In May, the US Department of the Interior published a list of 35 non-fuel mineral commodities considered ‘critical’ to the economic and national security of the US. This followed on from President Trump’s executive order issued last December, which aimed to ensure a reliable supply of critical minerals for the US. The order is part of Trump’s ‘America first’ initiative to reduce US reliance on foreign imports, with a US Geological Survey (USGS) report concluding that 20 of the 23 critical minerals are sources from China.
While there are currently no public plans for the US to become entirely self-sufficient in regards to its mineral supply; recent developments, such as rare-earths yttrium and praseodymium being hit with tariffs earlier this month, suggest that the country is aiming to incentivise domestically produced minerals at the cost of foreign exports.
Critical minerals and their uses
These minerals have been designated as critical to the US’s national interest in part because of their potential military and industrial applications. The Essential Chemical Industry at the University of York, UK, reported that nearly half of the world’s titanium goes to aerospace projects and that it is often used as an alloy with metals, such as aluminium, molybdenum and iron.
Scandium can be worked at high temperatures, making its role in jet engines ‘a very real future possibility’, according to NioCorp. Currently it is used to reinforce and strengthen aluminium. Niobium serves a similar purpose, making steel stronger, lighter and more corrosion-resistant, producing high-strength, low-alloy steels. Unlike the former metals, niobium is listed as both a critical and a strategic mineral, signifying its importance to the US, as well as its difficulty to produce.
The potential military uses of these minerals have highlighted their importance to the Trump administration. In May this year, when Jeffery A. Green, the president of a bipartisan government-relations firm in Washington DC and a former US Air Force commander, wrote in Defense News that, “without access to such minerals, our precision-guided missiles will not hit their targets, our aircraft and submarines will sit unfinished in depots, and our war-fighters will be left without the equipment they need to complete their missions.”
The scarcity of these minerals means that the vast majority are imported: Brazil produces 92% of the world’s niobium, while the USGS named China as the largest importer of scandium to the US in 2015. China also produced 47% of the world’s titanium in 2016.
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Reservations over resources
However, a USGS report titled ‘Mineral Commodity Summaries 2018’ suggests that the US simply lacks the reserves of niobium, scandium and titanium to sustain long-term productivity. The report notes that niobium has not been mined in the US since 1959, only 13,100tpa of titanium can be produced from US mines, that ‘domestically, scandium-bearing minerals were neither mined nor recovered from mine tailings in 2016’, and that the US has only a ‘limited capacity to produce ingot and distilled scandium metal.’
Mining legislation could also be a factor here; mining in the US is governed by the General Mining Act of 1872, which enshrines mining as the ‘highest and best use’ of public land, ensuring hardrock mining companies pay no royalties to US taxpayers, while receiving tax breaks. Initiatives such as NioCorp’s Elk Creek project, which mines the only source of niobium and scandium in North America, may produce minerals and generate profits, but US legislative emphasis on individual miners to find and stake their own claims on mineral reserves could prevent the predicted mining boom in NioCorp and Nebraska from spreading to other companies and states. This effect could be multiplied by the small reserves of these minerals in the US.
NioCorp’s Elk Creek project and causes for optimism
US mining operator NioCorp could be an early beneficiary of this increased focus on domestic mining. In addition to producing titanium, its Elk Creek project in Nebraska is the only source of niobium and scandium in North America.
The mine is currently under development – NioCorp expects production to begin in 2021 – and is predicted to produce up to 2.9 million tonnes of titanium dioxide, 643,800t of niobium pentoxide and 7,800t of scandium over its 32-year operating life. NioCorp estimates that the operation will generate $17.6bn over its lifespan, with an operating margin of $12.2bn.
The figures are impressive – ‘robust’, even, according to NioCorp – and the project coincides with the resurgence of the US mining industry as operators push towards self-sufficiency. Mining’s contribution to the nation’s GDP has increased from a low of $330.4bn in late July 2016 to $387.4bn in January 2018, according to Trading Economics. The industry employed 722,000 individuals in March of this year, compared with 691,000 and 660,000 in the same month of 2016 and 2017 respectively.
Sections of the industry remain optimistic that Trump’s ideal of self-sufficiency is achievable. Adjunct scholar in geosciences at the Center for the Study of Science Ned Mamula and chief economist of the Heritage Foundation Stephen Moore wrote in the National Review that, “the US sits on a vast treasure of mineral resources and reserves that are probably more extensive than those of China and Russia combined”.
Similarly, US lawyer Korey J Christensen concluded in the March 2018 edition of law firm Hogan Lovell’s newsletter that it is “likely that in the coming months, industry participants will see attempts to roll back regulatory leasing and permitting hurdles and possibly also to make additional federal lands available for mineral development”.
Despite the potential local benefits to US miners of the tariffs, and Trump’s focus on ‘all levels of the supply chain’ in his initial order, it is unclear whether the US’s increasingly domestic focus will be sustainable, given the nation’s limited reserves of niobium, scandium and titanium. As Green notes, “America’s critical minerals’ problem has gone from bad to worse”, and it is possible that Trump’s latest policy will increase pressure on US miners, without necessarily yielding positive results across the country.