    [Senate Hearing 116-373]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 116-373

                    THE IMPACTS OF COVID-19 ON MINERAL SUPPLY
                     CHAINS, THE ROLE OF THOSE SUPPLY CHAINS
                     IN ECONOMIC AND NATIONAL SECURITY, AND
                     CHALLENGES AND OPPORTUNITIES TO REBUILD
                     AMERICA'S SUPPLY CHAINS

    =======================================================================

                                    HEARING

                                   BEFORE THE

                                  COMMITTEE ON
                          ENERGY AND NATURAL RESOURCES
                              UNITED STATES SENATE

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JUNE 24, 2020

                                   __________

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                           Printed for the use of the
                   Committee on Energy and Natural Resources

            Available via the World Wide Web: http://www.govinfo.gov

                                   __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    40-919                    WASHINGTON : 2021

    -----------------------------------------------------------------------------------

                   COMMITTEE ON ENERGY AND NATURAL RESOURCES

                        LISA MURKOWSKI, Alaska, Chairman
    JOHN BARRASSO, Wyoming               JOE MANCHIN III, West Virginia
    JAMES E. RISCH, Idaho                RON WYDEN, Oregon
    MIKE LEE, Utah                       MARIA CANTWELL, Washington
    STEVE DAINES, Montana                BERNARD SANDERS, Vermont
    BILL CASSIDY, Louisiana              DEBBIE STABENOW, Michigan
    CORY GARDNER, Colorado               MARTIN HEINRICH, New Mexico
    CINDY HYDE-SMITH, Mississippi        MAZIE K. HIRONO, Hawaii
    MARTHA McSALLY, Arizona              ANGUS S. KING, JR., Maine
    LAMAR ALEXANDER, Tennessee           CATHERINE CORTEZ MASTO, Nevada
    JOHN HOEVEN, North Dakota

                          Brian Hughes, Staff Director
                          Lucy Murfitt, Chief Counsel
                Annie Hoefler, Senior Professional Staff Member
                 Lane Dickson, Senior Professional Staff Member
                     Renae Black, Democratic Staff Director
                    Sam E. Fowler, Democratic Chief Counsel
              Elliot Howard, Democratic Professional Staff Member
                         Darla Ripchensky, Chief Clerk

                                C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page
    Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska....     1
    Manchin III, Hon. Joe, Ranking Member and a U.S. Senator from
      West Virginia..................................................     3
    King, Jr., Hon. Angus S., a U.S. Senator from Maine..............     4

                                   WITNESSES

    Nassar, Dr. Nedal T., Section Chief, National Minerals
      Information Center, U.S. Geological Survey, U.S. Department of
      the Interior...................................................     6
    Bryan, Joe, Senior Fellow, Atlantic Council Global Energy Center.    13
    Caffarey, Mark, President, Umicore USA Inc.......................    17
    Duesterberg, Dr. Thomas J., Senior Fellow, Hudson Institute......    26
    Moores, Simon, Managing Director, Benchmark Mineral Intelligence.    41

              ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

    American Exploration & Mining Association:
        Letter for the Record........................................    82
    Bryan, Joe:
        Opening Statement............................................    13
        Written Testimony............................................    15
    Caffarey, Mark:
        Opening Statement............................................    17
        Written Testimony............................................    19
        Responses to Questions for the Record........................    75
    Daines, Hon. Steve:
        Chart entitled ``2019 U.S. Net Import Reliance''.............    63
        Chart entitled ``Major Import Sources of Nonfuel Mineral
          Commodities for Which the United States was Greater than
          50% Net Import Reliant in 2018''...........................    65
    Duesterberg, Dr. Thomas J.:
        Opening Statement............................................    26
        Written Testimony............................................    29
        Responses to Questions for the Record........................    79
    Evolution Metals Corp.:
        White Paper for the Record...................................    85
    Industrial Minerals Association -- North America:
        Statement for the Record.....................................    88
    King, Jr., Hon. Angus S.:
        Opening Statement............................................     4
    Manchin III, Hon. Joe:
        Opening Statement............................................     3
    Mining Minnesota:
        Letter for the Record........................................    92
    Moores, Simon:
        Opening Statement............................................    41
        Written Testimony............................................    43
        Responses to Questions for the Record........................    81
    Murkowski, Hon. Lisa:
        Opening Statement............................................     1
    Nassar, Dr. Nedal T.:
        Opening Statement............................................     6
        Written Testimony............................................     8
        Response to Question from Senator Hoeven.....................    58
        Response to Question for the Record..........................    74
    Women's Mining Coalition:
        Statement for the Record.....................................    95

      THE IMPACTS OF COVID-19 ON MINERAL SUPPLY CHAINS, THE ROLE OF THOSE
      SUPPLY CHAINS IN ECONOMIC AND NATIONAL SECURITY, AND CHALLENGES AND
                OPPORTUNITIES TO REBUILD AMERICA'S SUPPLY CHAINS

                                  ----------

                            WEDNESDAY, JUNE 24, 2020

                                           U.S. Senate,
                     Committee on Energy and Natural Resources,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 9:37 a.m. in Room
    SD-366, Dirksen Senate Office Building, Hon. Lisa Murkowski,
    Chairman of the Committee, presiding.

               OPENING STATEMENT OF HON. LISA MURKOWSKI,
                        U.S. SENATOR FROM ALASKA

        The Chairman. Good morning, everyone. The Committee will
    come to order. We are here this morning to discuss the impacts
    of the COVID-19 pandemic on supply chains and the role that
    those supply chains play in our economic and national security,
    and the challenges that we face in rebuilding them here at
    home, especially if we refuse to start at the beginning with
    the minerals that actually make them possible.
        The fundamental importance of minerals to supply chains is
    certainly not a new topic for us. In fact, it is the ninth
    hearing that we have had in this Committee. That is a lot of
    hearings on this issue. I have been Chairman and Ranking Member
    now for a period of years, but to have nine, nine hearings on
    this, I think, is significant. This is obviously our first time
    on the subject since the start of the global pandemic, but it
    is as timely as ever as more Americans recognize the need for
    strong, domestic supply chains. The pandemic has brought home
    that we don't produce many goods important to our country. Over
    the past several months, that has become clear for a range of
    crucial medical items, including personal protective equipment
    (PPE) for doctors and nurses as well as individual Americans.
    But it also extends to a much wider range of healthcare,
    electronic, industrial, defense, and energy technologies.
        The mining industry has not faced the same level of
    disruption as we have seen in oil and gas and renewables, but
    there have been some noteworthy developments. Border closures
    in Africa have impacted the export of cobalt from the
    Democratic Republic of Congo and platinum from South Africa.
    Mines in Argentina, Peru, and Brazil have temporarily shut
    down, restricting supplies of lithium, copper, and iron. We are
    fortunate that those supply impacts have not been more acute or
    widespread. We certainly hope that remains the case as nations
    around the world continue to fight the virus, and we certainly
    thank our American miners who have stayed on the job as truly
    essential workers. But it is also hard not to conclude that we
    have just been lucky here and luck usually is not a very good
    strategy. Despite our significant dependence on imported
    minerals, we have not yet come up against a severe shortage
    that causes dramatic harm.
        It is worth thinking about what would happen if that did
    occur because minerals are the building blocks of our modern
    society. We would not have electricity or phone lines without
    copper wiring. Portable heart monitors wouldn't function
    without lithium, nickel, and zinc. The magnets in many
    electronic and defense technologies rely on rare earth
    elements. There are a host of minerals that almost no one can
    name that are critical to our economy, our security, our
    competitiveness and our health, and many come from places that
    we would be hard pressed to find on a map and the rest seem to
    come from the one place that we have no difficulty finding--and
    that is China.
        The U.S. Geological Survey (USGS) tells us that we imported
    at least 50 percent of our supply of at least 46 different
    minerals, including 100 percent of 17 of them, in 2019. Beyond
    the numbers that means we are placing our fate on other's
    ability and willingness to sell to us, and we are forcing
    American manufacturers to develop complex global supply chains
    that sometimes prompt them to realize that it would be cheaper
    and easier to locate somewhere else. I think it is time that we
    actually address this. I have been pleased to hear greater
    discussion of reshoring to bring companies and industries back
    home. I certainly don't have any pretentions that that is going
    to be a quick process, but it will be harder still if we refuse
    to address the front end of supply chains, and that is
    minerals.
        There is no denying that our nation has and will continue
    to have significant mineral needs including, and especially
    for, clean energy technologies. The International Energy Agency
    (IEA) recently released a report acknowledging that clean
    energy progress after the COVID crisis will need reliable
    supplies of critical minerals. The World Bank released a report
    last month estimating that demand for lithium, graphite, and
    cobalt will increase 500 percent by 2050 to meet clean energy
    demand. And back in December before the pandemic took hold, the
    Institute for Defense Analysis pointed out the supply chain
    vulnerabilities the Department of Defense is exposed to by
    relying on China and South America for the refining and
    processing of the minerals in lithium-ion batteries. The Trump
    Administration has been a strong partner in our efforts to make
    meaningful progress. The Department of Defense (DoD), State
    Department, Department of the Interior (DOI), the Forest
    Service, and the Department of Energy (DOE) all have important
    initiatives underway. But despite that good work, we will still
    hear today from witnesses who are concerned about losing multi-
    billion-dollar industries, such as the manufacturing of
    semiconductors, to Asia. We will also hear about the security
    implications of relying on China and other adversarial
    countries to obtain minerals.
        So we need to do more. And of course, we have an answer
    here in this Committee. We can start by passing my American
    Minerals Security Act which provides the framework for a
    sustainable, domestic mineral supply chain. It recognizes the
    expertise at agencies like USGS for surveying and forecasting.
    It directs DOE to conduct research and development into
    alternatives and recycling while facilitating modest permitting
    reforms and helping to ensure a skilled workforce. The COVID-19
    pandemic has shown how delicate our supply chains are, and that
    should be a wake-up call for all of us. Our job is not simply
    to impose a royalty on mineral production on federal lands and
    then call it a day. It is to rebuild our supply chains and to
    recognize that no realistic level of subsidies and incentives
    can compete with having raw materials available here at home.
        I thank our witnesses for appearing today. I will introduce
    you, but first let's turn to my friend and Ranking Member,
    Senator Manchin, for his opening comments.

