10.01.20

Senior DOD Official Commits to Sullivan to Produce Plan on a U.S. Stockpile of Critical Minerals to Combat China

Commitment comes one day after President Trump issues executive order on securing America’s critical minerals supply chains

WASHINGTON, D.C.—U.S. Senator Dan Sullivan (R-Alaska), chairman of the Senate Armed Services Subcommittee on Readiness and Management Support, chaired a hearing today on the integrity of America’s critical minerals supply chains, one day after President Donald Trump issued an executive order (EO) on addressing the threat of U.S. reliance on foreign adversaries for these important minerals and metals. In the hearing, Sullivan pressed Under Secretary of Defense for Acquisition and Sustainment Ellen M. Lord on steps the Pentagon and the administration are taking to prevent China from seizing complete control of mineral markets critical to U.S. national security, particularly rare earth elements. Under Secretary Lord committed to providing Sullivan and the subcommittee with a plan, within 30 days, for establishing a domestic stockpile of critical minerals, similar to the Strategic Petroleum Reserve (SPR).

“With the rise of China and great power competition, and the global COVID-19 pandemic, the vulnerabilities and gaps in our supply chains, particularly as it relates to national security, have taken on new urgency,” said Senator Sullivan. “Highly technical weapons systems, as well as consumer electronics…increasingly have a role in warfighting and are increasingly reliant on Chinese supply chains. One area of supply chain integrity that is particularly important to me, and I think the rest of the country, is our supply of strategic critical minerals and metals that go into many of our modern-day electronics and our modern-day weapons. The key issue on this is that we know we're reliant on China. In many cases, we, the United States of America, actually have these critical minerals—for example, in the great state of Alaska—and we actually mine them and process them [using] much higher environmental standards than the Chinese…and I think people are starting to recognize that.”

Senator Sullivan highlighted findings from the President’s EO, including the fact that the United States imports more than half of its annual consumption of 31 of the 35 minerals that are most important to the U.S. defense industrial base. Additionally, the U.S. has no domestic production for 14 of these critical minerals.

“In the 1980s, the United States produced more of these elements than any other country in the world and, by the way, we still have them in my state. Bokan Mountain is an example,” said Senator Sullivan.

In his first line of questioning, Sullivan asked Under Secretary Lord about China’s actions to strategically flood the global market for rare earth elements in order to displace its competitors, a vulnerability the President’s EO also recognized.

“Every time another supplier, whether in the United States or somewhere else in the world, looks like they are going to be able to start mining and producing, the Chinese flood the market to destroy their competition. It’s outrageous,” said Senator Sullivan. “Can you talk about this dependence on critical minerals and how it affects the integrity of our defense industrial base and what are we doing about it?...We are very vulnerable to our biggest strategic adversary in the world who has no qualms about playing hard ball.”

“What we can do today is begin the mining and processing…[and] we can think about stockpiling some more of these,” Under Secretary Lord replied. “We need the authorities to move forward with these, in some cases, and we certainly need appropriations…We actually have worked through OMB (Office of Management and Budget) and have submitted to Congress and hoped to see another appropriation to DOD under the CARES Act, and we actually had submitted $5 billion for another DPA (Defense Production Act) Title III appropriation, because our industrial business council has a very long list of critical frugalities that we are trying to address. Rare earth is our key one.”

In his next round of questions, Senator Sullivan noted that the Strategic Petroleum Reserve was created in the 1970s following an oil embargo by several Arab nations and asked what lessons could be learned to better address the current constraints on critical mineral supplies. 

“How does that Strategic Petroleum Reserve differ from the National Defense Stockpile and should the National Defense Stockpile be expanded to take on a role similar to the Strategic Petroleum Reserve?” asked Senator Sullivan. “Would you need…authority or funding? Is there a pathway to make that happen? Let me just mention that would of course provide security, but also market certainty.”

“There is already a lot of work going on to look at expanding the National Defense Stockpile to include more rare earths and to look at that as a national resource,” replied Under Secretary Lord. 

Senator Sullivan followed up and pressed Lord further, seeking a commitment to move forward on a strategic reserve of critical minerals. 

“Congress played a huge role in setting up the Strategic Petroleum Reserve. We really need to get on this and I think the SPR, with the energy sector, is a great analogy for strategic critical minerals. What do you need from us?” asked Senator Sullivan.

“I would like to look into that to give you specifics to see what authorities,” replied Under Secretary Lord. “It would obviously take some authorities and some appropriations to do that, but I would like to take that on and get back to you within a month.”

To close out the hearing, Senator Sullivan voiced the opportunity he sees to counter China’s nefarious actions impacting the U.S. supply chain, and create new opportunities for American workers in the process.

“The whole issue of supply chains, the rise of China, COVID—it is outrageous that we are so reliant on the Chinese right now,” said Senator Sullivan. “Their calculated attempts to keep supply chains dependent on them has to stop, and I think you are in a perfect position to do that. I think there is strong bipartisan support and resolve to help the Department of Defense do that and to create supply chains that are not just secure for our national security, but also to help American workers. These are all great jobs. The mining sector in my state has an average wage of $100,000 per worker. These are great jobs. If we do it better than anybody else with higher environmental standards clearly than the Chinese, who trash their environment when they mine…We should bring that home and I think we have a great opportunity here.”

In June, the Senate passed the Fiscal Year 2021 National Defense Authorization Act (NDAA) which includes two Sullivan-authored amendments to address the United States’ rising critical mineral dependence on China and other foreign countries, setting forth U.S. policies to achieve ambitious 10-year critical mineral goals and requiring the Department of Defense (DOD) to produce a study on U.S. defense critical mineral needs. 

To watch the full hearing, click here.

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