GOOD MORNING FROM LONDON
RARE EARTH MINERALS – THE U.S. HEADACHE.
THE NEW YORK TIMES
“For many years, while China strategically secured minerals from around the world, the United States rarely used foreign policy to obtain the minerals it needs. That has finally changed — and dramatically so. Within the first 40 days of President Trump’s term, he has expressed interest in acquiring Greenland for its rare earths; annexing Canada, with its vast reserves of uranium and copper; and securing control over Ukraine’s rare earths and titanium in exchange for continued U.S. support.
Incorporating minerals into foreign policy is crucial for U.S. national security. However, without dedicating government investment and diplomatic resources — as China has done — this initiative remains a hollow effort and may fail to deliver any results.
With less than 2% of the world’s reserves of rare earths, graphite, cobalt and nickel, the U.S. must work closely with resource-rich nations to make sure U.S. companies can get the minerals they need to build phones, batteries for electric vehicles and semiconductors. China has similar challenges and has made minerals diplomacy central to its foreign policy. Despite accounting for only 1%-10% of global lithium, cobalt, nickel and copper production, China imports enough to process more than 65% of some of these metals and approx. 90% of earths. This level of control is the outcome of years of strategic industrial planning and foreign policy efforts by Beijing.
The U.S. has seemingly minimal knowledge of Ukraine’s underground resources. There is no modern mapping of the country’s rare earth deposits; the most recent surveys are believed to have been conducted 30-60 years ago. by what was then the USSR. Without up-to-date geological data, it is impossible to determine whether these resources are economically viable for extraction. If the ore grade is too low, the deposits are too small or the byproducts are not valuable enough, private companies are unlikely to invest the $500m to $1bn needed to develop a mine and separation plant.
To make minerals diplomacy more effective will require a willingness by the U.S. not just to strike deals but also to spend and invest, over a long period, in countries that have the mineral resources the U.S. needs. China did not build the significant competitive advantage it holds in electric vehicle manufacturing by reducing spending. One analysis found that between 2009-2023, the Chinese government allocated at least $230.9 bn in subsidies to help develop the nascent industry. The fruits of that effort are apparent in the domination of China BYD’s electric vehicles worldwide.
So how should the American government spend the resources needed to build a competitive minerals diplomacy strategy?
First, the U.S. should increase its geological mapping and reduce exploration risks in key regions. The U.S. Geological Survey could also place their attachés in embassies, to work alongside geological surveys and mining ministries in host countries,
Second, the United States needs to help build roads, bridges and other infrastructure in mineral-rich places. Mining is one of the most energy-intensive sectors in the world. One of the challenges with mining in Ukraine, for example, is the fact that missile and drone strikes have damaged about half of that country’s power stations.
Any government-to-government cooperation agreement is useful only if it stimulates investment by private mining companies, which develop those minerals into a form that companies like Apple and Tesla can use. But the world’s most resource-rich nations, such as the Democratic Republic of Congo, are not easy places for businesses to operate.
China has long aligned its infrastructure investments to mineral investments. Under the 2007 Sino-Conglais Agreement Chinese companies gained access to cobalt, copper and other minerals in exchange for the development of infrastructure, such as roads and hospitals. The Chinese consortium pledged more than $6.5 billion for infrastructure projects, securing mining rights to deposits near Kolwezi in the southeastern region of the Democratic Republic of Congo, which were estimated to be worth $93 billion. As a result, China now owns or has stakes in 15 of Congo’s biggest copper and cobalt mines.
Mining is a long and costly process. If America is to be a global leader in the minerals it needs for national, economic and energy security, it will have to go beyond signing agreements. In Ukraine and elsewhere, does the U.S. have the strategic diplomacy and substantive investment to deliver the mineral security the United States is looking for?
GRAHAM PERRY COMMENTS;-
The question for America. Does it have staying power? Does it have focused political stability? Or does the very high-wire risk of Trumpism Politics diminish the very enthusiasm for expansion that it seeks to create. Will Trump become the very author of his own under-achievement?
In the long term, whether the topic is rare earths, foreign travel by PRC citizens, semiconductors or global maritime fleet development, China is active. Its Government liaises with China’s industrialists – State and Private. Its plans are discussed, reviewed, agreed and implemented. Its achievements come about because of initiative, imagination, discussion, correction and adjustment.
It points to a much under-appreciated aspect of China’s development – namely – its policy co-ordination is formidable. The Party decision-makers are invested with enthusiasm and determination. And nationalism plays its role as well. The Chinese are patriotic and its national effort is infused with collective and clear sighted goals. The Century of Humiliation is a key part of China’s Rare Earths mindset.
This has much to do with the political leadership in Beijing – this is the start with Rare Earths. And where does it end? In the Democratic Republic of Congo, Peru, the South Pacific Islands and the South China Sea.
The anti-China media is obsessed with the “Chinese threat”, “Chinese expansionism”, “Chinese infiltration”, “Chinese takeover”. It misses the point. China is on the move and its momentum creates its own dynamic which, when allied to a spirit of change and entrepreneurial initiative (800+ Billionaires), creates significant and substantial movement. The West does not get it. There is no magic wand. It is clear-headed progress, assessment and review followed by more progress, more achievement and more review.
And here is the final point – China knows what went wrong with the Great Leap Forward, the Cultural Revolution and the 1989 Tiananmin Deaths. The bad experiences are not hidden from view or consigned to history. On the contrary, they are ever-present reminders of what happens when the leadership gets it wrong. China is where it is today because of its painstaking analysis of the errors, the mistakes, the chaos – Yes and especially the deaths of yesterday.
GRAHAM PERRY
CHINA POST #563 WILL FOCUS ON THE CLOSING DOWN OF THE VOICE OF AMERICA
