    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

                         BREAKING CHINA'S CHOKE HOLD ON
                         CRITICAL MINERAL SUPPLY CHAINS
    =======================================================================

                                    HEARING

                                     OF THE

                     SUBCOMMITTEE ON EAST ASIA AND PACIFIC

                                   BEFORE THE

                          COMMITTEE ON FOREIGN AFFAIRS
                         U.S. HOUSE OF REPRESENTATIVES

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 July 15, 2025

                                   __________

                               Serial No. 119-27

                                   __________

            Printed for the use of the Committee on Foreign Affairs

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Available: http://www.foreignaffairs.house.gov, http://docs.house.gov,
                           or http://www.govinfo.gov

                                   __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    61-691PDF                 WASHINGTON : 2026
    =======================================================================

                          COMMITTEE ON FOREIGN AFFAIRS

                        BRIAN J. MAST, Florida, Chairman
    MICHAEL T. McCAUL, Texas             GREGORY W. MEEKS, New York,
    CHRISTOPHER H. SMITH, New Jersey         Ranking Member
    JOE WILSON, South Carolina           BRAD SHERMAN, California
    SCOTT PERRY, Pennsylvania            GERALD E. CONNOLLY, Virginia
    DARRELL ISSA, California             WILLIAM R. KEATING, Massachusetts
    TIM BURCHETT, Tennessee              AMI BERA, California
    MARK E. GREEN, Tennessee             JOAQUIN CASTRO, Texas
    ANDY BARR, Kentucky                  DINA TITUS, Nevada
    RONNY JACKSON, Texas                 TED LIEU, California
    YOUNG KIM, California                SARA JACOBS, California
    MARIA ELVIRA SALAZAR, Florida        SHEILA CHERFILUS-McCORMICK,
    BILL HUIZENGA, Michigan                  Florida
    AUMUA AMATA COLEMAN RADEWAGEN,       GREG STANTON, Arizona
        American Samoa                   JARED MOSKOWITZ, Florida
    WARREN DAVIDSON, Ohio                JONATHAN L. JACKSON, Illinois
    JAMES R. BAIRD, Indiana              SYDNEY KAMLAGER-DOVE, California
    THOMAS H. KEAN, JR, New Jersey       JIM COSTA, California
    MICHAEL LAWLER, New York             GABE AMO, Rhode Island
    CORY MILLS, Florida                  KWEISI MFUME, Maryland
    KEITH SELF, Texas                    PRAMILA JAYAPAL, Washington
    RYAN K. ZINKE, Montana               GEORGE LATIMER, New York
    JAMES C. MOYLAN, Guam                JOHNNY OLSZEWSKI Jr, Maryland
    ANNA PAULINA LUNA, Florida           JULIE JOHNSON, Texas
    JEFFERSON SHREVE, Indiana            SARAH McBRIDE, Delaware
    SHERI BIGGS, South Carolina          BRADLEY SCOTT SCHNEIDER, Illinois
    MICHAEL BAUMGARTNER, Washington      MADELEINE DEAN, Pennsylvania
    RYAN MACKENZIE, Pennsylvania

                  James Langenderfer, Majority Staff Director
                     Sajit Gandhi, Minority Staff Director
                                     ------

                     SUBCOMMITTEE ON EAST ASIA AND PACIFIC

                        YOUNG KIM, California, Chairwoman
    MICHAEL T. McCAUL, Texas             AMI BERA, California, Ranking
    ANDY BARR, Kentucky                      Member
    AUMUA AMATA COLEMAN RADEWAGEN,       BRAD SHERMAN, California
        American Samoa                   JOAQUIN CASTRO, Texas
    RYAN ZINKE, Montana                  JARED MOSKOWITZ, Florida
    JAMES MOYLAN, Guam                   GABE AMO, Rhode Island
    SHERI BIGGS, South Carolina          JOHNNY OLSZEWSKI, Maryland
    RYAN MACKENZIE, Pennsylvania

                     Tom Hill, Subcommittee Staff Director

                             C  O  N  T  E  N  T  S

                                  ----------

                                REPRESENTATIVES

                                                                       Page
    Opening Statement of Chairwoman Young Kim........................     1
    Opening Statement of Ranking Member Ami Bera.....................     2

                                   WITNESSES

    Statement of the Hon. Frank Fannon, Managing Director, Fannon
      Global Advisors................................................     4
      Prepared Statement.............................................     6
    Statement of the Hon. Joseph Manchin, Former U.S. Senator for
      West Virginia..................................................    14
      Prepared Statement.............................................    16
    Statement of the Hon. Jose W. Fernandez, Former Under Secretary
      for Economic Growth, Energy and the Environment, U.S.
      Department of State............................................    23
      Prepared Statement.............................................    26