                  STATEMENT OF HON. JOE MANCHIN III,
                    U.S. SENATOR FROM WEST VIRGINIA

        Senator Manchin. Thank you, Chairman Murkowski, for
    convening the hearing and thank you to the witnesses for
    joining us today. The hearing gives us an opportunity to
    discuss the impact of the COVID-19 pandemic on our mineral
    supply chains.
        Before we dive into the timely and important topic, let us
    take a moment to acknowledge that we are still in the midst of
    an ongoing pandemic that has taken the lives of 123,000 of our
    fellow Americans, including 92 West Virginians, and our heart
    goes out to the grieving families across the country.
        Last week we discussed the impacts of the COVID-19 pandemic
    on the energy sector, broadly. The mining industry as a whole
    has weathered the pandemic relatively well and, in many ways,
    better than other sectors. In April, PriceWaterhouseCoopers
    forecasted the top 40 largest mining companies would see a six
    percent hit to their earnings before interest, taxes and
    amortization due to COVID. However, the revenue for 2020 is
    still estimated to exceed $690 billion and dividends will
    likely be paid up to $55 billion. So they are still doing
    pretty well. Even though many mines have continued operating,
    the raw materials are of little use until they are transformed
    into the multitude of products that all of us rely on every
    day. Supply chains across the globe that feed raw materials
    into manufactured products have been disrupted and borders
    closed and factory workers told to stay at home.
        Over the course of the pandemic we have seen serious
    breakdowns in supply chains as evidenced by empty shelves at
    department stores and long backorders of popular products.
    Critical minerals lie at the heart of many of these supply
    chain shortages. Our Committee has held several hearings on
    critical minerals this Congress and China's tight grip on many
    of the minerals we need for both everyday items and security
    needs has been a recurring theme in our discussions. According
    to the United States Geological Survey, China supplied the
    largest number of nonfuel mineral commodities to the United
    States in 2019. The risk involved in remaining beholden to
    foreign suppliers should give all of us concern.
        We should be focusing on investing in innovative mining and
    mineral processing practices, developing viable substitutes for
    critical materials that can be found in our backyard and
    implementing smart policies for recycling critical materials.
    All these things can reduce our reliance on foreign imports
    while creating jobs right here in the United States. We must
    also work with our allies and trading partners to increase
    diversity in supply chains where downstream processing is
    geographically concentrated. I see a great deal of similarity
    to the challenges currently facing the mineral sectors to the
    challenges the oil and gas industry faced during the oil price
    shocks of the '70s--those of us who are old enough to remember
    the large lines. I know that my dear friend on the right, Angus
    King, does. I am not sure about my dear friend--I think you
    were too young to and no lines in Alaska. When that happened
    America met the challenge head-on with robust policies in
    investments and research and development. To this day, we
    continue to enjoy the benefits of these investments such as
    increased national energy security and contributions to the
    economy in ways we never thought were possible back then. Like
    what happened last week when we passed the Great American
    Outdoors Act where conservation is made possible by energy
    revenues.
        I think we have a real opportunity before us to make some
    much-needed changes to improve our national security, make
    America businesses competitive on a global stage and create
    markets that will support good paying jobs right here in the
    United States. And I believe that the mineral security title
    that the Chairman and I agreed to as part of the American
    Energy Innovation Act is a most fair and reasonable step in the
    right direction. But we need to be thinking more broadly about
    ways to incentivize domestic production and manufacturing and
    utilizing the tools the Federal Government has to do that. I
    think our panel of witnesses can help us today on that, and I
    look forward to hearing from you.
        The Chairman. Senator King, you wanted to pop in before you
    move to another committee.

                 STATEMENT OF HON. ANGUS S. KING, JR.,
                        U.S. SENATOR FROM MAINE

        Senator King. Please, thank you, I am committed at another
    hearing.
        First, I worked here in the Senate during the oil embargo
    and one of the most wonderful bill titles came out during that
    period. It seems that during--there were long lines at gas
    stations and Senators were sending their staff members to wait
    in the line to fill their cars. William Proxmire, from
    Wisconsin, introduced a resolution called, ``It shall be the
    sense of the Senate that Senators have to wait in line, too.''
        [Laughter.]
        I have always remembered that.
        Madam Chair, I want to thank you for calling this hearing
    and focusing on this issue, because I think it is so important
    and it is so underappreciated. The Latin phrase is ``Vox
    Clamantis in Deserto,'' a voice of one crying in the
    wilderness, and that is what you have been doing. But it is
    incredibly important because, as you have pointed out, these
    are the building blocks of our modern society.
        Two concerns. One is I think we need to talk about
    upgrading the mining laws that go back to the 1800s without a
    great deal of change. But secondly, I think we need to think
    about perhaps paying additional costs for these minerals if
    they are domestically produced as nothing more than an
    insurance policy. It is an insurance premium against a
    catastrophic breakdown in the supply chain of some of our most
    important products. I think we have to look at it that way and
    not always go with the low bidder who might be in China or who
    might be somewhere else in the world that we then become
    dependent on.
        So I commend you for focusing on this issue, and I think it
    is incredibly important. If we don't do something about it,
    people are going to look back in 10, 15 or maybe even 5 years
    from now and say, what were they thinking? How did they miss
    this? You have not missed it, and I want to thank you for that.
        The Chairman. Well Senator King, thank you. Not only do I
    appreciate your engagement on this issue, you remind me that I
    am not a lone voice because I have been joined with many of my
    colleagues, my Ranking Member here. The awareness is building.
    It has just been painfully slow. It sometimes reminds me of our
    effort when it comes to increasing awareness and knowledge of
    the Arctic. It is just taking some time but we are making great
    headway and the consequences, as you point out, are
    considerable. So making sure that we do not let up on this is
    part of the vigilance of the job. So thank you, thank you for
    that.
        Let us now turn to our witnesses. As we have done in these
    past few weeks, we have somewhat of a hybrid hearing. We will
    have members participating by way of our video conference, and
    we have half of our panelists that are also participating
    virtually.
        We have with us here in the hearing room today, Dr. Nedal
    Nassar. He is the Chief for the Materials Flow Analysis Section
    at the National Minerals Information Center with the USGS at
    the Department of the Interior. We welcome you before the
    Committee here this morning.
        We are also joined this morning by Mr. Joe Bryan. Mr. Bryan
    is a Senior Fellow at the Atlantic Council's Global Energy
    Center. We welcome you.
        Online we have Mr. Mark Caffarey, who is the President of
    Umicore USA Incorporated. Welcome.
        Dr. Thomas Duesterberg is also with us. He is a Senior
    Fellow at the Hudson Institute. Welcome.
        And we have another gentleman who has appeared before this
    Committee before, Mr. Simon Moores, who is the Managing
    Director for Benchmark Mineral Intelligence and has been a
    leader on so many of these mineral security issues. We welcome
    you back before the Committee as well.
        With that, we will go in the order in which I have
    introduced you. I would ask you to try to keep your comments to
    about five minutes. Your full statements will be incorporated
    as part of the record and after all the panelists have
    concluded, we will move to a series of questions and answers
    with our witnesses. Thank you for being here this morning,
    whether in person or virtually, and Dr. Nassar, if you would
    like to proceed, please.

           STATEMENT OF DR. NEDAL T. NASSAR, SECTION CHIEF,
     NATIONAL MINERALS INFORMATION CENTER, U.S. GEOLOGICAL SURVEY,
                    U.S. DEPARTMENT OF THE INTERIOR

        Dr. Nassar. Good morning, Chairman Murkowski, Ranking
    Member Manchin and distinguished members of the Committee, and
    thank you for the opportunity to discuss the U.S. Geological
    Survey's efforts related to mineral supply chains.
        The U.S. Geological Survey's Minerals Resources Program
    conducts scientific research on how the mineral occurrence is
    formed geologically, provides assessments on the geological
    potential for mineral resources and investigates the life cycle
    of those resources from their origin through their ultimate
    disposal. Within the Mineral Resources Program, the National
    Minerals Information Center collects the nation's data on
    domestic and international extraction, processing, trade, use
    and recycling of over 90 mineral commodities essential to the
    economy and national security.
        Mineral commodities are the foundation of modern society.
    Smartphones would have more dropped calls and shorter battery
    lives without tantalum capacitors and cathode-based, cobalt-
    based cathodes and their lithium-ion batteries. Bridges,
    buildings and pipelines would not be as strong without vanadium
    and other alloying elements in their steels. Medical MRI
    machines would use more energy and produce lower quality images
    without helium-cooled, niobium-based superconducting magnets.
    While the drive toward smaller, faster, lighter and smarter
    technologies will increase demand for these and other
    commodities whose properties are uniquely suited for the task,
    the stability of their supply is not necessarily assured. Among
    other things, the COVID-19 pandemic highlights the fragility of
    global supply chains and underscores the risks of supply
    disruptions during a crisis. This is only the most recent
    reminder of such risks. China's threats to cut off rare earth
    supplies in 2010 epitomizes these risks for importing countries
    who had limited alternatives due to China's near monopoly of
    rare earth supply chains.
        The concentration of production is not, however, limited to
    rare earths. The mining and mineral processing of many raw
    materials that underpin manufacturing supply chains have become
    increasingly concentrated--a decades-long trend. The tantalum
    in cobalt and smartphones, for example, are now predominately
    mined in the Democratic Republic of the Congo and refined in
    China. Having such concentrated production increases the
    potential for supply disruptions. Concurrently, developed
    countries such as the United States, have become increasingly
    import reliant for their mineral commodity needs, thereby
    increasing their exposure to foreign supply disruptions.
        In our latest research, we examined the risk of mineral
    commodity supply disruptions to the U.S. manufacturing sector
    by assessing the likelihood of and exposure and vulnerability
    to foreign supply disruptions. The study assessed over 50
    commodities and identifies a subset including cobalt, graphite,
    niobium, tantalum and the rare earths as having the greatest
    supply risk. Predictably, China is the largest producer of most
    high-supply risk commodities. Additionally, many high-supply
    risk commodities are recovered as by-products. The supply of
    by-products has the additional challenge of potentially being
    unresponsive to demand signals given their relatively minimal
    contribution to producers' revenues. This research is thus an
    enhancement to the original methodology used to develop the
    U.S. Critical Minerals List and forms the basis for updating
    that list through the interagency process established under the
    U.S. National Science and Technology Council's Critical
    Minerals Subcommittee.
        Once a mineral supply chain is identified as high-risk, the
    next step is to determine the best way to reduce that risk.
    Various strategies can be pursued including diversification of
    supply, identification and potential expansion of domestic
    mineral resources, increasing recycling, developing
    substitutes, maintaining strategic inventories and bolstering
    trade relations. In response to Executive Order 13817, a
    federal strategy has been released in which these and other
    actions are explicitly outlined. Importantly, many of these
    strategies are core to missions of several federal agencies
    including the U.S. Defense Logistics Agency, the U.S.
    Department of Energy and, of course, the U.S. Geological
    Survey. In coordination with the Association of American State
    Geologists, the USGS launched the Earth Mapping Resources
    Initiative to improve the geological, geophysical, and
    topographic mapping of the United States and thus advance our
    understanding of the potential geological resources of our
    country.
        At USGS, we continue to improve our capability to analyze
    mineral supply chains and assess the associated supply risk
    through advanced modeling techniques that will soon allow us to
    quantify how different supply disruptions may ripple through
    and impact the economy. We are also expanding our capability to
    develop forward-looking supply and demand scenarios that will
    help anticipate how certain trends and disruptive technologies
    may impact the minerals industry. Each commodity supply chain
    is unique. Moreover, bottlenecks may occur at different stages
    of the supply chains. Mineral supply chains must therefore be
    examined individually to determine the most effective strategy
    needed at each stage with the ultimate goal of minimizing the
    overall risk to the U.S. economy and national security so that
    we, as a nation, are better prepared for when another
    devastating event like the COVID-19 pandemic strikes.
        Thank you for the opportunity to testify today, and I look
    forward to any questions you may have.
        [The prepared statement of Dr. Nassar follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Dr. Nassar.
        Mr. Bryan, welcome to the Committee.

