Strategic Materials –
Section 1: Introduction
The United States faces a mounting national security challenge due to its heavy reliance on foreignâcontrolled supply chains for critical minerals that underpin defense systems, clean energy technologies, and advanced manufacturing. Despite policy measures like the CHIPS and Science Act, the Inflation Reduction Act, and Executive Order 14241, progress remains uneven. Geopolitical shocks—such as Russia’s invasion of Ukraine and China’s export restrictions on gallium, germanium, and antimony—have exposed the strategic costs of U.S. inaction. This paper frames the problem by tracing how decades of offshoring and regulatory complexity have left the DIB ill-prepared for a surge in demand during a major crisis.
Section 2: From Critical to Strategic:
Defining the Problem “Critical minerals” and “strategic materials” are related but distinct categories: the former is defined by economic importance and import vulnerability, while the latter focuses on materials essential for military readiness during emergencies. To sharpen analysis, the scope is narrowed to those minerals where China controls a dominant share of mining, refining, or processing and which are indispensable to U.S. defense systems—chiefly rare earth elements, lithium, cobalt, nickel, gallium, and germanium. By isolating minerals at the nexus of Chinese leverage and U.S. defense necessity, the paper targets the most acute supply chain risks.
Section 3: Strategic Environment: EO Attempts to Address Challenges A series of Executive Orders (EO 13817, EO 14017, and EO 14241) have sought to bolster domestic production, refining, and recycling capacity for critical minerals. Yet the United States remains 100 percent import-dependent for twelve key minerals and significantly reliant on foreign midstream processing for dozens more. Bottlenecks—lengthy permitting under NEPA, fragmented regulatory roles across DOE, DoD, DOI, and DOC, and limited innovation commercialization—continue to deter private investment. Meanwhile, China’s state-backed, vertically integrated model outpaces U.S. efforts in R&D, workforce development, and rapid project execution, leaving critical gaps in supply chain resilience.
Section 4: U.S. Industrial Structure:
Can We Compete? Applying the Structure-Conduct-Performance framework reveals that the U.S. critical minerals sector is hampered by a fragmented domestic mining base, scant midstream processing, and siloed government oversight. Risk-averse behavior among U.S. firms—driven by permitting uncertainty, lack of offtake guarantees, and long payback periods—yields underinvestment in new capacity. As a result, U.S. performance lags: the country refines only about 1 percent of global rare earth oxides, and project timelines average 10–15 years. Executive Order 14241’s whole-of-government intent has not yet translated into fundamental change in industry behavior or investment signals.
Section 5: Global Landscape:
Allies, Opportunities, and Vulnerabilities Building resilient supply chains requires leveraging “friend-shoring” with trusted partners and investing abroad in under-served regions. Key allies such as Australia, Japan, Canada, and EU members offer diversification opportunities through joint ventures, offtake agreements, and 5 coordinated policy frameworks. Beyond traditional partners, Latin America (Chile, Argentina, Peru) and frontier zones (DRC, Zambia, Angola, Greenland, Ukraine) present vast reserves but pose governance and infrastructure risks. EO 14241 calls for allied cooperation, yet the U.S. must deepen strategic economic relationships to counter China’s global investments and influence.
Section 6: Mobilization Readiness:
The DIB’s Strategic Risk The U.S. Defense Logistics Agency’s National Defense Stockpile (NDS) covers only about 6 percent of critical mineral needs under a major surge scenario, while DPA Title III interventions remain reactive and under-resourced. Digital forecasting tools and institutional authorities are insufficient to anticipate shortfalls or preposition materials in crisis. Despite DPA’s potential, funding thresholds, notification periods, and limited predictive analytics constrain its effectiveness. The current state of readiness falls far short of the 6–12-month surge window required in a high-intensity conflict.
Section 7: Policy Gaps & Recommendations:
Although recent legislation and EOs signal intent, fragmented governance, market failures, permitting delays, and workforce shortfalls persist. Section 7 identifies these gaps and introduces a strategic framework of priority areas to operationalize a whole-of-government response: centralized coordination, financial incentives, permitting reform, allied partnerships, recycling innovation, stockpile modernization, and talent development.
- Establish a Centralized Critical Minerals Processing Authority codified within the Executive Office to align agencies, streamline permitting, and coordinate public-private engagement.
- Deploy Targeted Tax Credits, Offtake Agreements, and Price Stabilization Mechanisms such as expanding 45X credits to midstream refineries; introduce magnet production and recycled-content tax incentives; create a futures market.
- Modernize and Accelerate Permitting Reforms by imposing statutory NEPA deadlines, expanding categorical exclusions, instituting expedited pathways for “critical mineral infrastructure,” and funding environmental review staff.
- Expand Eligibility for Strategic Partnerships and Financing Tools under DPA Title III and the Mineral Security Partnership to include additional trusted partners and create a new DFC-style investment vehicle for infrastructure and exploration risk mitigation. • Establish a National Rare Earth Elements Recycling Strategy with a dedicated R&D fund, procurement guarantees for recycled content in defense contracts, and decentralized recycling infrastructure grants.
- Modernize the National Defense Stockpile by granting DLA multiyear contracting, preposition supplies, stabilize funding, and upgrade digital forecasting and AI analytics. Amend the Strategic and Critical Materials Stockpiling Act to authorize advanced procurement, waiver authorities, and consistent multi-year budgets. Implement a cloud-based, AI-driven Risk Assessment and Mitigation Framework (RAMF-SM) integrated with DoD analytics for proactive supply-chain stress-testing and dynamic stockpile management using predictive models.
- Develop a Resilient Talent Base via REE-focused curricula at technical institutes, expanded grants and internships, DoD SkillBridge for transitioning service members, and community engagement incentives to rebuild a mining and materials workforce.
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