                                    APPENDIX

    Hearing Notice...................................................    58
    Hearing Minutes..................................................    60
    Hearing Attendance...............................................    61

                            Questions for the Record

    Question submitted to Jose W. Fernandez from Rep. Gabe Amo.......    62

         BREAKING CHINA'S CHOKE HOLD ON CRITICAL MINERAL SUPPLY CHAINS

                                  ----------

                             Tuesday, July 15, 2025

                      House of Representatives,
                 Subcommittee on East Asia and Pacific,
                                  Committee on Foreign Affairs,
                                                        Washington, DC.

        The subcommittee met, pursuant to notice, at 10 a.m., in
    room 2172, Rayburn House Office Building, Hon. Young Kim (chair
    of the subcommittee) presiding.
        Mrs. Kim. Representative Troy Downing be allowed to sit on
    this dais and participate in today's hearing.
        Without objection, so ordered.
        The Committee on East Asia and the Pacific will come to
    order. This hearing aims to explore strategies for the United
    States to reduce global dependence on the People's Republic of
    China for critical minerals by partnering with the private
    sector and allied nations.
        Let me now recognize myself for an opening statement. I
    think we're still in morning so good morning and welcome to
    East Asia and the Pacific Subcommittee's hearing titled
    ``Breaking China's Choke Hold on Critical Mineral Supply
    Chains.''

               OPENING STATEMENT OF CHAIRWOMAN YOUNG KIM

        I want to thank our witnesses for joining us this morning.
        Critical minerals--lithium, cobalt, rare earth elements,
    and others are the building blocks of modern technology
    powering electric vehicles, microchips and advanced defense
    systems.
        Global demand for these minerals is surging with lithium
    demand alone growing nearly 30 percent annually from 2021 to
    2024, driven by rising electric vehicle battery production.
        Yet, the People's Republic of China, or PRC, controls 92
    percent of global rare earth element processing and dominates
    the manufacturing of battery and magnet components.
        This choke hold, reinforced by China's tens of billions in
    global mining investments and tactics like price manipulation
    and export restrictions, poses a direct threat to the United
    States and our allies.
        While the U.S. possesses significant mineral resources,
    domestic production alone cannot meet the speed or scale of
    this demand. The U.S. manufacturing operation costs increased
    significant in the region, increasing the regional bureau. It
    will take decades to permit natural mining in America.
        Moreover, the Federal Government lacks the financial
    capacity to fully subsidize the level of investment needed to
    drive large-scale private sector investment--expansion of
    domestic production.
        Relying solely on domestic solutions is insufficient,
    therefore, so we need a bold global strategy to secure
    resilient, diversified supply chains free from Chinese control.
        The current geopolitical landscape offers an opportune
    window to act. The recent developments such as President
    Trump's critical minerals agreement with Ukraine and the U.S.-
    facilitated peace deal in the Democratic Republic of Congo open
    new opportunities to access vital resources.
        We have also seen coordination like the recently announced
    Quad critical minerals initiative underscore the importance of
    critical minerals through broader regional engagement.
        As the administration renegotiates trade relationships, we
    can strengthen partnerships with our allies to build non-
    Chinese supply, chains enhancing both economic and national
    security.
        So today's hearing we will explore these challenges and
    opportunities. We will examine how to build a proactive global
    strategy to establish supply chains free from Chinese
    dominance.
        So our goal today is very clear, to ensure the United
    States and its allies have secure, reliable access to the
    critical minerals that will define the future of technology and
    security.
        I look forward to a productive discussion, and now let me
    now recognize the ranking member from California,
    Representative Bera, for his opening statement.

