Homeland Security, Wikileaks, Jack Bauer — and Mason Graphite
In the torrent of U.S. Government diplomatic cables spilled out by Wikileaks beginning in early 2010 – ultimately 251,000 in all — one little-noticed document should be book-marked by all resource wonks: a cable sent by the U.S. State Department, providing a fleeting inside-look at something called the “Critical Foreign Dependencies Initiative.”
As the cable notes:
“In the USA Patriot Act of 2001 (42 U.S.C. 5195(e)) ‘critical infrastructure’ is defined as systems and assets, whether physical or virtual, so vital to the United States the incapacitation or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters.”
While the senders at State designated the cable “SECRET/NOFORN” (no foreign nationals) and marked it for de-classification in 2019, Wikileaks declassified it a little bit ahead of schedule, revealing an intriguing list of “Critical Infrastructure/Key Resources” outside of the U.S. “which, if destroyed, disrupted or exploited, would likely have an immediate and deleterious effect on the United States.”
On the list of Key Resources: Graphite mines — in Canada and China.
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The leaked cable is silent on how the U.S. Government might go about securing these “critical sites” (will Jack Bauer parachute in in the event of a crisis? There are some things even Julian Assange doesn’t know). As for China, it must be comforting for Beijing’s leadership to know that they have a graphite mine – and, scanning the list, much else besides – that the U.S. Homeland Security apparatus believes to be critical to U.S. “security, national economic security, national public health or safety.”
There must be something about graphite’s properties of superior conductivity and extreme heat-resistance that makes it key not only to the U.S. economy – but national security as well (think moderator rods and reflector components in nuclear reactors, and Radar Absorbent Material in stealth aircraft, to name just two). Now, the Critical Foreign Dependency list is just that – a list, lacking any detail or rationale. But if there’s some mystery about U.S. Homeland Security putting Canadian and Chinese mines on the list, there’s no doubt why there are no American graphite mines. There aren’t any.
Since the list leaked, things have gotten worse. The Canadian mine referenced in the once-secret cable — Timcal’s Lac des Iles property 250 km northwest of Montreal — stopped operations several months ago.
That leaves China’s graphite operations, already providing 70% of the world’s graphite and 75% of the graphite used to make steel. That’s a strong position from which to leverage commercial markets – and it’s equally useful should China’s leadership decide to use its graphite leverage for geo-political ends. All of which puts the U.S. dangerously close to the land of SPOF – in defense-speak, “Single Point of Failure:” A deficiency that renders an entire system – whether weapons or economic – unable to function. Were it not for Wikileaks, the public would be none the wiser about these dangerous dependencies.
That’s the national security context that makes last week’s announcement by Canada’s Mason Graphite — which in independent tests achieved 99% purity, without optimization, for its 100% flake graphite — noteworthy beyond its considerable commercial implications.
Mason’s resource averages over 20% carbon-as-graphite content – more than double the percentage of any other graphite mine operating today. As Ty Dinwoodie reported last week to InvestorIntel readers, “as a result, [Mason’s Lac Gueret project] is poised to be one of the lowest-cost flake graphite producers in the world.” Which means it’s time for the U.S. State Department to update its Critical Foreign Dependencies cable, or perhaps they already have. Only they – and Julian Assange – know for sure.
The lesson here: A stable supply of graphite is important, and increasingly so. The commercial case for high-quality large flake graphite like that found at Lac Gueret will help meet growing demand, driven by lithium-ion batteries – requiring 10 times as much graphite as lithium – and, in the decades ahead, traditional refractory uses to meet rising steel demand spurred by the middle-class expectations of 3 billion newly-minted consumers in China, India and elsewhere in Asia.
So yes, when it comes to graphite, markets are watching, manufacturers are watching – and governments are watching, too, even if they wished we didn’t know it.
That’s life as a critical commodity. Congratulations: You’re on the list. The world’s Big Brothers have their eyes on you. As for Mason Graphite, as they move their project forward, they may want to keep an eye out for Jack Bauer. The good news is, Kiefer Sutherland’s already got his Canadian passport. There’s going to be a lot of interest in near-pure graphite flake.
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