                STATEMENT OF JOE BRYAN, SENIOR FELLOW,
                 ATLANTIC COUNCIL GLOBAL ENERGY CENTER

        Mr. Bryan. Thank you, Madam Chairman.
        Senator Murkowski, Senator Manchin, members of the
    Committee, thank you for the opportunity to testify today. My
    name is Joe Bryan, and I am a Senior Fellow with the Atlantic
    Council's Global Energy Center. I was previously the Deputy
    Assistant Secretary of the Navy for Energy and, prior to that,
    spent about 14 years working in the Senate, most of that time
    on the Armed Services and Intelligence Committees. So I've
    spent a lot more time in the seats behind you than the one I'm
    in now.
        We are in the midst of a historic shift in global energy.
    From the electrification of transportation to the integration
    of renewable energy into the grid, lithium-ion batteries are at
    the center of that transformation. The massive global
    investment we see in the lithium-ion supply chain, mostly
    driven by expected demand for electric vehicles, speaks to the
    pace and scale of that shift. Other witnesses will detail the
    U.S. competitive position in the race for supply chain
    investment. Suffice it for me to say, the United States is
    getting lapped. And while China is the dominant player, we are
    also quickly losing ground to our European allies as well. This
    is a problem.
        Our supply chain weakness has obvious economic implications
    but it also creates risk for our military and, more broadly,
    U.S. national security. From communications gear that keeps our
    troops connected on the battlefield; to unmanned aerial and
    subsurface platforms; to tactical ground vehicles transitioning
    away from lead acid, lithium-ion batteries are everywhere. That
    is not surprising. Energy storage cannot only increase
    capability but, by reducing fuel use, can also help take
    convoys off the road and our troops out of harm's way.
        Lithium-ion is also key to future capabilities. Army
    Futures Command is imagining what an All-Electric Brigade
    Combat Team might look like. The Navy has an Electric Ships
    Office, and the deployment of next generation weapon systems
    like rail gun and lasers will depend, to one extent or another,
    on energy storage. The future is electric, and lithium-ion
    batteries are essential to that future. That is why the current
    state of our supply chain is so concerning.
        Over the past few months, COVID-19 has exposed the
    vulnerability of our supply chains for critical materials and
    not just personal protective equipment. For example, COVID-19
    severely impacted the supply of cobalt, a key mineral in the
    production of lithium-ion batteries.
        The cause of the disruption this time was a pandemic, but
    it could have been a material shortage, a trade dispute or, in
    the worst case, military conflict, that cut off access to key
    materials. The bottom line is that weak battery supply chains
    carry significant risk.
        But the lithium-ion market also represents an opportunity.
    Tesla's Nevada Gigafactory is one example. The State of Ohio
    recently landed a $2.3 billion investment from General Motors
    and Korea's LG Chem to build a battery plant in Lordstown,
    Ohio. That facility will bring more than 1,000 jobs to the
    Mahoning Valley. Now we can't change geology and create
    resources where they don't exist, but we can change direction
    and compete for supply chain jobs in minerals extraction,
    processing, anode and cathode production, and cell production.
    That cannot happen soon enough.
        The scale of global investment in the lithium-ion supply
    chain is massive and investment patterns will have geopolitical
    impacts. Right now, commercial relationships are being forged
    and trade alliances hammered out. Decisions made over the next
    few years will define the global transportation industry for
    decades to come and plant the seeds of future political
    alliances. Maintaining our global influence and diplomatic
    leverage depends on us not just getting in the race but setting
    the pace.
        From establishing priorities for research and development;
    to setting conditions for attracting investment; to, most
    importantly, hitting the accelerator on transportation
    electrification, there are things we can do. But to date, our
    actions have matched neither the scale of the opportunity, the
    efforts of our competitors, nor the risk we accept should we
    remain on the sidelines.
        Thank you for this Committee's leadership on this issue,
    and I look forward to your questions.
        [The prepared statement of Mr. Bryan follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Mr. Bryan. We appreciate you
    pointing out the importance of mineral security for our
    military. Some of us think that our American Mineral Security
    Act would be a good fit within the NDAA that will be coming
    before us for Floor action in these next few days, so thank you
    for that reminder.
        We will next go to Mr. Mark Caffarey. Welcome Mr. Caffarey.

                STATEMENT OF MARK CAFFAREY, PRESIDENT,
                            UMICORE USA INC.

        Mr. Caffarey. Thank you, Chairman Murkowski, Ranking Member
    Manchin and members of the Committee. My name is Mark Caffarey,
    and I'm President of Umicore USA. Thank you for holding this
    hearing and providing the opportunity to testify.
        Umicore is a global energy materials and recycling company,
    with nearly $4 billion in revenue, 70 percent of which is from
    clean mobility and recycling. Of our 11,000 employees
    worldwide, approximately 500 are in the U.S. with facilities in
    ten states including our regional headquarters in Raleigh,
    North Carolina. Due to the economic impacts of COVID-19 on the
    automotive supply chain, Umicore was forced to close its
    automotive catalyst manufacturing facility in Tulsa, Oklahoma,
    unfortunately impacting approximately 100 employees.
        Umicore recycles end-of-life electronics, spent automotive
    catalysts, industrial catalysts and other materials that
    contain precious metals like gold and silver and also copper in
    a nearly half million metric ton yearly processing facility in
    Belgium. At the same time, we are able to recycle--at the same
    site, we are able to recycle critical elements such as cobalt,
    nickel and lithium from battery manufacturing scrap, portable
    and electric vehicle batteries once they reach their end of
    life. Currently Umicore has the capacity to recycle 7,000
    metric tons per year of lithium-ion battery materials with
    plans to grow in both scale and geographic scope by the end of
    this decade. Umicore would like to expand that capacity
    globally. The number of end-of-life energy battery packs in the
    U.S. is predicted to grow to over one million by 2030. These
    batteries will contain quantities of valuable critical minerals
    that need to be recycled by recyclers. It is important that a
    policy and economic framework be put in place now while the
    volume of these battery packs is relatively low so the industry
    and nation will be prepared to handle the increased volume we
    expect in the next five to ten years.
        Umicore supports the recycling components in the American
    Mineral Security Act which seeks to ensure that the U.S. has a
    secure, ready and domestic access to critical materials
    required for defense and civilian high-technology products. Our
    nation's industrial scrap, lithium-ion batteries from cars and
    energy storage, electronics and electronic applications could
    provide nearly boundless valuable resources that could be
    recycled and put back into the economy and complement the
    materials coming from the mines.
        First, recycling critical materials will avoid the purchase
    of materials mined in unreliable areas. Over 50 percent of the
    primary global cobalt supplies are derived from the Democratic
    Republic of Congo where small mines have a history of human and
    environmental health and safety concerns. Umicore introduced a
    Sustainability Procurement Framework for cobalt in 2004 and is
    the first to obtain external validation through its ethical
    procurement approach in this area. However, if more lithium-ion
    batteries with cobalt concentrations were recycled, the supply
    chain could rely more on sustainable cobalt from recycled
    sources rather than from poorly-managed mines.
        Second, recovering metals from end-of-life products yields
    more materials per ton than mining from primary resources.
    Other witnesses have testified that electrification
    technologies are growing, so there will be a greater need for
    battery materials. The COVID-19 situation has made the sale of
    electrical vehicles in 2020 less robust, but it is clear that
    in the longer-term the need for materials is only increasing.
        Finally, the economic growth benefits of the U.S.
    commitment to recycling of critical materials could be enormous
    creating a high number of jobs with varying skill levels
    throughout the recycling supply chain in: the collection of
    discarded end-of-life products and scrap; the dismantling,
    sorting of products and separation of components; and the pre-
    treatment of the separated components. Those steps must be
    robust to enable economies of scale and the possibility of jobs
    in what Umicore does: the refining of the pre-treated materials
    into final, critical minerals.
        We think the Federal Government has an important role to
    play in both leadership as well as in research and development.
    Stakeholder collaboration, public-private partnerships,
    standards, and a systems approach will be crucial in
    determining how we want to map out our domestic recycling
    supply chain. Umicore is excited the Department of Energy
    launched the Lithium-Ion Battery Recycling Prize competition
    which will highlight best practices for the collection and the
    initial processing of these critical materials. We are
    optimistic that, because of this hearing and discussion, we can
    implement policies that open up new markets to recycling,
    create----
        [Mr. Caffarey's video froze.]
        The Chairman. I do think you were getting close. If you
    come back, Mr. Caffarey--are you now back online?
        Mr. Caffarey. Hello.
        The Chairman. Yes, Mr. Caffarey, you cut off right there at
    the end. I believe you were concluding your remarks, but I want
    to make sure that you were, in fact, finished with your
    comments. You froze right at the end.
        Mr. Caffarey. Yes, but that was the end of it. Thank you.
        [The prepared statement of Mr. Caffarey follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you. Thank you very much. Sorry for
    that technical glitch there.
        Let's go to you, Dr. Duesterberg. Welcome to the Committee.

                STATEMENT OF DR. THOMAS J. DUESTERBERG,
                    SENIOR FELLOW, HUDSON INSTITUTE

        Dr. Duesterberg. Chairman, Ranking Member Manchin, members
    of the Committee, it's a pleasure for me to be with you today
    on this incredibly important topic. I spent the last 25 years
    or so working on various issues related to the strength of the
    manufacturing sector, including--[Dr. Duesterberg's video
    froze]--Manufacturers Alliance for Productivity and Innovation.
    So today I'm going to focus my remarks on the importance of
    mineral resources to the U.S. manufacturing sector which itself
    is so important to defense, innovation, capital investment and
    both low- and high-skilled jobs.
        The U.S. manufacturing sector has seen something of a
    decline in the last two to three, four decades in the number of
    factories and of jobs. Part of that deterioration is due to the
    often unfair competition of our Chinese competitors. I would
    note that the pandemic we're now facing has accelerated pre-
    existing trends toward finding ways to rebuild and bring supply
    chains closer to home. A major stimulus with this trend is not
    only the interruption of supply chains during the pandemic but
    also the increasing control of our major economic and political
    competitor, China, over both upstream raw resource supplies and
    downstream processing and manufacturing of finished products.
        I'm going to start my remarks by noting the importance in a
    major success story of one of the United States' only, most
    important sectors, that is chemicals and plastics. Our superior
    natural endowments of natural gas and an incredibly productive
    new extraction technology has created a boom in gas production
    and the domestic industry of chemicals and related products.
    The United States' chemicals industry relies for about two-
    thirds of its feedstock from natural gas compared to our
    competitors in, for instance, Europe and Japan and China which
    rely on petroleum products. This gives us a cost advantage of
    major proportions. So in the last decade or so, we've seen over
    $200 billion in new capital investment and over 400,000 new
    jobs due to the shale gas revolution alone. Much of the
    domestic investment is coming from competitors in Europe and
    East Asia who prefer to take advantage of the abundant
    resources and fair prices here in the United States.
        Let me now turn to the auto industry. Other witnesses have
    noted the importance of lithium-ion batteries and the control
    of China over the major mineral resources that go into those
    batteries. This is incredibly important to the future of the
    auto industry. China has clearly targeted this industry. It has
    control of the resources as a goal of producing for its own
    domestic market, which is the largest market in the world--80
    percent of electric vehicles, domestically, by 2025. I would
    also note that China is a major producer of manganese and
    magnesium minerals which are associated. It controls over 80
    percent of those magnesium resources which is incredibly
    important to the future of light vehicles. Substituting alloys
    with magnesium products is one key to reducing the weight of
    all kinds of transportation vehicles and construction
    equipment, I would also mention. So this is incredibly
    important to eventually meeting our goals for reduction of
    CO2.
        So I'll pass over any details on lithium-ion batteries,
    other than to note that they are important to other major
    manufacturing industries, self--[Dr. Duesterberg's video
    froze]--airliners in the new all electric internal control of
    787 Boeing aircraft and also to large-scale solar electric
    facilities for storage. Other witnesses have also mentioned
    rare earths and other important minerals for which we are
    dependent on China such as tantalum, and to a certain extent,
    cadmium. These are all important to the $500 billion
    semiconductor industry where the United States holds the
    technology lead and produces over 45 percent of the chips that
    it produces here in the United States. I would also note that
    gallium arsenide is crucial to the high-performance chips used
    in national defense and telecommunication applications. Rare
    earths are also key to fiber optic cables and lasers that power
    them. We do not manuf--we do manufacture most of our chips
    domestically. We would like to manufacture more.
        Recently, within the last few months, the largest
    semiconductor fabricator in the world, TSMC, has announced
    they're going to put a new fabrication facility, a $12 billion
    facility, in Arizona. So China is behind the United States in
    all of these technologies but catching up fast. The danger of a
    cutoff of rare earths where China is dominant is especially
    crucial to commercial products and defense needs.
        I will finally note that the solar power industry also
    depends on rare earths like cadmium and tellurium and the
    leading producer in the United States, First Solar, has a thin
    film technology that depends greatly on these minerals and
    gives it a cost advantage over the old related products that
    are being subsidized heavily by China.
        So what to do about these issues? Just briefly. I support
    codifying the recent Executive Branch, Executive Order for
    action and support the American Mineral Security Act, S. 1317,
    as the Chairman outlined here today.
        The Chairman. Thank you, Dr. Duesterberg.
        Dr. Duesterberg. I'm sorry?
        The Chairman. I thought you had concluded. You are over
    your time, but go ahead and finish.
        Dr. Duesterberg. I'll be very quick.
        I'm especially interested in the national--in processing
    technology, recycling and workforce training as part of S.
    1317. Second, we do need to pay attention to rare earths, as
    has been mentioned. I support coordination with our closest
    allies in the Five Eyes group which have good supplies of rare
    earths and other needed minerals. We absolutely need to reduce
    regulatory barriers and permitting times if we are to
    incentivize domestic production. Expansion of R&D by tax
    credits and expensing of capital investments is helpful to U.S.
    investment and also, finally, the use of trade policy to
    caution and fight back against Chinese subsidization and theft
    of technology and acquisition of mineral resources around the
    world, especially in places that have lower environmental and
    human rights standards than our miners do.
        So let me conclude there, and I look forward to your
    questions.
        [The prepared statement of Dr. Duesterberg follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, sir.
        Let's now finally go to Mr. Simon Moores, of the Benchmark
    Mineral Intelligence.