              OPENING STATEMENT OF RANKING MEMBER AMI BERA

        Mr. Bera. Thank you, Madam Chairwoman and, obviously, this
    is an incredibly important hearing. Your testimony could be my
    testimony and that demonstrates the bipartisan nature of
    creating redundant supplies of critical minerals and rare earth
    elements, weaning ourselves off of the choke hold that China
    currently has where we watch them use their current export
    restrictions on rare earths in retaliation to some of the trade
    negotiations that President Trump is leading.
        We can't be dependent on that and, again, so with that I
    certainly thank you for this important hearing.
        Creating and building a diversified, resilient, secure,
    critical mineral supply chain is crucial to our national
    security.
        That's why landmark legislation like the Inflation
    Reduction Act in which Senator Manchin played a key role led to
    historic investments to support a domestic critical mineral
    supply chains and started to diversify us away from foreign
    entities of concern.
        Unfortunately, in the Big Beautiful Bill some of these
    demand incentives with regards to electric vehicles, battery
    manufacturing, et cetera, potentially are going to be
    undermined and that's something that, you know, certainly as we
    look at implementation of this bill I think we ought to
    continue to build those demand signals.
        Also, while domestic production of critical minerals is
    crucial for the United States' security we can't do it alone if
    we want to shift away from reliance with China.
        That's why our subcommittee is going to play an important
    role to make sure the State Department, the Development Finance
    Corporation, and other national security agencies have the
    tools they need to build resilient global supply chains.
        I have, in the prior administration, worked closely with
    the State Department, worked closely with Under Secretary
    Fernandez to build those strong international partnerships on
    supply chain resilience both bilaterally and through
    multilaterally initiatives including the Mineral Security
    Partnership.
        The MSP brings together 14 partner countries including
    Australia, India, Japan, South Korea, and the United Kingdom as
    well as the European Union to strengthen critical mineral
    supply chains.
        The MSP finance network convenes development finance
    institutions like the DFC and its equivalents in the MSP
    partner nations to leverage private sector investment for
    critical mineral projects, focusing on minerals that are most
    relevant for advanced technologies, defense, energy and
    industrial processes.
        It is a positive sign that our ally South Korea has now
    succeeded the United States as chair of the MSP. That said, we
    have got to continue to work with the State Department and
    continue its robust leadership in the MSP to ensure that MSP
    projects are meeting our national security goals.
        That's why today I have introduced the bipartisan Mineral
    Security Partnership Authorization Act with my colleague
    Chairwoman Kim and Representative Moylan to authorize the State
    Department to lead the U.S. participation in the MSP.
        As our committee works to pass bills including
    reauthorizations of the Development Finance Corporation and
    State Department, it is critical that we work in a bipartisan
    nature to ensure that we have a clear international strategy
    for securing a critical mineral supply chains.
        The MSP is central to the State Department's role in this
    strategy and I look forward to hearing our witnesses'
    suggestions on how we can strengthen the MSP to be more
    expansive.
        With that, I look forward to hearing the testimony from the
    witnesses and I will yield back.
        Mrs. Kim. Thank you. Other members of the committee are
    reminded that opening statements may be submitted for the
    record.
        We are pleased to now have a distinguished panel of
    witnesses before us today on this very important topic and I
    would love to introduce them.
        The Honorable Frank Fannon, the managing director of Fannon
    Global Advisories. Thank you for joining us.
        The Honorable Joseph Manchin, former U.S. senator of West
    Virginia. Thank you for joining us.
        The Honorable Jose Fernandez, former under secretary for
    economic growth, energy, and the environment--the E family at
    the Department of State. Thank you for joining us.
        This committee recognizes the importance of the issues
    before us and is grateful to have all of you here to speak with
    us today.
        Your full statements will be made part of the record and
    I'll ask each of you to keep your spoken remarks to 5 minutes
    in order to allow time for member questions.
        I now recognize Mr. Fannon for your opening statement.

