[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                     
          
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               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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