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Murkowski says US must prioritize mineral supply chain to reduce import reliance

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Murkowski says US must prioritize mineral supply chain to reduce import reliance

The United States's reliance on other countries for critical minerals and rare earth materials could be reversed if the country prioritizes its own supply chain, according to one of the leading U.S. Senate advocates for domestic mineral production.

Speaking before attendees at a Nov. 13 discussion about the economic and national security importance of these resources, U.S. Sen. Lisa Murkowski, R-Alaska, said the nation could alleviate its mineral import reliance if the federal government makes doing so a priority. The U.S. imported more than half of its consumption of 48 nonfuel mineral resources in 2018 and imported 100% of 18 of those minerals, according to a report this year from the U.S. Geological Survey.

"It can be reversed, but it has to come with a prioritization by an administration, a prioritization by the Congress, a prioritization by the industry," the senator said. "We need to be able to provide industry again with that level of certainty to provide them with just a little bit of help when it comes to the permitting process."

Murkowski, who chairs the Senate Energy and Natural Resources Committee, as well as government officials and experts working with the industry, noted during the event the economic benefits of increased domestic mineral development and the potential national security risks if action is not taken to reduce the nation's reliance on adversarial nations to provide these resources, especially amid the trade war with China. Several also said the U.S. needs to invest in the entire mineral supply chain, rather than simply focusing on the initial mining process and final manufactured products.

The senator said her bill, the American Mineral Security Act, as well as President Donald Trump's 2017 executive order regarding critical minerals, were good first steps toward addressing reliance. The issue has also drawn more attention recently.

"It's interesting to me how quickly this has risen in the halls of Congress in terms of discussion as an issue, as a priority and really out there in the public," Murkowski said. "I think it really has risen to a level of interest and concern that is important because ... how you get political action is when it's recognized as an issue and it needs to be prioritized."

Several representatives from various departments of the Trump administration said the president and Vice President Mike Pence see ensuring the nation's supply of critical minerals as a top priority and a national security issue.

Melissa Simpson, deputy assistant secretary of the U.S. State Department's Bureau of Energy Resources, said on a panel that the department is worried that some of the nations controlling these mineral reserves may not be open to business with the U.S. China dominates the global rare earths market.

"We want to look at where our domestic mining sector can be investing in other countries and start helping them create some best practices that would be more attractive to U.S. investment," Simpson said.

Casey Hammond, acting assistant secretary of land and minerals management with the U.S. Department of the Interior, told attendees that agencies looked at the nation's reliance on various minerals and their supply chains, identifying a list of 35 critical minerals. Hammond said the government is now working on an action plan identifying how the U.S. is going to "solidify that supply chain from within the United States."

The administration is also working to streamline the permitting process for mines. At the start of the Trump administration, an environmental impact statement required under the National Environmental Policy Act took about four years to complete and often totaled about 1,500 pages, Hammond said. Now, those reports take slightly more than a year and are usually about 150 pages.

"What that's going to provide moving forward is regulatory certainty and predictability for developers," Hammond said. "It's really unfortunate the number of times I've heard from developers that said, 'We just will not work on federal land.' It's just not worth their time."

Other experts chided the government, arguing that more needs to be done to support the entire minerals supply chain. Republicans are often supportive of the mining sector, and Democrats tend to tout renewable energy sources and electric vehicles that contain mined materials, but there is little overlap between the two political parties supporting all stages of mineral development, processing and manufacturing, said Robbie Diamond, president and CEO of Securing America's Future Energy, an organization seeking to mitigate economic and national security threats from the nation's oil reliance.

While there are discussions about minerals, these conversations are not connecting those resources to the markets, Diamond said. The federal government has taken "baby steps" on mineral development, while China has taken "huge leaps."

"I think, until we have a comprehensive plan that's not just about permitting or saying that we need the minerals, but a plan that shows the use of those minerals in the U.S. as a market, we will not develop the supply chain to provide enough certainty to weather the ups and downs of the capital market quarter to quarter," Diamond said in an interview.

Given how far behind the U.S. is on this front compared with other countries, the government will need to kick start the change, Diamond said.

Emily Hersh, a lithium industry expert and managing partner of DCDB Research, a division of financial consultant DCDB Group, said capital markets in the U.S. are less likely to invest in mining because the industry ties up capital for extended periods rather than immediately offering high returns.

"U.S. investment craves liquidity above all else, and U.S. investment sacrifices, if you will, all other areas at the altar of this need for liquidity," Hersh told S&P Global Market Intelligence following a panel discussion. "And liquidity means the ability to pull your capital out at any moment, and that's just not how mines work, and they won't work that way. You need to tie your capital up for a few years."