                       STATEMENT OF FRANK FANNON

        Mr. Fannon. Thank you, Subcommittee Chair Kim and Ranking
    Member Bera, for the opportunity to speak on one of the most
    pressing national security challenges of our time.
        China has been waging what I have termed a quiet war
    against the United States for years. This is not a war fought
    with missiles and bullets but one waged with minerals and
    refineries.
        The Chinese Communist Party has systematically weaponized
    its control over critical mineral supply chains as part of a
    broader strategy to displace the United States as the world's
    indispensable power.
        U.S. intelligence agencies have confirmed that communist
    China is an existential threat for many years, yet Washington
    has been reluctant to take the necessary and sometimes
    difficult actions.
        Unlike the West, Beijing does not subscribe to definition
    of war as simply acts of force but instead follows Sun Tzu's
    guidance that supreme excellence consists in breaking the
    enemy's resistance without fighting and recommends first
    attacking this strategy.
        Wars are fought with industrial capacity in the supply
    chains to fuel it. The CCP seeks to win its war by depriving
    the United States the means to ever wage a kinetic one.
        China controls most of the critical minerals that underpin
    defense and weapon systems, energy technologies, and the
    building blocks for the modern economy.
        Although America has a significant resource endowment, the
    U.S. is 100 percent import reliant on nearly a quarter of the
    50 critical minerals and over 50 percent reliant on 29 of them.
        The United States must take bold actions rather than spend
    time increasing awareness of the problem. President Trump's
    executive orders signal a meaningful shift toward action.
        With that in mind, I'd like to touch on a few of the
    recommendations from my written testimony.
        First, the United States should be clear that it is focused
    on critical minerals for national and economic security. By
    adopting security as America's organizing principle the U.S.
    can take the appropriate countermeasures.
        Further, this clear goal will signal to partners,
    governments, resource-rich nations, and investors that America
    is serious and committed to mineral security.
        Next, the U.S. must right size, modernize, and use its
    international finance tools. China has deployed more than a
    trillion dollars in Belt and Road Initiatives including in
    critical minerals and in 2023 increased mining and metals
    focused investments 158 percent over 22 levels.
        The United States should not try to emulate the Chinese
    state-led model. Instead, should leverage its comparative
    advantage, the American private sector. This requires an
    appropriate Federal financing partner on the other side and the
    DFC and EXIM Bank are those partners.
        For the U.S. Government the DFC and EXIM can advance
    America's foreign policy. From the business lens they are
    sources of catalytic capital and, importantly, a means to
    derisk investment opportunities in emerging markets.
        Congress should significantly increase the DFC's funding
    and fix the scoring problem that treats equity investments as
    grants.
        The EXIM should be more nimble, lower domestic content
    requirements, and have greater risk tolerance. The DFC and EXIM
    should prioritize partnerships with American investors and
    companies and disqualify partners--parties with substantial
    Chinese ownership interests.
        This approach is consistent with the important
    strengthening of the foreign entity of concern provisions
    included in the One Big Beautiful Bill.
        To meet our challenges will require working with partners
    and allies, but America's minerals diplomacy should focus on
    performance-based partnerships that include objective measures
    such as dollars invested and tons of material mined.
        China is the lowest cost producer through State investments
    and shirking labor and environmental protections. Congress
    should highlight China's unethical inhumane practices.
        By increasing transparency the U.S. and free nations can
    impose penalties or establish barriers against unethically
    sourced critical minerals and thereby catalyze differential
    pricing.
        Breaking China's choke hold requires moving beyond semantic
    debates about decoupling versus derisking and adopting a bold
    strategy necessary for victory.
        I stand ready to work with this committee and the
    administration to assure America wins this quiet war and
    secures our critical mineral independence for generations to
    come.
        Thank you.
        [The prepared statement of Mr. Fannon follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mrs. Kim. Thank you, Mr. Fannon.
        I now recognize Mr. Manchin for your opening statement.

                      STATEMENT OF JOSEPH MANCHIN

        Mr. Manchin. Chairwoman Kim and Ranking Member Bera, I want
    to thank you all and the members of this committee for the
    opportunity to share my perspective on this vital and
    bipartisan economic and national security issue.
        It's something I put years of work into during my time as
