US State Department launches online tool to stake claim to world's rare earth minerals

March 2, 2020

In a high-tech twist on hammering pickets into the ground, the U.S. State Department has helped launch an online tool aimed at staking America’s claim to many of the world’s rare earth minerals, according to Bloomberg News.

The United States has become increasingly concerned about securing a stable supply of critical minerals used in car batteries, solar panels and wind turbines. Many of those resources are located in emerging markets that may be seen as too risky by American investors looking for best-in-class standards.

That raises the potential for “two really bad outcomes,” Francis Fannon, the U.S. assistant secretary of state for energy resources, said in an interview. “Either the world will not get the minerals it needs in order to fuel energy transition technologies,” or “that investment would only come from those who are less concerned about governance issues, transparency, corruption, environmental standards and best practices.”

The new initiative is designed to address these problems by giving countries with nascent resource industries an online toolkit to help them develop assets in a way that will allow them to meet the standards of U.S. investors.

Fannon made the comments ahead of the annual convention of the Prospectors & Developers Association of Canada (PDAC) in Toronto, at which the online toolkit is being launched.

By 2050, as much as 24 percent of the world’s electricity will be used to power electric cars, and solar and wind energy will provide almost half the world’s electricity, BloombergNEF predicts. Many of the minerals required for decarbonization are used in other high-demand products, including smartphones. As just one example, BNEF forecasts nickel demand from lithium-ion batteries alone will grow 15.6 times between 2018 and 2030.

China, which already produces roughly 70 percent of the world’s rare earth minerals, supplied about 80 percent of America’s rare earth imports from 2015-2018, according to the U.S. Geological Survey. State-owned Chinese companies have also been active buying up critical mineral deposits outside the country.

“Africa is a huge continent for a lot of these critical minerals and the Chinese have been making heavy advances in that area, offering support and offering investment,” Colin Hamilton, managing director of commodities research at BMO Capital Markets, said last week on the sidelines of a conference in Florida. Meanwhile, coronavirus has crystallized America’s determination to diversify its supply chain of key materials and products, he said.

Last year, the State Department’s Bureau of Energy Resources launched an international partnership, the Energy Resources Governance Initiative, to encourage responsible mining of key minerals.

At the height of the trade war between the United States and China, China suggested it could restrict the export of some rare earth minerals. Those concerns have eased with the signing of a phase-one trade deal, but Trump remains determined to ramp up domestic production and form partnerships with other countries to secure supply. American production rose 44% last year.

“We know that reliance on one country for anything, or any one source, exposes all customers to a risky supply chain, if there were a supply disruption of any type,” Fannon said. “The earth’s crust is blessed with good rocks everywhere. It’s what’s above the ground that will help determine whether a U.S. firm — a best-in-class company — will invest in that country.”
 

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