U.S. miners irked that Pentagon mineral stockpile plan bypasses them

Texas Mineral Resources

24/02/2022 21:19

By Ernest Scheyder
    Feb 24 (Reuters) - U.S. miners are clamoring for Washington
to approve new domestic sources of minerals used to make
weaponry, electric vehicles and other high-tech gadgets,
frustrated that the Pentagon is working with non-American
companies to stockpile the materials.
    Reuters reported last week that the U.S. Defense Department
plans to boost its reserves https://www.reuters.com/world/us/exclusive-pentagon-boost-rare-earths-lithium-stockpiles-sources-2022-02-18
 of lithium, cobalt and other minerals to reduce its dependence
on China. President Joe Biden confirmed the plan at a White
House ceremony https://www.reuters.com/business/energy/biden-set-tout-us-progress-critical-minerals-production-2022-02-22
 this week.
    Several companies working to open U.S. mines have sought to
supply the Pentagon, hoping military deals will help secure
other customers and financing. But even the most advanced of
these projects are several years away from opening.
    This presents a chicken-or-egg scenario for the military.   
 The Pentagon has taken an "all-of-the-above" approach, noting
Congress has deemed supplies from allies acceptable if no
domestic supply exists. A White House official said government
policy is to source products domestically first, if able. 
    American miners are frustrated the Pentagon is looking to
Canada, Australia and elsewhere.
    "What I would encourage the Biden administration to do is to
focus on getting a few of these U.S. projects approved and
finished," said James Calaway, chairman of ioneer https://www.reuters.com/article/us-usa-mining-insight-idINKCN2AT39Z
 Ltd  INR.AX , which aims to build one of the largest U.S.
lithium mines. 
    "The military should be contacting us and having serious
conversations about how we can help boost domestic lithium
supply." 
    Russia's invasion of Ukraine https://www.reuters.com/world/europe/ukraine-russia-what-you-need-know-right-now-2022-02-24
 added further impetus to the push. Russia supplies about 10% of
the world's nickel, which is used to make stainless steel and EV
batteries, and is also a major producer of iron ore, platinum
and other metals.
    The Pentagon has not yet reached out about the stockpile to
ioneer or Lithium Americas https://www.reuters.com/business/environment/us-judge-rules-lithium-americas-may-excavate-nevada-mine-site-2021-07-24
 Corp  LAC.TO , which is also developing a large U.S. lithium
mine.
    "Stockpile purchases cannot completely sustain a new
 domestic  source of supply, but they can act as an important
catalyst to reduce our dependence on unreliable foreign
sources," a Pentagon official said.   
    The National Mining Association, a trade group for U.S.
miners, acknowledged that the Pentagon must source some metals
from overseas, but said Biden should move faster to permit
domestic mines to ensure long-term supplies.
    "There are ample domestic resources and extremely promising
projects that are currently in the permitting process awaiting
approvals from the administration," said NMA President Rich
Nolan. He warned that permitting could be further delayed by
Biden's attempt to change U.S. mining laws https://www.reuters.com/business/energy/biden-set-tout-us-progress-critical-minerals-production-2022-02-22,
 which have not been updated since the 19th Century. Biden has
said any new U.S. mine must benefit local communities and not
damage the environment.
    "These projects would begin the urgent task" of increasing
domestic supplies, Nolan said.
    On Tuesday, Biden gave MP Materials Inc  MP.N  a $35 million
Pentagon grant to help build equipment to process rare earth
minerals in California. The company currently relies on Chinese
processors https://www.reuters.com/article/us-usa-rareearths-insight-idUKKCN2241KF
 and Chinese customers for all of its revenue.    
    The Las Vegas-based company declined to comment on whether
the Pentagon has asked it to eventually supply the stockpile,
but said it aims to "support the strengthening of the defense
industrial base."
    Even as they try to develop domestic supplies, many U.S.
mining executives conceded their industry is caught up in the
latest geopolitical struggles over control of the minerals that
will power technologies of the future.    
    "I think I know which way the wind is blowing, but it's an
 midterm  election year," said one industry CEO, who declined to
be named citing a desire not to offend elected officials. "The
business we're in now is all politics."

 (Reporting by Ernest Scheyder in Houston; additional reporting
by Trevor Hunnicutt and Mike Stone in Washington; Editing by
David Gregorio)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))