    chair and ranking member of the Senate Committee on Energy and
    Natural Resources as well as the Senate Armed Services
    Committee.
        When I joined the Senate in 2010 China put rare earth
    export controls on Japan following a territorial dispute over
    islands they claimed ownership of, which should really sound
    familiar to all of us.
        From that moment through the Energy Act of 2020, which
    created the critical minerals list itself, through my last day
    in the Senate I focused on this issue, and while there has been
    good legislation there remains much more to be done.
        If I could leave you with one thing today is to impress the
    urgent need for us and our allies to have strong, reliable
    critical mineral supply chains across the three phases--
    extraction, processing and manufacturing--so that no part of
    the process is in the hands of an adversary.
        The solution includes the use of our financing tools like
    the Development Finance Corporation, the Defense Production
    Act, and the Export-Import Bank. We need to reauthorize and
    strengthen these key financial tools so that we have a full
    toolbox, and given the committee's focus we must keep in mind
    that none of this works without diplomatic engagement.
        The Senate department must focus on energy security with
    experts who understand the complexity of resource economics and
    energy geopolitics with emphasis to prioritize the issue in
    country.
        Finally, we need to make sure that this effort is
    coordinated so that efforts across so many agencies are
    effective and don't work across purposes or waste investments.
        Here's why this matters now more than ever. Just like Putin
    weaponized Russia's oil and gas resources to try to scare off
    Europe from supporting Ukraine, Xi Jinping and the Chinese
    Communist Party are more than willing to use critical minerals
    as leverage to put Americans and the free world at risk.
        They have ramped that up in earnest recently by flooding
    the market with oversupply, driving prices down and leaving
    producers worldwide unable to compete, and then using export
    controls once they dominate the market.
        In fact, at the end of 2023 I held a hearing in the wake of
    the first round of China's export restrictions on gallium and
    germanium, two critical minerals that are needed for
    semiconductor fabrication.
        As I feared that export restrictions became a ban in the
    late 2024 that, with recent trade disputes, they have gone even
    further by cutting off our supplies of rare earths, antimony,
    tungsten, and more.
        That is why tariffs are so important. Tariffs are needed to
    protect the building blocks of our economy and national
    security as well those of our allies from China's market
    distortions and economic malfeasance.
        That is what tariffs are for, to protect strategic
    industries by penalizing bad actors and keeping the U.S. prices
    competitive.
        Even worse than Europe's addiction to Russian gas, which is
    about 45 percent of supply in 2021, we are over 90 percent
    reliant on China for graphite, gallium, rare earths, over 60
    percent reliant germanium, over 70 percent reliant for high-
    grade cobalt and nickel, and I could go on and on.
        And China's critical mineral grip extends around the entire
    globe. They control mines throughout the world, all of which
    feed a processing and manufacturing powerhouse that they
    control.
        So just as we cannot solve this problem alone, we are not
    in this mess by ourselves either. We must acknowledge that
    while we can provide much of the minerals we need domestically,
    we don't have the capacity to produce or process every mineral
    in the quantities that we need here in the United States in
    North America or even in a newly formed AUKUS security
    partnership between Australia, the United Kingdom and the U.S.
        Even if capacity weren't an issue we can't afford to spend
    a billion dollars per mineral to support domestic suppliers.
    Our debt is a national security threat, too, and we must come
    to grips with that.
        Permitting reform is essential to fast track domestic
    production but we also need to ensure that we are working with
    trusted and reliable partners when it comes to overseas mineral
    resourcing.
        That means looking first to friends like Canada, Australia,
    Japan, and Norway but also building new trusted partners
    throughout efforts like the Mineral Security Partnership and
    countering China through the energy and mineral diplomacy
    efforts under the committee's jurisdiction.
        We must also be extremely cautious of our policies where
    the Chinese have a majority of control like the Democratic
    Republic of Congo and Indonesia and don't get sucked in when
    they have total control either.
        So in closing, the time to solve this issue is now and
    Congress has a grave responsibility to step up to the plate. I
    look forward to your questions and thank you for asking me to
    be here today.
        [The prepared statement of Mr. Manchin follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mrs. Kim. Thank you, Mr. Manchin.
        And now I recognize Mr. Fernandez for your opening
    statement.

