A Look at Natural Resource Dependence

An interesting article in The Washington Examiner looks at a new report (PDF) documenting the availability of minerals and metals that are critical to U.S. national security and manufacturing needs. Unsurprisingly, the government seems to have a disjointed approach to this issue, with lots of overlap from different agencies:

To consult official U.S. Government statements on the issue of strategic materials is to discover immediately that the federal government does not speak with a single voice. In recent years, no less than seven departments or agencies – the Government Accountability Office (GAO), the Defense Logistics Agency (DLA), the Department of Defense (DoD), the Congressional Research Service (CRS), The Institute for Defense Analyses (IDA)1 , the National Research Council (NRC), and the Department of Energy (DoE) – have all considered the critical metals issue in some form or another, and have released their findings in report form.

It is interesting to note that politicians tend to exhaust themselves talking about our nations dependence on imports of foreign oil, but I’ve rarely — if ever — heard politicians discuss what seems to be a heavy reliance on strategic metals and minerals from foreign sources.

Stepping back a minute, there’s not always a completely satisfactory answer as to what is to be done about issues like this. If you take a look again at the report, you will see on page 17-18 an excellent overview of where we get our metals and minerals from, what kind of reserves are present in the United States, what percent of reserves are present globally, etc. Now if you were to go through this entire list, you might seem a bit worried because we appear to be completely reliant on other countries for some metals and minerals specifically because they are important and we don’t have very many of them in the United States. However, that’s the beauty of international trade, we can simply buy some of these from other nations.

The problem with that is that some of these resources are incredibly important, and any interruption of supply might be incredibly damaging. In some cases, we rely on imports from countries that aren’t historically known for their stability and openness to international trade. That has led to some stockpiling by the government of critical resources to help absorb the shock of any interrupted supply chains. So what else can be done? Other than politicians encouraging other countries to remain committed to international trade, the U.S. can make a conscious decision to allow firms that extract natural resources to have significant access to the metal and minerals that we do have in the United States.

In some cases we do that, overall we have a very healthy mining and resource production base in our country. However, we also often bend to the will of environmentalists and artificially limit what can be produced domestically, increasing the extent to which we rely on foreign supply sources. Resourceful Earth has extensively documented cases in which environmentalists or NIMBY activists have worked overtime to shut down natural resource production, including oil drilling, hydraulic fracturing, uranium mining, and much more.

We have also been beating the drum on a potential source of important minerals that hasn’t yet been shut down, the proposed Pebble Mine in Alaska. Operation of the mine would most certainly reduce the extent to which the U.S. is reliant on copper imports, while driving down the price of copper by increasing the supply. Again, it is not so much that imports of metal and minerals from other countries is necessary bad. What is bad is not allowing firms to explore or access similar metals and minerals in the United States, making us reliant on foreign sources when we do not need to be reliant on foreign sources.

Aside from the Pebble Mine, we have seen similar problems with shortages of rare-earth elements, after the only domestic source of production shut down about a decade ago due in part to push-back from environmentalists (though there were other reasons involved in the closure as well). Thankfully, that Californian mine is in the process of re-opening and increasing up production.

We can only hope the EPA and other agencies that seem to be dedicated to stopping resource production in the United States have a change of heart. Maximizing the available supply by not needlessly denying access to resources is the best way to insure against disruption in global markets.



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