Reshoring Isn't Enough | Opinion

To its credit, the Biden administration has been, from the very beginning, both consistent in its messaging and correct in its analysis of the importance of critical minerals. They are not only needed to meet ambitious climate action goals, but as one White House document recently put it, "the building blocks for many modern technologies are essential to our national security and economic prosperity." The problem, however, is that the White House does not go far enough in its proposed fix, focusing almost exclusively on developing a "made in America" supply chain that will never be sufficient to meet the current demand for these strategic materials, much less the 400-600 percent growth in demand over the coming decades that the administration itself projects.

The Biden administration's 100-day supply chain assessment revealed the threat to national and economic security that disruptions could wreak, singling out the market dominance over strategic commodity supply chains gained by China through "questionable environmental policies, price distortion through state-run enterprises to minimize competition, and large subsidies."

In response to this state of affairs, the administration has sought to encourage domestic production through expanded mining, processing and recycling. The political attractiveness of "reshoring"—bringing back home the sourcing of these important inputs rather than relying on imports, especially from potentially hostile suppliers, is justified. Further, a midterm election year, coupled with President Joe Biden's promise to create good-paying union jobs, provides the impetus to expand domestic production.

The problem, however, is geology. For an overwhelming majority of the 50 minerals deemed "critical" on the updated list published recently by the secretary of the Interior, the United States does not even rank as one of the top five producers.

Cobalt, which, in combination with lithium, is a critical component of rechargeable batteries used for everything from smartphones and laptops to electric vehicles and the storage of energy from solar, wind and other renewable sources. According to U.S. Geological Survey data published this year, America possesses less than 1 percent of the world's reserves of the metal, and at current demand, would consume the entirety of its domestic supply in about six years. Despite President Biden invoking the Korean War-era Defense Production Act to secure a supply by "responsible domestic mining and processing," there is not enough cobalt domestically to meet present-day demand for electric vehicles and the administration's goal to reach net-zero greenhouse gas emissions by 2050.

As highlighted in a recent report for the Krach Institute for Tech Diplomacy at Purdue University, the responsible development of domestic resources is part of the solution; however, in most cases, the result will be insufficient.

Thus, the challenge is clear: ensuring that America's needs for critical minerals are met without leaving the U.S. vulnerable to being "held up" by an adversary like China, which has achieved dominance in the mining and processing of many of these strategic materials.

Going back to the U.S Geological Survey, slightly more than half of the world's cobalt reserves are in the Democratic Republic of the Congo (DRC). The country accounts for about 70 percent of global production. Virtually all of DRC's cobalt currently gets shipped off to be processed in China. I'd call that ironic for a "green economy," given the amount of carbon emitted by the trucks that haul the ore to ports on the Indian Ocean and the cargo ships that carry it to Chinese plants.

So, where do we go from here?

The U.S. should support supply chain diversification efforts, contributing to more robust governance and creating a level playing field for American companies. The U.S. should also encourage the development of facilities to process and refine the minerals in the DRC itself. Beneficiation, or processing, close to mines would be more environmentally friendly—especially when one also factors in the plentiful potential renewable energy resources (both hydro and solar) to power the industry. The move would also be geopolitically smart: there is negligible risk of Kinshasa holding up the cobalt supply chain in competition with Washington, which cannot be said about Beijing.

Sensible and sustainable efforts should increase domestic supplies of critical minerals, whether by mining or recycling. But these efforts alone won't meet the burgeoning demands for these materials vital for both decarbonization and technological innovation.

That's why the U.S. effort to secure its supply chain requires a broader vision that transcends a simplistic domestic and foreign sourcing dichotomy. This approach should be embraced as it relates to supply chain management, emphasizing geopolitical security and preventing China's increasing encroachment.

Ambassador J. Peter Pham is a distinguished fellow at the Atlantic Council, a senior advisor at the Krach Institute for Tech Diplomacy at Purdue University and previously served as U.S. special envoy for the Sahel Region and Great Lakes Regions of Africa.

The views expressed in this article are the writer's own.