                     STATEMENT OF JOSE W. FERNANDEZ

        Mr. Fernandez. Thank you. Thank you and good morning.
        Chairwoman Kim, Ranking Member Bera, members of this
    committee, thank you for having me here. I'm going to try and
    be brief because I very much share what's been said before me.
        Briefly stated, we have a need and we have a problem. The
    need is that the world needs exponentially more critical
    minerals and rare earths. We need them for just about anything
    and everything that we use--data centers, semiconductors,
    energy, battery storage, EVs--and these numbers are staggering.
        In the last couple of years the demand for energy battery
    storage has doubled. The IEA tells us that by 2050 we'll need
    42 times the amount of lithium that we use today. That's the
    need.
        The problem is that the PRC controls or owns just about
    all, if not--or at least most of these minerals, two-thirds of
    the world's lithium and cobalt, 100 percent of the graphite, 19
    out of 20 strategic minerals.
        This is a strategy that the PRC has followed now for over
    decades. It also involves subsidies. The IEA has estimated that
    20 to 40 percent of the cost of a mine in China is subsidized
    by the government.
        That is the problem, and as the senator just outlined the
    PRC has been willing to exercise its dominance. We saw it even
    this year with the seven heavy rare earths.
        When I was in office we helped to deal with the germanium
    export controls. We were able to secure 25 percent of the
    world's global supply through our allies and partners.
        We have also seen the PRC use predatory pricing. That's
    what a monopolist does. It uses its power in order to drive
    down the competition.
        So what have they done? They have flooded the market. The
    price of cobalt, the price of lithium, has gone down 75, 80
    percent. The price of cobalt today is lower than the price in
    2017. That is part of the strategy.
        But there's a bright side. There's a bright side, and that
    is that we are pushing on an open door. When we started working
    on the Mineral Security Partnership and I went to our allies
    and partners they shared the same concerns. They actually were
    looking to do something about their diversification of critical
    minerals.
        They saw the same need, and when we proposed the MSP
    concept they bought it immediately. They wanted U.S.
    leadership. That's our partners and allies.
        Producing countries want our investments. We don't bribe.
    We follow the law. We don't bring in our workers.
        So we created the Mineral Security Partnership based on the
    premise that no country can solve this problem alone. We had
    four lines of effort. We shared information with our partners
    because if we couldn't put together the deal for a mine perhaps
    other countries could.
        We did what private equity and banks do which is we finance
    together in order to derisk and minimize the risk. We included
    recycling projects because we are told that 30 percent of the
    world's need could be could be met in the next 10, 20 years by
    recycling.
        And last, we had to make a better offer and our offer was
    we would adhere to high ESG principles because we could not win
    a race to the bottom and so we had to change the terms of the
    debate.
        We were successful. We were a deal shop; we were not a talk
    shop. We had over 30 projects that we supported in our 2 years.
    Thirteen of those are public.
        We actually had countries come to me and say, Jose, if our
    companies invest in a mining deal in country X we're going to
    get screwed. But if the U.S. comes they won't mess with us.
        So some of what we did was diplomatic support. We also were
    able to work with our colleagues at the DFC, at EXIM Bank, at
    USTDA in order to finance together, and we were just getting
    started.
        I am very happy to see the--your proposed MSP authorization
    bill. I welcome it. It incorporates the lessons of the MSP. It
    gives it the tools for success.
        It's a partnership with partner countries that tries to
    galvanize the private sector and that is our best weapon. That
    is our secret weapon, our private sector as well as our allies.
        I've made three suggestions in my testimony that I hope we
    can discuss today. I think we're going to need more funding. If
    you look at what France, Germany, Australia, Japan, Korea, and
    others have done, all of those have billion-dollar investment
    funds in order to derisk and do early stage investing.
        They also--I've also proposed that we not ignore recycling
    and, last, that we create an emergency response team in order
    to address the continued weaponization by the PRC.
        But, again, I very much welcome your proposed bill and I
    hope we can discuss it later this morning.
        Thank you, and I look forward to your questions.
        [The prepared statement of Mr. Fernandez follows:]
       [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mrs. Kim.Thank you to all of our witnesses for your
    wonderful opening statements, and we'll go into member
    questioning and I recognize myself to first ask questions.
        And I want to pick up on what Mr. Fernandez said about the
    Chinese predatory tactics. So let me talk about how the
    significant challenge we face today is China's ability to flood
    global markets with low cost criminal--I mean, yes, criminal--
    critical minerals leveraging state-backed subsidies, for
    example, nickel prices that have fallen 75 percent in the last
    several years because of the Chinese oversupply.
        So let me ask this question to Senator Manchin. Why does
    China's choke hold on critical minerals threaten the U.S.
    economic competitiveness and national security, and if you can
    talk about to what extent can domestic production reduce this
    dependence and why is international engagement still essential?
        Mr. Manchin. When you look at what we're dealing with and
    look in history, the 20th century--beginning in the 20th
    century the United States became a powerhouse because of our
    energy.
        Back then, it was relied upon on coal. Made the steel. We
    did an awful lot of things and we basically pulled ourselves
    out of poverty, became an industrial leader. That was necessary
    for us to have reliable, dependable, affordable energy.
        Today, critical minerals is the same as that energy was
    needed back in the 20th century. So in the 21st century the new
    boom is going to be basically critical minerals.
        Well, everything that we do depends on the superconductors
    and the magnets and all the different things and special alloys
    and steels that we use.
