and steel.

• Ytterbium, used for catalysts, scintillometers, lasers, and metallurgy.

• Yttrium, used for ceramic, catalysts, lasers, metallurgy, and phosphors.

• Zinc, primarily used in metallurgy to produce galvanized steel.

• Zirconium, used in the high-temperature ceramics and corrosion-resistant alloys.

This new list comes at an interesting time, to say the least.

The US is reliant on totalitarian regimes with dictators installed for life for 32 of 47 minerals — an eye-watering 70%! We are of course talking about China (23) and Russia (9).

Without a reliable supply chain, a country must depend on outsiders. This gives foreign suppliers incredible leverage over the United States. There is always the possibility of slowed flows or bans on strategic materials, due to politics, acts of aggression/war or trade disputes.

Yet Russia, and China, are holding some powerful cards.

Conclusion

In 2019 President Donald Trump addressed the critical minerals dilemma by releasing a strategy that directed the US Department of the Interior to locate domestic supplies of those minerals, ensure access to information necessary for the study and production of minerals, and expedite permitting for minerals projects.

Three years later, we are no farther ahead, in fact the list has grown from 35 to 47 minerals and of those, 70% are supplied by America’s two principal adversaries — Russia and China.

The invasion of Ukraine shows just how emboldened these dictatorships have become. The message sent by Putin is that he is free to walk into whatever country he chooses, backed by nuclear weapons.

China is Russia’s ally, so it is scary to imagine what President Xi Jinping is thinking, as he watches Putin invade Ukraine with impunity. Could Taiwan be next?

The Kremlin has clearly calculated that it is willing to tolerate economic sanctions; it’s eyeing a much bigger prize. No thanks to ball-less politicians without the gumption to mount a counter-offensive. They prefer to hide behind their desks and calculators.

The same politicians who have done nothing to reduce the West’s dependence on Russia and China for critical minerals, in fact under their watch, it has increased. This opens the United States, Canada and Europe up to retaliation, which could easily come in the form of restrictions on metal exports.

We’ve already seen the prices of oil, natural gas, aluminum, nickel and palladium spike in the wake of the Russian invasion. The US depends on Russia for 9 of 47 critical minerals. For China it’s 23. Imagine what will happen to those prices, if China invades Taiwan and we slap sanctions on them?

Of course gold is always in the mix during times of geopolitical stress. On Thursday, Feb. 24, spot gold came within $26 of $2,000 an ounce, before slipping back as supposedly more hefty sanctions were announced.

It certainly is an interesting time to be a resource investor. 

Richard (Rick) Mills
aheadoftheherd.com
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