    STATEMENT OF SIMON MOORES, MANAGING DIRECTOR, BENCHMARK MINERAL
                              INTELLIGENCE

        Mr. Moores. Senator Murkowski, Senator Manchin and members
    of the Committee, I thank you for inviting me to this hearing
    today.
        China has been the equivalent of one battery megafactory a
    week; the United States, one every four months. This is my
    third time presenting to the Senate on behalf of Benchmark
    Mineral Intelligence in two and a half years. In that time, we
    have witnessed a global battery arms race and watched the
    world's number of supersized battery plants, known as battery
    megafactories or gigafactories, go from 17 to 142. Since 2017,
    China's battery megafactory pipeline has increased from 9 to
    107, of which 53 are now active and in production. Meanwhile,
    the United States has gone from 3 to 9 battery plants of which
    still only 3 are active, the same number as just under three
    years ago.
        Lithium-ion batteries are a core platform technology for
    the 21st century. They allow our energy to be stored on a
    widespread basis in electric vehicles and energy storage
    systems, and they spark the demand for the critical raw
    materials and chemicals.
        A new global lithium-ion economy is being created, yet any
    ambitions for the United States to be a leader in this lithium-
    ion economy continues to only creep forward and be outstripped
    by China and Europe. So I'll repeat this fact: China is
    building the equivalent of one battery megafactory a week; the
    USA, one every four months. The rise of these battery
    megafactories will require demand for raw materials to increase
    significantly. By 2029, so ten years from now, demand for
    nickel will double, cobalt will grow three times, flake
    graphite and manganese by four times, lithium by more than six
    times. The tectonic plates of this industry have shifted.
    Layered on top of this are new, emerging demands of supply
    chain security, transparency, and accountability.
        Not only has the COVID-19 crisis exposed the weaknesses of
    truly global supply chains and the need to build domestically,
    it has continued to shine a spotlight on how these raw
    materials are extracted around the world. In the United States,
    progress is far too slow on building out a domestic lithium-ion
    economy but the opportunities that remain are vast and pioneers
    have emerged. Tesla has continued to lead the industry and
    build on its Nevada gigafactory by announcing supersized
    battery plants in Germany and China and expected to announce a
    fourth in Texas which would give the United States its first
    ever 100 percent-owned and made lithium-ion battery cells. Ohio
    has recognized the scale of this opportunity and attracted the
    $2.3 billion General Motors/LG Chem joint venture. You could
    also turn to Alabama, Georgia and Tennessee for electric
    vehicle and battery cell investment success. Yet these
    developments are more of a stand-alone achievement than a
    coherent U.S. plan and all rely on imported raw materials and
    chemicals for the two main components that make a lithium-ion
    battery: the cathodes and the anodes. America has some of the
    best cathode knowhow in the business yet only three cathode
    plants producing under one percent of global output, while
    China produces over two-thirds of global supply from over 100
    cathode facilities. It's reassuring to see Mark Caffarey here
    from Umicore here today and actually have one of the true
    leaders in the industry step forward to talk about these
    issues. That's really important.
        For graphite anode, the United States has zero
    manufacturing plants while China has 48 plants and controls 84
    percent of the total global anode supply. Developing this mid-
    stream of the supply chain will create a domestic ecosystem, an
    engine for more battery plants to be built, more electric
    vehicles to be made, more energy storage systems to be
    installed and will spark the development of domestic mining and
    chemical processing. However, be under no illusions, the United
    States needs to build this 21st century industry from scratch.
    FDR's New Deal, for example, built the core infrastructure the
    United States still relies on today. Nearly 100 years later in
    similar economic and industrial circumstances, your country has
    to do this all over again. Yet instead of dams, you need to
    build battery megafactories in their tens. Instead of highways
    and bridges and tunnels, you need to build the supply chains to
    enable these megafactories to operate securely and
    consistently. These include cathode and anode plants and the
    lithium, cobalt, graphite, nickel and manganese sources to feed
    them. And this has to be done at a speed, scale, and quality
    that will make most U.S. corporations feel uncomfortable. Even
    more, these supply chains need to be underpinned by giga-sized
    factory recycling facilities to match the scale of these new
    operations and close the loop.
        One can also look to the creation of a--back to the
    creation of a widespread U.S. semiconductor industry back in
    the 1980s. The lead that the United States built in
    semiconductors and computing power has sustained your country's
    dominance in this space for over five decades. Those who invest
    in battery capacity and supply chains today will hold the sway
    of industrial power for generations to come. I would like to
    thank Senator Murkowski, whose leadership on the subject over
    the years has been crucial and relentless. The industry is
    listening.
        Thank you.
        [The prepared statement of Mr. Moores follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Mr. Moores. You always remind us
    of the urgency of where we are, and I think you have laid out a
    good roadmap with some specificity there. We so appreciate
    that.
        Senator Manchin has a conflicting engagement here in a few
    minutes, so I am going to defer to him for his first round of
    questions.
        Senator Manchin. Thank you, Madam Chairman. I appreciate it
    very much.
        This is for, I think, Dr. Nassar and maybe Mr. Moores also,
    but earlier this year Saudi Arabia announced it was changing
    its mining investment laws and last week Papua New Guinea
    announced it was amending its mining laws. Other countries are
    considering changes to encourage investment from the mining
    sector and/or reevaluate its production and revenue sharing
    regimes. Yet here in the United States we have the General
    Mining Law of 1872, which frankly is nothing short of an
    embarrassment to our country. In 1872, Ulysses S. Grant was
    elected President and Susan B. Anthony was served an arrest
    warrant and fined for voting. That tells you how antiquated our
    laws are for the hardrock mining.
        If we are serious about reducing our import reliance for
    critical minerals, our mining laws need to be updated. We need
    to improve the regulatory scheme for mines in low-risk, yet
    high-grade areas, end the claim patent system and help the
    mining industry put themselves in a better light in public by
    establishing a royalty to share the profits with the American
    people. So with that, can you please speak to how mining laws
    impact a country's ability to attract investment and to reduce
    mineral dependence?
        Dr. Nassar.
        Dr. Nassar. As USGS is a scientific organization of the
    Department of the Interior, that's not something that I can
    really comment about, and I would defer to other federal
    agencies that would be able to better address that question.
        Senator Manchin. Is there somebody else who wants to speak
    to that? Nobody.
        Mr. Moores. I can. Basically--Simon Moores here on the
    screen now.
        The problem with mining laws and regulation in the U.S., I
    can't speak of specific mining laws here but the point is to
    attract investment, people look to countries like Canada and
    Australia as mining-friendly jurisdictions and with the U.S.
    it's not known as a mining jurisdiction, especially if you're
    trying to develop lithium and cobalt and graphite mines. And
    this is not on the radar, I think a wholesale look at mining
    laws specific to critical minerals and specific to these raw
    materials needed in industries that are in the automotive space
    or energy storage space should be actually separated out in
    some way, if that's possible, to help investment in this
    industry. And I think at the moment everything is treated as
    one, and it's not just stifling U.S. mining but it's actually
    detracting a lot of investment.
        Senator Manchin. Thank you.
        Dr. Nassar, I think you can answer this one. Last month you
    and a handful of other United States Geological Survey
    scientists published an article in Mining Engineering magazine
    discussing the USGS' critical minerals review. You wrote, in
    part, ``Simply establishing domestic mining and concentrate
    production does nothing to mitigate the risk of downstream
    processing. It's highly concentrated geographically, imported
    and unreliable.''
        Well, I could not agree more with you, and we need to make
    sure we are addressing these gaps. What portion of the supply
    chain, either upstream or downstream, needs the most attention
    in terms of our national security?
        Dr. Nassar. Thank you, Ranking Member Manchin.
        So it really, the answer depends on the commodity. So
    different commodities will have different bottlenecks in their
    supply chains. In some cases, there's a highly concentrated
    production on the mining stage. In other cases, it might be
    further downstream. So, for example, for niobium, an element
    that's produced in only a handful of mines worldwide. And so,
    there are very few mines that are producing it and a single
    mine might be producing somewhere on the order of two-thirds of
    the world supply. On the other hand, there might be commodities
    where it's really not about mining and it's the, there's enough
    concentrate being produced but we're simply not recovering it
    further downstream such as many of the by-products. So,
    earlier, one of the other witnesses mentioned tellurium.
    There's a lot of tellurium in some of the concentrate that
    we're mining with copper. Once it gets to our copper
    electrolytic refineries, it's simply not recovered for economic
    reasons. And so, there are different stages for different
    commodities, and that's why I mentioned in my testimony that we
    do need to look at these supply chains individually to figure
    out what really is the bottleneck and what strategy would be
    most effective at reducing that bottleneck.
        Senator Manchin. Well, the U.S. is an erratic supporter for
    a handful of minerals. Are there any minerals on that list that
    we could lose if we do not remain vigilant on that? What we are
    exporting now, the few that we do, are we in jeopardy of losing
    those?
        Dr. Nassar. I can't think of, off the top of my head, what
    that would look like, but it's something that we can get back
    to you on.
        Senator Manchin. Please do.
        Dr. Nassar. Thank you.
        Senator Manchin. Thank you.
        Thank you, Madam Chairman.
        The Chairman. Thank you, Senator Manchin.
        We have long talked about the vulnerability of our mineral
    supply and the supply chain, and the testimony from each of you
    today just, kind of, reinforced that. This Committee, as I
    mentioned, has looked at this issue repeatedly over the years
    and instead of that reliance being offset, we just become more
    reliant, more vulnerable and, again, whether it is from a
    defense perspective or just our ability to be competitive, we
    are at greater risk, higher vulnerability. And as I mentioned
    in my opening comments, we have seen, within these past few
    months as we are dealing with COVID-19, people in this country
    are starting to understand what it means to have vulnerable
    supply chains because they are seeing it with lack of PPE and
    understanding that while we might not have the masks that we
    need and we need to wait on China and we don't like that. So
    what are we doing? How are we going to return that business to
    the United States?
        It is a little bit different to manufacture masks than it
    is to get a mine up to speed and actually producing the
    resources that we need. We understand that, that the ability to
    move quickly is very, very different when it comes to critical
    minerals because of the infrastructure, the permitting and, in
    some cases, the processing, the manufacturing. The question
    that I would have for each of you is, what would it look like?
    For instance, it has been noted that we turn to China for so
    much of the need for these critical minerals. What would the
    situation look like if China were to decide that they were
    going to cut off supplies of critical minerals to this country,
    not just rare earths like they did to Japan in 2010, but the
    critical minerals?
        It was the discussion between Senator King and Senator
    Manchin that reminded us, okay, we knew what it looked like
    when we were talking about oil vulnerability and we saw in the
    early '70s the impact when those oil supplies were cut off. The
    American public could visualize that, and they are still
    talking about that 50 years later. What does it look like? What
    would it look like? I know that that requires you to do a
    little bit of a hypothesizing or prognosticating, and we don't
    like to do that around here, but just help me out because I
    think that this is a struggle for most Americans to really
    understand the nexus between this thing and what we are talking
    about here in this Committee about the value of critical
    minerals.
        So if you can each briefly speak to that. Mr. Bryan, I hope
    you will be able to speak to it from the perspective of
    defense, but Dr. Nassar, why don't we start with you and just
    go down the line?
        Dr. Nassar. Sure, thank you, Chairman Murkowski.