        Those are building blocks. Where I think that we made a
    mistake that we should have trade agreements and we should have
    basically penalties with tariffs in order to protect our
    building blocks. That's it.
        Everything else should be used as an incentive to do trade,
    but protecting, basically, protecting our allies and countries
    across the world that we can rely on and we have a chain of
    allies that we can depend on.
        We have Canada, tremendous cache of rare earth minerals;
    Australia, tremendous cache; the United States, possibility of
    a tremendous cache. We weren't allowed to mine and process. And
    then you have Japan and South Korea able to do refining.
        We have a building block right there that we could start
    and get in the game very quickly. You got to let the private
    sector in. We can't take this debt on--continue to take all
    these debts on and the risk.
        Those are the things, and what happens if you let China
    control that it will be no different than what Putin tried to
    do with oil and gas and our allies. Same thing. So you've got
    to have independence.
        Mrs. Kim.From that and then ask Mr. Fannon similar
    questions, too.
        Given China's capacity to undercut the competitors, what
    policies can we consider to shield domestic and allied mineral
    producers from predatory pricing tactics?
        Mr. Fannon. Thank you for the question. I think this is
    key. What I don't think we can do is rely on traditional,
    conventional norms and practices because China rejects them.
        We talked--the senator spoke about the rare earth dispute
    in 2010 and the response from the United States at the time,
    along with Europe and Japan, was to initiate a WTO action
    against China.
        It took 2 years for that to be concluded and it found what
    we knew, China was cheating, but in that interim China dumped
    material onto the market and killed the economic basis for that
    company so they went out of business.
        So what we have to do is a new way of thinking about these
    things. In terms of what the steps we should pursue one of
    those would be--and the senator mentioned tariffs--I think
    targeted tariffs is exactly the right approach.
        China, according to the International Energy Agency,
    recently concluded that China's cost of capital is 50 percent
    less than anywhere else in the world to do a mining project.
    That's very hard to compete with.
        Second, the issues on how they do their business it's very
    opaque. We don't know how they do their business. It's hard to
    see. What we know is that they violate environmental and human
    rights all the time and actually last year the Department of
    Labor issued a report underscoring that.
        I think a higher degree of scrutiny is important. It could
    create differential pricing. We always talk about having a
    green premium because there will be a commodity produced in a
    way with lower carbon, but industry is reluctant to pay more
    for it if they're competing against a commodity at a lower
    cost.
        Rather than ask U.S. industry and U.S. companies to pay
    more we should try to level the playing field. I think the
    administration is keen to do that by making the cost of the--
    increasing the cost on the Chinese side.
        At the same time, we have a pacing challenge. The senator
    noted the amazing resource abundance in America. It takes a
    long time to develop a mine.
        We have to go where the rocks are and where there's
    political will to develop them. So it'll be a combination of
    domestic side, market interventions on pricing, but also to
    create a favorable environment to develop mines in some of
    these resource rich jurisdictions and the mobilization of
    entities like the DFC.
        Mrs. Kim.Thank you. I have a lot of questions to ask you
    so, hopefully, we'll have a second chance to come around
    questioning. But for now, I'm going to turn it over to my
    ranking member to ask questions.
        Mr. Bera. Thank you, Madam Chairwoman. And, again,
    listening to each of the witnesses you couldn't tell who were
    the Republican witnesses or who were the Democratic witnesses,
    which, again, just emphasizes why this is a nonpartisan issue
    and it's in our national security interest. So we should
    certainly approach it from that perspective.
        Under Secretary Fernandez, we worked pretty closely on the
    Mineral Security Partnership and, again, I think it is the
    right strategy, working with countries that share our values,
    take a free market approach, and obviously are--have directly
    felt the impact of economic coercion from the Chinese which,
    again, I think we're very afraid of.
        I'm going to ask you about--you made three recommendations
    that we should be thinking about and one that I've thought a
    lot about but I don't think we talk as much about is the
    recycling component of it.
        And if you want to expand on that and how you would think
    about it as we think about authorizations, investments, and
    recycling. I think you mentioned up to 30 percent of our supply
    could come from recycling.
        Mr. Fernandez. Thank you for your question.
        This is not my number. This is the IEA saying that in a few
    years 30 percent of our minerals could come from recycled
    batteries.
        Right now we don't have enough batteries to recycle but in
    a few years we will, and that's huge. I mean, we heard before
    that it takes 10, 15, sometimes 20 years for a mine to come on
    stream. It's much quicker to do a recycling project.
        The issue has been that there is not enough feed stock in
    order to feed recycling right now but so we need to put
    together incentives. We need to put together mandates in order
    to make sure that that feedstock exists.
        But right now there are companies. The MSP funded and
    supported a project in the U.K. a recycling project that the EU
    has also supported. There are opportunities right now and it's
    yet another opportunity for our private sector to get involved
    because there's money to be made here.
        Mr. Bera. Right.
        Senator Manchin, you talked about the various tools that we
    have available, whether that's the DFC, EXIM Bank, the Defense
    Production Act. Do you want to elaborate a little bit more on
    that?
        And, you know, I think one thing as we--this committee goes
    through the reauthorization process for DFC what are some
    fundamental changes other than we do think we need to increase
    the limits?
        Mr. Manchin. Representative Bera, the question you've asked
    is a good question because basically what we have is a critical
    situation in our country right today.
