The Critical Minerals List is Becoming More Critical
In a funky group of office buildings in Reston, Virginia sits the US Geological Survey (USGS), a bureau of the Department of the Interior that “provides science about the natural hazards that threaten lives and livelihoods; the water, energy, minerals, and other natural resources we rely on; the health of our ecosystems and environment; and the impacts of climate and land-use change.”
While it’s not clear from this cryptic mission statement, one of the important jobs of the USGS is the creation, every 3 years, of the US Critical Minerals list. The Energy Act of 2020 defines a critical mineral as “a non-fuel mineral or mineral material, essential to the economic or national security of the U.S., which has a supply chain vulnerable to disruption.” The current Critical Minerals list can be found here. It now lists 50 critical minerals critical to the U.S. economy and national security – 15 more commodities than the U.S.’s first list of critical minerals created in 2018. A large part of the increase in the new list of 50 is the result of splitting rare earth elements and platinum group elements into individual entries. Significantly, the USGS has added nickel and zinc to the list.
The list is compiled from research by USGS staff and a review of at least a thousand public comments. Having minerals on the list is supposed to be a good thing for mining companies, but the benefits are not obvious or quantifiable. Some argue that being on the list confers “soft” benefits, but permitting authorities like the EPA and Forest Service state explicitly that their process is the same whether the project involves critical minerals or not.
This might suddenly be changing, however. In February of this year, within a day or two of Russia’s invasion of Ukraine, the Biden administration issued an executive order requiring US agencies to “prioritize production and processing of certain critical minerals.” While we don’t yet have case studies on what this will look like, it may be a sea change. And if you’re shocked it came from a Democratic administration, you’re in good company!
It now seems a reasonable bet that projects involving critical minerals may see expedited permitting and at least some relief from red tape. It’s also probable that the critical minerals list will expand, since as US relations with Russia and China deteriorate, US vulnerability to supply chain disruptions is growing. According to Forbes, if we break down the 90 minerals tracked by the USGS, the US is 50% import-dependent for 50 of them, and 100% import-dependent for 20. This is truly an Achilles’ heel of the US economy and military.
The threat posed by US reliance on foreign minerals is not abstract. In February of this year, in retaliation for US support of Taiwan, China banned rare earth exports to Raytheon and Lockheed Martin, forcing the latter to temporarily suspend production of the F-35 fighter jet. While some of those rare earth elements are now being re-sourced from other countries, it’s a process that can take months or years – which would be a real problem in wartime.
This example illustrates the gravity of the issue, and explains why politicians are taking note; it also explains why the process of designating critical minerals needs to become more dynamic.
A case in point is potash, 40% of which comes from Russia and Belarus, and all of which is now subject to sanctions. Potash was on the critical mineral list in 2018, came off the list in 2022 (because supply chain risk was deemed benign), and now should arguably go back on the list tomorrow. If the US is serious about the risk of foreign mineral dependence, the USGS may need to start working overtime.
Although it’s an imperfect document, the critical minerals list is carefully considered and may now become a bigger factor in the mining industry. The recent executive order looks like one of the few issues in Washington that can enjoy bipartisan support, and if the federal government follows through on pledges to “prioritize production and processing of….critical minerals,” expect the designation of critical minerals to become more politicized. Miners might want to start shopping for lobbyists, since the critical minerals list looks likely to become more….well…. critical.
- Aluminum, used in almost all sectors of the economy
- Antimony, used in lead-acid batteries and flame retardants
- Arsenic, used in semi-conductors
- 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
Source: United States Geological Survey.
Robert ("Bob") Scannell has broad experience in finance, capital markets, economics, and investment management. Bob is managing partner at a family office investing in emerging ... <Read more about Robert Scannell>