        So, obviously, it's very difficult to anticipate how supply
    chains might react to such an action. But we can generally
    assume that prices are going to rise for a lot of the
    commodities that we need, that our manufacturers need to use as
    their input for their manufacturing processes. So if, for
    example, tungsten is cut off, it's used in cutting tools that
    are used throughout our manufacturing sector, including
    manufacturing of cars. So you can imagine the impact that would
    have throughout the manufacturing sector and then, ultimately,
    to the U.S. consumer. So----
        The Chairman. That is going to increase prices, consumer
    prices.
        Dr. Nassar. That would be the expectation.
        The Chairman. Sure.
        Mr. Bryan.
        Mr. Bryan. So, Senator, a couple things. One, I think the
    Navy alone has about 2,000 different systems that rely on
    lithium-ion batteries. So I can't speak to the stockpile of
    those systems and the batteries that support them but I think,
    suffice it to say that if you don't have access to the raw
    materials, the processed materials, the cathode and anode as
    Mr. Moores talked about and the rest of the supply chain, you
    are effectively limiting the number of those devices that you
    can field. Similarly, for future systems like I mentioned--
    lasers, directed energy weapons, electrification of systems--
    that the military knows they have to do to keep pace with our
    competitors.
        So I can't speak to the very, very short-term interruption,
    but that's problematic. But the long-term impact on military's
    ability to field existing capabilities and to deploy new
    capabilities to remain competitive with our international
    adversaries, is, would be challenged. I would also say that,
    you know, the indirect national security implications of
    cutting off a key input to key industry, like the auto
    industry, I think, we are--transportation is electrifying
    globally and the scale of that and the scale and pace of that
    move is large and fast. And if we don't keep up or are
    precluded from keeping up because we don't have access to the
    things our industry needs, that could dislocate a significant
    industry that's really important to the United States' economy
    and, by extension, important to our national security and our
    position in the world.
        We think about things like innovation in the auto industry
    moving east and out of the United States. So there's short-term
    implications in terms of fielded systems and our ability to
    move quickly. There's also long-term implications about, like,
    how do we remain competitive from a military standpoint and
    from an economic standpoint? Are we at the table? And if we're
    not, who is?
        The Chairman. I am over my time but I want to give the
    opportunity, very briefly, if any of the three of you online
    would care to respond.
        Mr. Caffarey?
        Mr. Caffarey. Yes, I'd be delighted to but I won't step on
    my recycling soapbox because there are lots of materials
    already in the U.S. that could serve as a source for these
    critical minerals. And I do believe that if we can organize, if
    the U.S. can organize the collection and preparation of the
    different materials that are already here, that would alleviate
    some of the issues. It might not be the whole solution, but it
    can be a great contribution to providing a more stable supply
    of materials.
        I'll give another example--China did shut off supply of
    scrap copper a couple of years ago and the U.S. industry, sort
    of, adjusted and we now have the announcement of a secondary
    copper smelt for the first time in many years being established
    in Southern Ohio that will take secondary scrap copper and make
    copper metal. So that's an example of something that the U.S.
    can do going forward to reduce the reliance on foreign
    countries.
        The Chairman. Thank you, Mr. Caffarey. I recall a hearing
    here in the Energy Committee and one of our witnesses made the
    comment when it came to recycling that the first place we
    should look to mine is within our own economy, not in the
    earth, but what we have already produced and basically, remine,
    repurpose, reuse that. So thank you for that comment.
        Very, very quickly, either Dr. Duesterberg or Mr. Moores?
        Dr. Duesterberg. Yes, I'd like to weigh in just a little
    bit, if I may.
        I think the consequences of a long-term cutoff of some of
    the critical materials that we've discussed today would just be
    disastrous for the U.S. economy in the first place. And I
    mentioned the size of the semiconductor in the auto industry,
    but it's not just those industries. It underlies computers,
    commercial aviation and so on and so forth. We simply can't
    stand up, Madam Chairman, as you know, new mining operations
    overnight. There are all kinds of horror stories about how long
    it takes to get just the permits in place. So that's one
    reason, I think, we need to think about both stockpiling and
    working with allies to--[Dr. Duesterberg's video froze]--Five
    Eyes group to assure secondary sources of supply.
        In the longer run, as Senator Manchin alluded to, we need
    to revise our mining laws to speed up the permitting process
    and perhaps put some time limit on the environmental reviews
    and the mining permitting for critical materials, let alone
    widely-used materials like magnesium or some that go into the
    solar cell production industry and the battery industry. So
    that's a long-term project and we need a national commitment to
    do that and perhaps the threat of China, which is becoming more
    and more evident every day, even during this pandemic, maybe
    that will stimulate a lot more attention to the longer-term
    problems.
        The Chairman. Thank you.
        Mr. Moores, I am going to come back to you for your
    response on this, because I have another question for you, but
    I am going to defer now to my colleague from Nevada, Senator
    Cortez Masto.
        Senator Cortez Masto. Thank you, Chairman, thank you to the
    Ranking Member and to all of you participating today. I so
    appreciate it.
        Let me jump to an issue that has been brought to our
    attention by previous panelists, and it is the issue of the
    technical workforce that is necessary to really address what we
    are talking about today. As you all know, Lithium America is
    pursuing the largest number of lithium resources in the United
    States. According to the company, Thacker Pass in Northern
    Nevada has the potential to produce enough lithium to fulfill
    25 percent of the world's demand. However, when the President
    and CEO of Lithium America sat before this Committee in May
    2019, he shared concerns about the limited pool of technical
    professionals available to fill the roughly 300 permanent
    positions a mine the size of Thacker Pass would require.
    Moreover, the U.S. Department of Commerce released a report on
    critical minerals in June 2019 and it warned, and I quote,
    ``The entire U.S. critical mineral supply chain faces workforce
    challenges, including aging and retiring personnel and
    faculty,'' and what we are talking about today, foreign
    competition for U.S. talent. Unless these challenges are
    addressed, there may not be enough qualified U.S. workers to
    meet domestic production needs across the entire critical
    mineral supply chain.
        So my question is to everyone on the panel. Do you believe
    the U.S. is currently doing enough to foster a strong workforce
    of technical professionals and specialists to support what we
    are talking about here in the hope of the projected growth of
    domestic critical mineral extraction production and, if not,
    what should we be doing?
        Let me just start with the panelists, and I will start with
    Dr. Nassar.
        Dr. Nassar. Thank you, Senator, for that question.
        It is an issue that I think other agencies are quick to,
    better equipped to answer. I will say, however, that in the
    federal strategy that's been put out by the Department of
    Commerce, there's a specific call to action about growing
    America's workforce on critical minerals that's being led by
    the Department of Education and the National Science
    Foundation.
        Senator Cortez Masto. Thank you.
        Anyone else? Yes, please, Mr. Caffarey. We will go to Mr.
    Caffarey first. Thank you. Oh, I think you are on mute.
    Perfect.
        Mr. Caffarey. Thank you. Thank you for that question.
        Yes, I do believe that more needs to be done in the U.S.
    for educating technical people, and definitely we need to
    reinforce the workforce. There are several universities that
    are active in forming young, technical people but there are not
    enough of the requirements that are out there. And there is a
    lot of, how do I say, distraction. One example was a recent
    graduate from the Colorado School of Mines found a job as an
    investment banker in Boston. So there are people that then
    disappear from that potential workforce.
        Umicore tries to provide local training for that purpose.
    We bring in some experts from Europe, from other areas within
    Umicore and then we have those people locally train U.S.
    citizens in the technical aspects needed for our companies. So
    I think allowing foreigners from established companies to come
    in and educate the local force for specific jobs is one, but
    definitely try and encourage universities to bring out more
    technical degree personnel.
        Thank you.
        Senator Cortez Masto. Thank you.
        Dr. Duesterberg?
        Dr. Duesterberg. Yes, thank you, Senator.
        I've elsewhere called for spending as much as $80 billion
    more per year through the, mostly through the National Science
    Foundation, for education of a technical workforce but mostly
    higher education. But I think we also need to keep in mind that
    a lot of the jobs in manufacturing, including the processing of
    materials, require skilled jobs that can perhaps be
    accomplished through the training of community colleges.
        And finally, we need to do something, I think, to motivate
    women in the technical workforce. Perhaps this is a
    longstanding problem that is a well-known issue, the
    representation of women in physical sciences and engineering
    and mathematics is not as robust as it should be. There must be
    some way to make these sorts of jobs a little bit more
    attractive not only to women but to men as well and perhaps
    linking them up somehow with these because we spent this
    hearing talking in large part about semiconductors, lasers,
    gallium-arsenide chips and that sort of thing. So it's a long-
    term project, but there's a cultural element to it as well that
    national leaders like yourself, I think, could play a big role
    in just starting to talk about it and urging, you know,
    diversification of the technical workforce.
        Senator Cortez Masto. Thank you.
        I couldn't agree more, and you highlighted Tesla earlier.
    Tesla is in Nevada. I will tell you, I have toured Tesla, I
    can't tell you how many times, but they have a program and they
    call it, Engineer Like a Girl. They invite all of these young
    women in to talk about opportunities and explore the STEM
    really, kind of, professional background that is necessary in
    this field. So I agree with you. I think more needs to be done,
    and that is my focus here in the Senate. So thank you.
        I notice my time is up. Chairman, thank you so much. Thank
    you, gentlemen.
        The Chairman. Thank you, Senator Cortez Masto.
        Senator Barrasso.
        Senator Barrasso. Thank you, Madam Chairman, for holding
    this important, timely hearing. The coronavirus pandemic has
    challenged each of us in unprecedented ways. The pandemic, the
    economic response, has had a profound effect on all of us and
    it has been, it has helped demonstrate our strengths but also
    exposed a number of our weaknesses and that is the purpose of
    this hearing today.
        Our domestic mineral supply chain is one area that we can
    actively strengthen through sound proactive policies we should
    take the opportunity, I believe, to strengthen, to facilitate
    and to rebuild our domestic supply chains. China has ramped up
    production of certain critical minerals, like rare earth
    elements, and now it undercuts the rest of the world on price.
    We use rare earth elements in everything from smartphones to
    defense applications. This practice has allowed China to
    dominate both production and processing of these minerals. This
    is as much a geopolitical move as it is an economic move. The
    Department of Defense has issued certain funding opportunities
    under the Defense Production Act for the domestic production of
    key minerals and products in recent months.
        So Mr. Bryan and Mr. Duesterberg, what policy tools do we
    have today at our disposal to break China's grip on these
    minerals?
        Mr. Bryan. Thank you, Senator.
        I think there are things that the Department of Defense can
    do. I think there's an opportunity to one, identify critical
    shortages, figure out sources of supply. We can use the Defense
    Production Act to put in place some economic incentives to
    encourage investment. At the same time, I think we have to
    recognize that the global move here toward electrification
    dwarfs any ability of the Department of Defense to control that
    market.
        DoD is a big customer, don't get me wrong. I think since
    about the mid-1980s, we've, for example, we've bought like,
    something like 300,000 Humvees. That's a big order. But the
    United States auto market is 17 million cars a year. The
    Department of Defense can't control that market. And I think
    until we get our EV policy right and until we determine that
    with the rest of the world to determine that that's the
    direction we're going and we put in place the structures,
    incentives, programs we need to attract supply chain investment
