US-Russia trade unlikely to recover 'in my lifetime' – senior State official

The US is unlikely to resume normal trade relations with Russia "in my lifetime," a senior State Department official told S&P Global Commodity Insights in an interview about international efforts to secure minerals.

Jose Fernandez, the State Department's undersecretary for economic growth, energy and the environment, leads US participation in the Minerals Security Partnership. The collaboration of 13 countries and the EU was formed to spur public and private investment to diversify mineral supply chains worldwide.

Fernandez, who was appointed by President Joe Biden and confirmed by the Senate in 2021, said the US must reduce global reliance on China for key metals. And Moscow's ongoing war in Ukraine has pushed the US and other global players to limit business with Russia — a major producer of cobalt, copper and other minerals critical to the energy transition — for the foreseeable future, Fernandez said.

"Never is a long time, right? I can't speculate," Fernandez said during a March 8 interview. "[But] I cannot see in any time, certainly in my lifetime, Russia becoming a reliable supplier of anything."

The Russian embassy did not respond to a request for comment on long-term trade relations with the US.

Alternatives to China

The need for the minerals necessary to transition to cleaner energy puts the United States in a "vulnerable place right now," Fernandez said.

The US and its trade partners need those minerals, but "we also have to face the fact that a majority of them, in some cases, almost 100% of them are owned, controlled, or mined by and processed by the People's Republic of China," Fernandez said.

The US and its partners are not decoupling from China, Fernandez added. Instead, he wants to "de-risk" through investment and aligning policies with partners and allies.

"What we're trying to do in the mineral space is basically provide countries with an alternative," Fernandez said. "To provide countries with an alternative that we believe will be more attractive to them than that of our competitors."

Biden made similar remarks during the State of the Union address on March 7, saying the US is "standing up against China's unfair economic practices."

"We want competition with China, but not conflict," Biden said. "And we're in a stronger position to win the competition for the 21st century against China, or anyone else for that matter."

One of the pillars of the Minerals Security Partnership, Fernandez said, is a focus on projects meeting a high bar of environmental, social and governance standards.

"This is a competition, but we're aiming to create a race to the top," Fernandez said. "If we are successful, that race to the top will include China, and countries will benefit from the fact that we will all have to follow the highest ESG standards."

Industry doubt

There is a "massive gap" between the Biden's stated supply chain and energy priorities and the administration's efforts to obtain the necessary minerals, said Ashley Burke, senior vice president of communications at the National Mining Association, a US-based trade organization representing mining companies.

"We have abundant domestic reserves, and Congress clearly intended to use the [Inflation Reduction Act] to boost domestic sourcing for our supply chains, yet we're seeing taxpayer dollars sent overseas through US deals to source minerals from trade partners instead of here at home," Burke said.

Burke said the administration is approving too few new mines in the US while removing thousands of acres of mineral-rich lands from potential development and incentivizing mining abroad.

"To be clear, I don't think we can solve the China problem exclusively through domestic mining — the need is too immediate," Burke said. "With a strong domestic foundation, we can then look to ally sourcing, recycling and other responsible ways to secure our supply chains and decrease reliance on both China and Russia."

Projects moving forward

The State Department first announced the Minerals Security Partnership (MSP) in June 2022. Since its inception, it has completed six deals, which Fernandez calls "lightning fast" for the mineral space, and is looking into 23 other projects.

"This is a work in progress. It is only the beginning," Fernandez said. "We're getting new projects literally every week."

Members of the MSP include Australia, Canada, Estonia, Finland, France, Germany, India, Italy, Japan, the Republic of Korea, Norway, Sweden and the UK, US and EU. During the Prospectors and Developers Association of Canada's annual convention on March 4, the government organization kicked off an initiative called the Minerals Security Partnership Forum, which Fernandez said has already engaged in conversations with over 20 countries that are not members of the partnership, with the goal of facilitating discussions between governments and companies.

"Ultimately, we take our lead from the private sector, and it's the private sector that has to tell us which critical mineral projects they are interested in pursuing," Fernandez said. "Once they have done that, they come to us for support, be it financial support, be it advocacy, be it regulatory help."

Foreign countries with mining concessions they want to auction can reach out to the MSP for leads on companies that might be interested.

"They will come to us, hopefully, so that we can act, in a way, almost as their publicist," Fernandez said. "We can then reach out to our companies, over 100 companies, and see if they're interested."