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Ag Metal Miner

Ag Metal Miner

MetalMiner is the largest metals-related media site in the US according to third party ranking sites. With a preemptive global perspective on the issues, trends,…

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Can President Biden Avoid A Critical Metals Crisis?

President Joe Biden’s latest executive order seeks to secure a variety of important supply chains. For example, in one higher-profile case, General Motors recently announced it would extend downtimes at several plants as a result of a semiconductor shortage.

As we’ve noted in our Rare Earths Monthly Metals Index (MMI) series, rare earths supply has long been a point of concern for the US, particularly the Pentagon. (Recently, MetalMiner’s Stuart Burns delved into China’s overwhelming control of the rare earths processing market and indications Beijing is considering tighter rare earths export regulations.)

In that vein, the president’s latest executive order — his 33rd in just over a month in office, which the White House said he would sign Wednesday — aims to secure those critical supply chains.

The White House said the order focuses on six key areas:

  • the defense industrial base
  • the public health and biological preparedness industrial base
  • the information and communications technology (ICT) industrial base
  • the energy sector industrial base
  • the transportation industrial base
  • supply chains for agricultural commodities and food production

First 100 days

Meanwhile, the order calls for a 100-day review related to supply chain vulnerabilities for four key products:

  • APIs, or the active ingredient in pharmaceutical products
  • semiconductors
  • critical minerals
  • large capacity batteries, like those used in electric vehicles

Securing US supply chains for rare earths

Among the supply chains in question, as mentioned, is that of rare earths.

“Critical minerals are an essential part of defense, high-tech, and other products,” the White House said. “From rare earths in our electric motors and generators to the carbon fiber used for airplanes—the United States needs to ensure we are not dependent upon foreign sources or single points of failure in times of national emergency.”

Related: India's Largest Refiner To Invest $4.5 Billion To Boost Capacity

In January, the US took a small step toward that goal with the signing of a deal with Australia’s Lynas Rare Earths Ltd.

The Australian rare earths firm will build a light rare earths separation facility in the US. Lynas is the largest rare earths company outside of China.

The lack of domestic processing capability leaves the US exposed, as Burns explained.

“The US even sends its ores to China for refining,” Burns noted. “That’s not because it doesn’t have the technical know-how; the US simply lacks the facilities. Furthermore, China is more willing to tolerate the environmental damage from the dreadfully polluting refining process.”

Semiconductor supply chain shortage

As noted earlier, the latest supply chain challenge impacting US businesses is the semiconductor shortage.

In addition, the shortage is impacting the automotive sector, in particular.

Oliver Blume, CEO of Porsche, told CNBC’s “Squawk Box Europe” the shortage is “very serious” and could impact operations for months.

The latest executive order highlights the semiconductor shortage and its impact on automotive operations (and, in turn, on US workers).

“The United States is the birthplace of this technology, and has always been a leader in semiconductor development,” the White House said. “However, over the years we have underinvested in production—hurting our innovative edge—while other countries have learned from our example and increased their investments in the industry.”

The US-based Semiconductor Industry Association (SIA) welcomed news of the executive order. The association represents 98% of the US semiconductor industry by revenue.

“We welcome today’s executive order and stand ready to work with the Biden administration to ensure the strength and resilience of America’s semiconductor supply chains,” the SIA said. “As part of this effort, we urge the president and Congress to invest ambitiously in domestic chip manufacturing and research.”

Furthermore, the US’s share of global semiconductor manufacturing capacity has declined from 37% in 1990 to 12% today, SIA added.

By AG Metal Miner

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Leave a comment
  • Mamdouh Salameh on February 28 2021 said:
    Once the United States has set its mind on becoming self-sufficient in rare earth metals, it will achieve its goal in a record time.

    Meanwhile, there is a shorter route which is for President Biden to end the trade war with China and agree a reciprocal lifting of tariffs. This won’t only benefit both countries and the global economy at large but it will also ensure continued Chinese earth metals exports to the United States and generate a lot of good well between the two countries.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

Leave a comment




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