    across that, I think, the Department of Defense is going to be
    at a disadvantage and where there are opportunities they're
    going to pay a lot.
        So I worry about, there are things DoD can do--don't get me
    wrong--a lot, but they are ultimately going to be, I believe,
    going to be victim, to a certain extent, to the larger global
    transition.
        Senator Barrasso. Dr. Duesterberg?
        Dr. Duesterberg. Thank you, Senator.
        I'd focus on two or three different approaches. The most
    important is to develop our own ability to produce needed
    resources and I think, again, we need to work with our close
    allies in places like Canada and Australia which have abundant
    supplies, and it includes not only the raw minerals but the
    processing capacity, for instance, for rare earths.
        Second, I would focus on trade policy. China clearly
    subsidizes its mineral industries through its Belt and Road
    programs. It's using zero cost financing in many cases to
    acquire the rights to mines. This is contrary to the spirit, at
    least, and in some instances, the law of the world--[Dr.
    Duesterberg's video froze]--sanction their unfair acquisition
    of and exploitation of mineral resources just as we can for
    manufactured products.
        Senator Barrasso. Thank you.
        Dr. Duesterberg. If you want I can, I have a few other
    ideas, but----
        Senator Barrasso. Maybe in writing because I am running out
    of time, and I do have a question for Dr. Nassar.
        Dr. Duesterberg. Okay.
        Senator Barrasso. Thank you.
        Dr. Nassar, the Energy Information Administration recently
    released its annual report on uranium production. The report
    shows that 2009 production of American uranium was down 89
    percent from the previous year. Wyoming has led the United
    States in uranium production, and the outlook for our nation's
    uranium production, I believe, is dire. We need to reverse this
    alarming trend. That is why I support immediately establishing
    the Department of Energy's Uranium Reserve. You know, absent
    immediate action from Washington, can you talk a little bit
    about, do you expect American uranium production to recover
    unless we do something dramatically to increase uranium demand
    here at home?
        Dr. Nassar. Thank you, Senator, for that question.
        As you mentioned, this is information that the Energy
    Information Administration covers and it's really not covered
    by our Center, at the National Minerals Information Center at
    U.S. Geological Survey. So I wouldn't be able to comment about
    that specific question.
        Senator Barrasso. We asked them last week, and I also felt
    they hedged on the answer. When you think of something that
    drops that dramatically and your knowledge on the issue,
    anything else you would want to offer?
        Dr. Nassar. I'm afraid I don't have anything to offer on
    that.
        Senator Barrasso. Thank you, Madam Chairman.
        The Chairman. Thank you, Senator Barrasso.
        Senator Lee.
        Senator Lee. Thank you, Madam Chair, and thanks to both of
    you for being here.
        Mr. Nassar, I would like to start with you, if that is all
    right.
        You mentioned in your written testimony that, ``Once a
    mineral supply chain is identified as high risk, the next step
    is to determine the best ways to reduce the risk. Various
    strategies can be pursued including diversification of supply,
    identification and potential expansion of domestic mineral
    resources, increasing recycling, developing substitutes,
    maintaining strategic inventories and bolstering trade
    relationships.''
        Can you tell me how often essential minerals are found on
    federal land and while being found on federal land are rendered
    more or less inaccessible as a result of administrative
    withdrawals and other restrictive designations?
        Dr. Nassar. Thank you, Senator, for that question.
        The question on federal lands is something the BLM, the
    Bureau of Land Management, can address, probably more
    accurately. It's important to note, however, that simply more
    exploration companies look for deposits for commodities that
    are either base metals or precious metals. A lot of the
    commodities that we're talking about that we would define as
    critical minerals, are typically not explored for and so we
    would not know that information because they're typically
    recovered as by-products further downstream. And so, it's
    difficult, I think, in a lot of cases, even on, in any deposit
    to figure out what the potential is to recover some of these
    critical metals.
        Senator Lee. So you are saying you often don't know what is
    in there?
        Dr. Nassar. That's right.
        Senator Lee. And you can't know until----
        Dr. Nassar. Well, they're typically----
        Senator Lee. ----somebody else develops it as part of a
    supply chain for something else?
        Dr. Nassar. Exactly.
        So, a lot of cases, they're going after maybe the copper or
    the gold and they're typically not looking in the assays for
    some of these by-products. And so, we don't actually know if
    it's going to happen or not or if it's going to be recovered.
    And sometimes it's not really the mining companies that do the
    recovery, it's a separate company that's further downstream
    that does it.
        Senator Lee. Okay.
        One of the reasons why I ask is that one such deposit of
    uranium exists near a Utah southern border, but it remains
    inaccessible because of an administrative withdrawal. I was
    just going to ask you, do you think that in a time of crisis
    and if the administrative withdrawal could somehow be lifted in
    this hypothetical, do you think mineral development in that
    kind of circumstance could be implemented quickly enough to
    avoid disruption?
        Dr. Nassar. It's difficult to know. We know that mining,
    going from exploration to mining development to actually full-
    scale production can often take decades. And that might be due
    to permitting, it might be due to technical reasons. It takes a
    lot of effort to get a mine up and running. So often in cases
    that if it's a short-term issue, going from exploration to full
    production is typically not feasible in a short timeframe.
        Senator Lee. But it is certainly possible that if you could
    lift the administrative withdrawal, you might be able to gain
    access to it faster or at all, whereas you could not without
    lifting the withdrawal?
        Dr. Nassar. Yeah, that's something that I really can't
    comment about.
        Senator Lee. Okay.
        Mr. Bryan, let's turn to you. You also mentioned in your
    testimony that the State of Ohio recently landed a $2.3 billion
    investment from General Motors and South Korea's LG Chem to
    build a battery plant in Lordstown, Ohio, and that that
    facility would bring more than 1,000 jobs to the Mahoning
    Valley. Is that right?
        Mr. Bryan. That's correct, sir.
        Senator Lee. It is a very significant investment by a
    private entity. Do you think there is enough market demand to
    establish secure supply chain through private investment?
        Mr. Bryan. So I would defer to, first of all, I think it's
    a massive investment. It's a big deal for Ohio. I think Mr.
    Moores is probably best positioned to talk about the broader
    market, the private sector market or investment in supply chain
    infrastructure. What I would say is that I think in the,
    especially in the wake of COVID, you're seeing a lot of auto
    manufacturers even look to see how they can remove risk from
    their supply chains, and battery and supply chain facilities
    are best close to where they produce their vehicles. But again,
    I think Mr. Moores is probably really well-positioned to speak
    to that question as well.
        Senator Lee. But do you believe that there is enough market
    demand to establish a secure supply chain through private
    investment?
        Mr. Bryan. So, sir, I can't, I can't speak to that.
        Senator Lee. Okay, thank you. Thank you, Madam Chair.
        The Chairman. Thank you, Senator.
        We have Senator Hoeven who is with us virtually. Welcome,
    Senator Hoeven.
        Senator Hoeven. Chairman Murkowski, can you hear me?
        I would like to address my first question to Dr. Nassar. To
    what extent has USGS collaborated with Department of Energy on
    the protection of the commercialized rare earth minerals from
    domestic coal and coal by-products?
        Dr. Nassar. Thank you, Senator, for that question. I
    believe there is a partnership there. I don't, I can't speak to
    the exact terms because I'm not entirely knowledgeable of it,
    but it is something that both DOE and USGS are investigating.
        Senator Hoeven. All right. Has the USGS performed any
    assessments of other potential domestic sources for rare earth
    minerals such as rail cuttings from unconventional shale
    production or other sources?
        Dr. Nassar. There are other potential sources for rare
    earths, as you mentioned. I can get back to you on the
    specifics the USGS is investigating.
        [Information regarding potential domestic rare earth
    sources from USGS follows.]
    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        Dr. Nassar. But I think it's important to recognize--
    including recycling of, for example, waste electronics. But I
    think it's important to recognize that at this stage there's
    significant supply outside of China of rare earth mining. What
    is really still missing, however, is further downstream in the
    separation and then into magnum manufacturing. And that's
    something that really, it needs to be addressed and is
    partially being addressed by what's going on with Department of
    Defense and the Presidential determinations have been put out.
        Senator Hoeven. Thank you.
        Mr. Bryan, what policies should we prioritize to strengthen
    our supply chain and manufacturing capabilities, for example,
    for things like unmanned aviation and that kind of thing?
        Mr. Bryan. So, sir, thanks for that question.
        As I look at the defense demand for lithium-ion batteries
    which has been the focus of my testimony, I think the
    Department of Defense, writ large, their demand for lithium-ion
    is around 300 megawatt-hours a year in demand or thereabouts.
    That's about the same amount of batteries that go into about
    3,500 Teslas, and Tesla made about 100 times more cars than
    that last year. I think the policies that we have to really
    think about, I mean, look, there are things, again, the
    Department of Defense can do. I think there's Defense
    Production Act incentives that can be put in place. I think we
    need to really understand what our supply chain vulnerabilities
    are, what our material shortages are, what materials are
    actually critical, whether or not we have them and how long the
    supply chain, how long the lead time we have in the supply
    chain for that. We can do battery standardization things within
    the Department to increase demand for particular types of
    batteries.
        But ultimately, the Department of Defense's demand, I do
    not believe, is big enough to define the industry. And so, I
    think that, I think that we really have to look broadly to the
    supply chain and look and see what kind of policies we need to
    put in place to attract manufacturing here and what kind of
    programs we need to put in place. And that's going to extend
    far beyond the Department of Defense to a more--and I think
    this Committee has talked about it quite a lot over the past
    couple years, that this is a whole government approach and we
    need a whole government approach to that.
        I think at the same time, from a national security
    perspective, we may not have minerals in some segments of the
    supply chain, but we do have allies and people we can work with
    and we need to really reach out to those folks, like Australia
    is a perfect example. What do we--how are we working with
    Australia to diversify our supply chain to support our own
    needs and also, perhaps, to hedge against China? So I think
    there are things we can do, but I do believe that in the
    defense sector we are going to be subject, to a certain extent,
    to the broader industry.
        Senator Hoeven. What about military and economic
    ramifications that fall behind on advanced energy storage
    technology?
        Mr. Bryan. Two things I would raise. One is, of course, we
    have specific platforms that rely on lithium-ion batteries. We
    have, I mentioned earlier, we have, I think, the Navy alone has
    about 2,000 systems that rely on lithium-ion batteries. Our
    future capabilities from electric ships to an electric brigade
    combat team, to directed energy weapons, all, to one extent or
    another, incorporate capabilities that are enabled by lithium-
    ion batteries. So the implications tactically for us are
    significant. An interruption, you know, I can't speak to how
    well we'd manage a short-term interruption, but certainly a
    long-term reduction in the availability of supplies would
    affect our ability to remain competitive, I think.
        I also think that our, if we are not at the table as this
    massive industry transitions, if we are not at the table in the
    middle of these trade discussions, in the middle of these
    negotiations that are happening, we give up some of our ability
    to influence world events and use diplomatic leverage to hedge
    against some of our competitors.
        Senator Hoeven. Thank you. Thank you, Madam Chairman.
        The Chairman. Thank you, Senator Hoeven.
        Let's go to Senator McSally. You have been patiently
    holding.
        Senator McSally. Thank you, Madam Chair. Thanks for holding
    this really important hearing as we focus on this issue that is
    important for our national security. It is important for all of
    us in each of our states, and you have been sounding the alarm
    for a long time and we have been with you about our critical
