Critical minerals problem: Supply chain issues come to the fore

It seems that all of a sudden there is talk of mineral shortages and two metals which are thought to be plentiful in the Earth's crust, nickel and zinc, have been added to the list of minerals now deemed critical to the United States, a list recently updated by the U.S. Geological Survey.

Partly, the concern is that the United States is not producing enough of its own nickel and zinc to rest easy over the availability of these metals on world markets. Nickel's new status stems in part from its emerging role in electric vehicle batteries. There is only one operating U.S. nickel mine. The situation with zinc is less concerning since there are 14 mines and three smelters.

There has long been concern about Rare Earth Elements (REEs) crucial to the computer and renewable energy infrastructure. Part of the concern is China's domination of the production of these minerals. Chinese mines supplied 55 percent of all REEs mined worldwide in 2020 and its REE refineries produced 85 percent of all refined products.

What has always lurked in the background in the form of "critical" and "strategic" minerals lists is the use of these minerals in military as well as commercial applications. The U.S. Defense Logistics Agency has long maintained a strategic materials stockpile "[t]o decrease and preclude dependence upon foreign sources or single points of failure for strategic materials in times of national emergency."

But the trouble with minerals is they have a habit of concentrating in places far from where they are needed and under the soil of countries without the factories to utilize them. If it were just a question of, say, turning agricultural produce into a value added product such as cotton clothing from cotton grown in the same country, that would be one thing.

But high-tech fabrication requires inputs from a worldwide network of suppliers to produce, for example, a computer or a permanent magnet (used in wind turbines and electric vehicles). While the Democratic Republic of Congo leads in the mine production of tantalum, a metal critical for the production of cellphones, computers and cameras, manufacturers are not flocking there to set up shop as so many other minerals from other parts of the world are needed to make these products.

To get a sense of how complex the supply chains for cellphones are, a brief review of this graphic will make clear the scale of the problems we now face with vulnerable mineral supply chains.

It's hard to imagine any country with significant manufacturing capability or significant use of manufactured goods (especially electronic goods) escaping dependency on some very long and complex supply chains. And, so practically every country is vulnerable.

One solution to the current supply chain crisis has been to respond by bringing manufacturing back home (often from China) to the country where the manufactured goods are being purchased and used. That may be a useful step. But it doesn't necessary solve the problem of a sprawling worldwide logistics chain which now simply shifts from one country to another. The problem of multiple points of failure remains.

Complexity has long served humans well and made it possible for them to exploit ever larger resources from the earth, air and water and to combine those resources into an ever greater variety of gadgets, structures and vehicles. But as the historian of complex societies and their collapse, Joseph Tainter, tells us, there comes a point when complexity starts to undermine the stability of society. If we have not reached that point, we seem to be very near it. Backing away and lowering complexity is no easy job. And, it mostly happens when humans are forced to do it as we have been in the face of the ongoing pandemic.

As Tainter has explained, the results of having to lower complexity can be very unpleasant and include the possibility of a relatively quick collapse of existing economic, social and political arrangements.

Kurt Cobb is a freelance writer and communications consultant who writes frequently about energy and environment. His work has appeared in The Christian Science Monitor, Resilience, Common Dreams, Naked Capitalism, Le Monde Diplomatique, Oilprice.com, OilVoice, TalkMarkets, Investing.com, Business Insider and many other places. He is the author of an oil-themed novel entitled Prelude and has a widely followed blog called Resource Insights. He can be contacted at kurtcobb2001@yahoo.com.