    minerals and the challenges in our supply chain. I think the
    coronavirus has certainly awakened many people to our reliance
    on our adversary, China, for supply chains for many things.
        I flew the A-10 Warthog and we wouldn't be able to build a
    Warthog, we are not building them today, without relying on an
    adversary, China, for the pieces and parts of the A-10 and also
    other parts of our national security and our military. So this
    is a very critical conversation that we are having and we have
    to get our legislation passed. I support including it in the
    NDAA, and I appreciate everybody's testimony on this today.
        I want to talk about, it is not just, obviously, the
    extraction of these critical minerals. Arizona is a mining
    state. We have 18,000 jobs and over, I want to say, $13 billion
    of economic impact that comes from mining in Arizona. But there
    is also the issue of processing of these elements and, as we
    have talked about, green energy and lithium-ion batteries,
    roughly 22 percent of the battery for an electric vehicle has
    purified or processed graphite in it.
        I just want to share a story from last week. I had a
    virtual meeting with a company in Arizona that started with
    technology that was researched out of the University of
    Arizona, and it was focused on this graphite processing. So it
    is not just the extraction of these critical elements, but it
    is the processing. In this case, we are totally reliant on
    China for processing of graphite. They have created a
    technology that is cheaper and greener than what is available
    out there, and now they are located in Arizona trying to ensure
    that we have these jobs in America. We bring the supply chain
    home and, again, I was just so proud to hear that these types
    of efforts were happening because this is critical for energy
    storage, as you all have been talking about already. It is also
    an element of our nuclear energy and coming from there is
    purified graphite that is important for our nuclear energy.
        So it is initiatives like this that are allowing us to be
    more reliant on ourselves with American jobs, American reliance
    for key elements. And it needs to happen in so many parts, but
    as I talked to these guys at Urbix Resources last week, we had
    a conversation about what else needs to be done in order to
    incentivize investment, for investment to come home. We
    discussed things like opportunity zones to encourage investment
    in distressed communities. Are there things that we can do,
    this question is to any of the panelists, to incentivize
    investment in innovation that is bringing the supply chain
    home? And what more needs to be done for us to continue to
    invest in the research and development for us to have those
    best technologies out there so we can be a leader again in the
    processing of these critical minerals for our national security
    and for other elements of our energy security? This was, again,
    a great example right in Arizona with Arizona jobs, Arizona
    research. What else can we do in order to encourage that kind
    of investment, that kind of research, to address this issue?
        Dr. Duesterberg. This is Tom Duesterberg. I'll take a stab
    at that.
        First, I think it's important to continue to do research on
    alternative sources of materials. There are companies out
    there, I know that Toyota is working on, for instance, an
    alternative to the lithium-ion battery. I don't know how far
    along that is, but that's one thing.
        We can incentivize research through building basic
    knowledge through our national labs. We do need to devote a
    bigger proportion of our federal budget to basic research,
    including in things like processing technology.
        Finally, I would just note, Senator, on rare earths, as you
    probably know, which offers tax incentives both to the
    producers and to the consumers of rare earth products that
    would probably, you know, be somewhat costly although the
    numbers are not huge because rare earths are, they're vital,
    but they're not huge in quantity. But that sort of approach
    might be worth taking a look at as well.
        Senator McSally. Great, thank you.
        Mr. Moores. I have comments.
        Senator McSally. Yes?
        Mr. Moores. Thanks, Senator.
        I think there's twofold from my experience and my
    perspective. One is actually encouraging the industry--
    supersized battery plants, more of them to be located within
    the U.S. So actually the business already exists for companies
    like Urbix to actually sell to customers within the domestic
    U.S. because at the moment all the customers are in Asia.
        Senator McSally. Yes.
        Mr. Moores. And so that's, kind of, the base level. But
    then you look at what the European Union does, it's quite
    interesting. They have founded the European Institute of
    Innovation and Technology which allows, it's kind of focused on
    identifying early stage companies like this and giving them
    access to, basically, debt capital, easy money. They call it
    ``no recourse'' capital, but it allows them to better their
    technologies to a stage that attracts capital from the private
    markets. And I think those two combined helps start creating
    this ecosystem, this lithium-ion economy for the USA where
    things like graphite and what Urbix are doing are crucially
    important because 84 percent of that material is produced in
    China and none is produced in the U.S. So yeah, that's my
    comments.
        Senator McSally. Great, thank you.
        Thank you, Madam Chair.
        The Chairman. Thank you, Senator McSally.
        Let's go to Senator Daines.
        Senator Daines. Thank you, Chair Murkowski.
        Behind me is the USGS' 2019 list of mineral companies and
    commodities that the United States is relying on for foreign
    countries for imports.
        [USGS Charts Displayed--2019 U.S. Net Import Reliance chart
    follows:]
    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        Senator Daines. I want to highlight a few things. You can
    see in the chart we are dependent on China for over half of the
    62 minerals on the list. It is highlighted there in yellow.
    Other countries we are dependent on for critical minerals on
    this list include Russia, Argentina, Vietnam, Rwanda and many
    more. But being 100 percent reliant on imports for a product or
    a commodity import is never good for supply chain reliability.
    However, being 100 percent import reliant on China or Russia
    for materials for our healthcare system, for energy industry
    and technology sectors is a national security nightmare.
        This next map shows the different countries that we are
    more than 50 percent reliant on for mineral commodities.
        [Major Import Sources of Nonfuel Mineral Commodities chart
    follows:]
    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        Senator Daines. You will notice that China is the darkest
    color on the map. It is scary that the United States has gotten
    to this point, especially since we have many of these resources
    in our very own backyard in the United States. We don't need to
    be so dependent on foreign countries for these critical
    minerals. However, when it takes over two decades to permit a
    mine in the United States, like it has for the Rock Creek Mine
    in Montana, it is no wonder we are being forced to rely on
    foreign countries. We need to bring these high-paying mining
    jobs back to the United States and back to Montana. In fact, in
    Montana the average mining job paid an annual wage of nearly
    $90,000. That is double the average wage for Montana which is
    about $45,000 a year.
        Increasing our domestic production of critical minerals
    will create jobs, high-paying jobs, twice the state average
    wage, generate revenue for our rural communities and bolster
    our national security. Bringing the production back to the
    United States will help ensure that we have a steady and a
    reliable system and stream of the critical minerals that are
    used in our healthcare system and modern technology every day.
    COVID-19 has shown us that we need to bring back manufacturing
    jobs in the United States and increase our domestic mining
    capacity. The U.S. should never, never be in a position where
    we are beholden to China or to Russia for supplies to keep our
    country safe and healthy, especially when we have many of these
    minerals in the United States. I need to be focused. We need to
    focus more on the issue. I am excited to talk about it more
    today.
        I want to start with Dr. Duesterberg. You said in your
    written testimony that in order to compete with China we need
    to lower regulatory barriers. We have mines in Montana that
    have taken decades, decades to federally permit. Even when the
    Federal Government is minimally involved, it can take a decade
    of testing before a mine is permitted in Montana alone. How do
    these lengthy delays increase our dependence on China and
    increase national security risks and how do we lower these
    regulatory barriers?
        Dr. Duesterberg. Well Senator, thank you for the question.
    I think it's obvious that these lengthy delays are disastrous
    for trying to--[Dr. Duesterberg's video froze]--China, but also
    dominance in Russia and things like uranium production. But I
    think we ought to consider for critical materials some time
    limit on the permitting process. There will have to be
    coordination between state and federal permitting authorities
    but I think it's, if we're going to be serious about this, we
    have to find a way to put some limits on, temporal limits on
    the permitting.
        We also need to think through what critical regulations
    really are, how critical they are and try to roll back some
    that are not cost-effective, especially, again, for critical
    materials.
        Senator Daines. Thank you.
        I want to ask a question of Mr. Nassar. Many of the
    minerals on your critical minerals list are used in the
    healthcare system, including medications, medical equipment and
    more. Many of those we also are heavily import reliant upon.
    Did you take into consideration the medical supply chain and
    import sources when creating the critical minerals list?
        Dr. Nassar. Thank you, Senator, for that question. It's
    always great to see USGS data up there.
        So you're absolutely right. Minerals are used throughout
    the healthcare industry, whether it's pharmaceuticals,
    diagnostic imaging, surgical equipment, even dental, right? So
    even a single commodity like platinum is used in over 50
    percent of anti-cancer drugs. It's used in biomedical devices,
    et cetera. The list goes on and on.
        In terms of our critical minerals list--and it is a Federal
    Government approach through the interagency, not just a USGS
    list--we took into account both production concentration and
    import reliance and in our latest attempt we looked into
    economic vulnerability. And so by definition we looked at
    whether or not that commodity is used in industries that are
    important to the U.S. economy.
        Senator Daines. So the problem also is not just where
    something is mined, I might note, but also where it is
    processed. Montana mines a lot of copper and because of that we
    are less import reliant. However, the number of copper smelters
    in the United States is dwindling while China is building new
    ones. How would processing dependence affect the critical
    mineral list?
        Dr. Nassar. In developing the critical minerals list we
    look at multiple supply chain stages, wherever we are able to
    obtain data. So we would look at the mining production
    concentration as well as the smelting and refining stages. And
    so, if the bottleneck occurs further downstream, we're able to
    capture that and use that information to highlight that in
    terms of which commodities are most critical.
        Senator Daines. Thank you, Mr. Nassar.
        Thanks, Chairman Murkowski.
        The Chairman. Thank you, Senator Daines.
        I want to go back to you, Mr. Moores. It was both you and,
    I believe it was Mr. Bryan, I think it was you, Mr. Bryan, that
    said the U.S. is getting lapped by China which we know. We talk
    about a lot but you also say and Europe. And Mr. Moores, you
    have said the same. Again, we often talk about mineral and
    battery manufacturing in China and other Asian countries, but
    Mr. Moores, you mentioned that more European countries are now
    making it a priority to onshore additional components of the
    battery supply chain.
        I would ask you first, Mr. Moores, and then we will go to
    you, Mr. Bryan, a little bit on what is happening in Europe and
    if Europe can do this, if they can get into the game, what is
    wrong with us over here? So Mr. Moores, you first on the
    European investment.
        Mr. Moores. Thank you, Senator Murkowski.
        Within Europe they are building battery plants much quicker
    than the U.S. and we've got 16 of these battery megafactories
    in the pipeline at the moment and that's a reaction from the
    automotive industry, speaking with the government level and
    identifying a need for the independent, European independent,
    battery production. And the way they've done this, really,
    considering there was hardly any lithium-ion battery production
    within Europe before, as it's been the European Union, they
    firstly discussed the subject, discussed again and treated it
    like we do in these hearings, like we do at our conferences at
    Benchmark. Then they identified the problems and companies that
    can come to the solution and then they gave access to the
    capital.
        So the way they did this first was they created this EU
    Battery Alliance to discuss these issues and bring industry
    together with government and together with financiers. Then
    they created the second phase which was this European Institute
    of Innovation and Technology and the commercial arm of that
    called Commercial Partnership for Inner Energy. They then
    identified companies that could be, smaller companies that are
    going to be part of the supply chain going forward. And the
    third part, the European Investment Bank came on board as well
    and helped with access to debt capital. And those three
    components actually sparked one of the highest--one of the most
    successful cases is the development of Northvolt. Northvolt, a
    European-based, lithium-ion battery producer. They're not in
    production yet, but they are already planning their second
    plant in Germany. And so, the way they've been described by
    Henry Sanderson at Financial Times was ``the airbus of the
    battery industry.'' And that's exactly what the U.S. needs to
    be doing. They've created a champion. It's encouraging more
    industry and more people to get involved in the supply chain,
    and it's starting to go out toward the upstream, toward the
    cathode manufacturing as well.
        The next step up to cathode is, of course, the raw
    materials and that's now, as a result, getting more attention.
    So that's, kind of, how they did it.
        The Chairman. So very coordinated or, certainly,
    collaborative strategy.
        Mr. Bryan, do you want to speak to that?
        Mr. Bryan. So Mr. Moores knows this far better than
    probably anybody in the industry, but I'd only point, as a
    point of reference, note the scale of the European's
    investment. Just one of the tranches of funding that came out
    of this, came out of the EU, last December they put $3.5
    billion into supply chain investments. Three and a half billion
    dollars, that's one tranche. I think the European Investment
    Bank has said that something like $100 billion has been
    channeled to the battery supply chain. So the scale of their
    effort is, we sort of pale in comparison to that,
    notwithstanding your efforts, Madam Chairman.
        The other thing I would say is post-COVID, it's
    interesting, I think Europeans have seen support for
    electrification and the supply chain in their stimulus
    packages. I know Germany and France have both targeted those
    industries as part of their stimulus. And I think the reason
    for that is we, obviously--countries are going to want to
    recover what they have lost, but they also are seeing this as
    an inflection point for them to decide where they want to be in
    the future. And so, I think they've taken advantage of that
    opportunity and have, sort of, doubled down on it. And I think
    we're in the same position as we assess where we are and where
    we're going, but the scale of their commitment has been, I'll
    say, impressive.
        The Chairman. Well, I would agree, and I think it is
    something that we need to pay attention to.
        You mentioned this inflection point. Bloomberg recently ran
    an article entitled, ``Supply Chains of 2020 Needing Repair Now
    are the Banks of 2008.'' That article references a Michigan
    State University, or a white paper from Michigan State. They
    assert that companies need to take action immediately in order
    to shore up supply chains and that low cost should no longer be
    the only consideration. Dr. Duesterberg, I will ask you, what
    do you think about that? Do you think U.S. companies should do
    this once in a generation overhaul of their supply chains?
        You have your mute button on, Dr. Duesterberg. There you
    go.
        Dr. Duesterberg. Sorry about that.
        I do think we need quite a bit more attention on
    vulnerabilities of supply chains. We've talked about that all
    morning. And I would note that U.S. industry is already aware
    of that and they're slowly making moves to achieve more
    resilience, move supply chains out of China where possible. But
    again, partly like mining, you can't do this overnight. So
    there does need to be a national commitment. We can think of
    ways where we can incentivize companies to take these steps.
        If I may just make a quick comment about Europe and two
    things. Number one, the support of national champions including
    battery makers in Europe is going to lead to some questions
    about their subsidization of industry. We're in danger of
    having a subsidy war with our European friends the way things
    are moving now. And second, they can't build batteries without
    getting access to the same raw materials that we do and that
    those raw materials are controlled more by China than anyplace
    else for batteries. China is well known for exercising
    leverage, political leverage, over countries that are dependent
    on them. Europe is already dependent on China for sales of
    autos. If they're going to be dependent on China for a new
    major thrust in industry like lithium-ion batteries, they
    become more vulnerable to political pressure from China and
    that will--[Dr. Duesterberg's video froze]--which, I think,
    dangerous in the long run.
        The Chairman. Thank you, Dr. Duesterberg.
        Mr. Moores, I want to go back to you and, kind of, key into
    a question that I think Senator King might have asked were he
    here. He suggested that given the vulnerability, the reliance
    that we have on foreign nations, many of them are adversaries,
    that it might, might, be something to consider to pay
    effectively a premium for domestic production. So to you, Mr.
    Moores, are you seeing any signs that U.S. companies and
    manufacturers view supply chains as a vulnerability and are
    therefore willing to invest or to pay a bit more for the raw
    materials to improve a level of resiliency?
        Mr. Moores. That is a good question. We are seeing
    automotive companies that are aware they need the battery cell
    capacity and when you get to that stage it's very clear
    lithium-ion batteries are all about the raw materials. And so I
    would say, not yet, that the investment is not coming from the
    downstream fully to build these new resources domestically
    within the U.S. and the question actually is whether it's,
    whether the supply chain is more integrated, that's the key
    thing I think. You know, it's not just having the cobalt mined
    and then you're selling it to make precursor. It's actually
    having the people that make the precursor own the cobalt mine.
    Or the lithium--lithium is quite integrated because it comes
    from brine in South America, but the people that own the
    resorts actually own the chemical processing facility that
    makes battery-grade lithium to go into a lithium-ion battery.
    So that's the model.
        Mining companies have to become chemical companies and
    integrate it and that way, actually, the costs, generally, the
    cost sensitivity within the supply chains is reduced. And
    actually you can, the business cases are already there with
    junior mining companies, development companies in the U.S. They
    can actually build these things economically if there was a
    domestic industry, if there was cathode and anode manufacturers
    within the U.S. they could sell to, if there was battery
    manufacturing and the demand there. And so I would say you can
    get around paying a premium for the raw materials if the supply
    chain is more integrated, and that's where the industry is
    going. So it all comes back to encouraging supersized battery
    plants to be built within the U.S. Cathode manufacturing is so
    critical. The U.S. needs a giga-cathode manufacturing facility.
    Tesla would be able to take the majority of it with its new
    plants. LG Chem is going to need cathode as well as they build
    out their domestic U.S. facilities. So I would say supply chain
    integration is the way forward rather than just paying a
    premium for raw materials.
        The Chairman. Now I appreciate that and it speaks to what
    we are seeing with this clustering, the multiple steps of
    supply chains coming together, clustering in one region. We see
    them in Nevada, certainly, as we heard from Senator Cortez
    Masto.
        I have one final question and this is probably directed to
    both of you, Dr. Nassar and Mr. Bryan, and this is related to
    stockpiling. It has been referenced briefly this morning. It is
    certainly one solution to increase mineral security,
    particularly in the defense space within the NDAA that we will
    again have before us here in the next few days. There is focus
    on critical minerals, mineral stockpiles, but can you speak
    just to the concept, the notion, of stockpiling raw materials
    as a viable solution to protect against supply disruption,
    particularly over the long-term?
        We will go to you first, Dr. Nassar, and then Mr. Bryan.
        Dr. Nassar. Thank you, Senator.
        I think stockpiling can play a very important role. It
    definitely is there to provide a buffer for when there is an
    unexpected supply disruption. The U.S. Defense Logistics Agency
    obviously manages the national defense stockpile, and they
    provide a report to Congress on a biannual basis. I think this
    is really useful information. They do their own shortfall
    analysis to try to understand what might happen under different
    scenarios and are able to then request purchases for the
    stockpile to be able to hedge against those events. It is not,
    by itself, a solution to supply risk, but it is an important,
    one of the important levers that can be pulled.
        The Chairman. Mr. Bryan.
        Mr. Bryan. So, you know, I kind of agree with Mr. Nassar.
    I'm not an expert, certainly on stockpiling or on, even on
    minerals markets necessarily. My observation would be that
    stockpiling wouldn't be my first instinct. I'm not, it's not
    clear to me on the volume and the feasibility of creating a
    stockpile for all the volume of materials we're going to need,
    not just for defense applications but certainly for the auto
    industry. I don't know whether it's realistic to think we're
    going to stockpile enough lithium to fuel our auto industry,
    but I'm sure it has some place.
        I would also note that, you know, as Mr. Moores has made
    really clear, that our weaknesses throughout the supply chain,
    so if we have a stockpile of minerals but they're not processed
    and useable then I'm not sure how much good it does us. If we
    have to ship the stockpiled minerals to China for processing,
    that's probably not the most ideal scenario. So I think we have
    to look again holistically at the supply chain, look at what we
    need and figure out how we position ourselves to attract the
    kind of massive, massive economy changing, transforming, levels
    of investment that are happening globally to the United States.
        The Chairman. Well, I couldn't agree more. It has to be the
    whole supply chain and, again, when we talk about the level of
    investment, we are seeing the investment in these mining
    activities but we are not seeing that investment here in this
    country. The investment, again, whether it is in extracting the
    raw material first off or the processing or along the chain. As
    you have used the term, the United States is being lapped here
    and it is how we, kind of, pick up our game that I think is
    going to be very, very important moving forward and that is why
    we continue to press this issue whether it is in this Committee
    or attempting to advance legislation like our Mineral Security
    Act. So we will continue with that.
        I want to thank all those who have participated in the
    panel today, not only for your comments, your responses, but to
    what you are doing to lead in this very, very important area.
    It really is a matter of education and awareness, and I think
    we just need to keep that up regardless of how many times we
    have said what we have said and the importance and the urgency
    we just need to keep saying it. So thank you for that.
        I want to conclude today's hearing with just a comment. It
    has been noted, not only in this hearing but in others, as we
    have talked about critical minerals, the subject of mining law
    reform comes up and the push for a royalty for hardrock mining
    on federal lands. I have said before and I will repeat, I am
    happy to engage on a discreet set of updates to the mining law
    but my minimum standard here is that we can't harm our mineral
    security. That, to me, is very clear and, again, it becomes
    more clear with every hearing that we have. But to this point,
    the proposals that I have seen appear to be designed to
    discourage mineral development on federal land and frankly that
    makes it hard to even begin a conversation about something
    viable. We often hear proponents of mining law reform make it
    sound like federal lands are a free for all, but that is not a
    reality. Approvals of operations, reclamation, bonding, these
    are all required. You have to have compliance with NEPA, the
    Clean Water Act, the Endangered Species Act, just to name a
    few.
        Again, we hear today and we have heard in previous
    hearings, we are ceding a host of industries to other
    countries. I become concerned when I think that we might be
    chasing miners off of public lands and sending, really, a wrong
    signal here in terms of U.S. support for mining activity. So if
    members are interested in reasonable legislation that
    acknowledges the unique challenges and the disadvantages of
    mining on public lands and that protects our prospectors and
    our miners who put tremendous time and certainly tremendous
    resources at risk to find, explore, prove up and develop our
    mineral deposits, I am ready. In the meantime, I think we are
    where we need to be which is focused on the greater challenges
    which include rebuilding our supply chains and ensuring that
    our nation is strong and competitive.
        Again, we will continue these good and important and timely
    discussions here in this Committee, and we thank you all for
    contributing to the debate today.
        With that, the Committee stands adjourned.
        [Whereupon, at 11:31 a.m. the hearing was adjourned.]

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