        National defense authorization would be the way to go right
    now because you can accelerate whether it be permitting that
    you needed for these projects. Permitting is something we have
    worked on very, very diligently.
        We made some inroads but not enough. In order to do that,
    to get into the rare earth minerals that we have in our
    country, I have always said this. You can't ask other countries
    to do what you won't do for yourself.
        If we have a cache of rare earth minerals we should be able
    to mine them, we should be able to process, and we should
    manufacture, and working with our allies around the world we
    should do the same.
        You have got to form a bloc, really, and basically national
    defense authorization for defense of our country, and this is
    what's at stake right now, can we defend ourselves? Can we have
    the defense we need?
        Do we have the critical minerals for that, computers and
    chips? Do we have it for our economic growth, compete in AI?
    All the things we're competing with right now it's a race,
    basically, who's going to lead the 21st century and beyond?
        And the United States has been the leader. It's, basically,
    leaderships looked upon from the free world and whether we
    survive or not.
        So with that, I think it's critical. Use what you have now
    but the big elephant in the room right now is national defense
    authorization. Allows you to bypass an awful lot of this and
    the determination that we have got to have this done as quickly
    as possible, and it could be.
        Mr. Bera. Great.
        And, Under Secretary Fernandez, if my colleague from
    California Dr. Ruiz was here, he's bent my ear a lot on, you
    know, Lithium Valley, the Salton Sea and the possibilities
    there, thinking about just the vast supplies of lithium
    potentially there, and doing it in an economically responsible
    way.
        I know he's talked to you in the past about this. Would you
    want to just expand on the potential? That is one of the
    poorest counties in California if not the country and, you
    know, doing something like that in a responsible way seems
    possible.
        Mr. Fernandez. I'm familiar with that project and that's a
    project that, like several other projects in the U.S., is quite
    promising and I think we need to find ways of supporting it.
        The senator spoke about permitting. Both sides recognize
    that this is a problem. We have got to speed that up. We don't
    have the luxury of time.
        The other thing on lithium goes to the question that
    Chairwoman Kim asked about oversupply. We have--oversupply is a
    temporary problem. Our lithium--our demand for lithium keeps
    going up year after year, 10, 20 percent over the last 5 years.
        But the prices go down. Why is that? Because of oversupply.
    But if you look at the numbers, if you look at the history, in
    10 years the world will need more lithium even with the
    overabundance that we have today.
        So what we have to do is find ways to help our industries,
    to help our companies, survive the next five to 10 years. It's
    almost like a boxer hanging on for that round to end so that
    they can take a break.
        And so I think we ought to be looking at lithium and we
    ought to be looking at the overabundance problem of something
    that we're going to need to deal now but that won't be there,
    hopefully, if we do our job right in the next 10 years.
        Mr. Bera. Thank you. I yield back.
        Mrs. Kim.All right. I now recognize the gentlelady from
    South Carolina Ms. Biggs.
        Ms. Biggs. Thank you, Madam Chairwoman.
        And my first question is for Senator Manchin. Given
    President Trump's March the 20th executive order titled
    ``Immediate Measures to Increase American Mineral Production,''
    to what extent can Congress direct the Development Finance
    Corporation to use the authorities available under the Defense
    Production Act to finance domestic mining projects?
        Mr. Manchin. Anything we do today from the government we
    have to consider the debt of the Nation, I think. It is very
    important to all of us.
        But with that being said, how do we partner up with private
    is what you're asking and we can do that. I think the MP
    project that the President just announced is a very good start.
        Basically, it's a company that was kind of toyed with with
    the Chinese forever. They really broke the company, put them in
    bankruptcy, took over basically their production, and basically
    now we're coming back to where the Federal Government stepped
    in to have ownership.
        A company I'm involved with is called Ramaco, just now that
    we have announced it mining coal--first coal mine in 70 years
    in Wyoming. It has critical minerals in the binding which is a
    tremendous opportunity for us to get two for one and that's
    going to be something we think is going to be very promising.
        There's others in the United States that we can do but the
    Federal Government really has to make--who's going to be the
    off take? Is it the Department of Defense? Is it going to be
    the private sector and the economy?
        Well, you've got to protect it from the standpoint that
    private sector capitalization is going to go where the cheapest
    prices are--it's just the way the system works--unless it's
    protected by tariffs that does not allow China to dump on us
    when you have rare earth, whether it be lithium, granite,
    germanium, whatever it may be.
        They can't come in and undercut it to where someone says,
    well, in the private sector I'll buy there versus here, and
    that's where you offset with your tariffs. That's what we think
    the Federal Government can do is they can be the referee.
        They can put the guardrails on that protects us to grow not
    just here, with Canada, Australia, some of our leading
    partners--Japan--things that they've been able to do.
        So there's an awful lot that we have that people work with
    us and be part of--be a partnership versus us trying to do it
    by ourself.
        Ms. Biggs. Thank you.
        And the second part what do you feel like are the primary
    reasons for DFC's limited success in financing mining and
    quarrying projects as evidenced by only a 1.2 percent of its
    active projects being in this sector?
        Mr. Manchin. Time. Just time. Permitting. You know, I'll
    give you an example. You can start. I'll give you a perfect
    example, the Mountain Valley Pipeline, MVP.
        We tried for a long time. It started out as a $3.2 billion
    project. Because of litigation and time ended up $8 billion.
    Companies won't do that. They just won't unless there's some
    certainty, and that's why I encourage all of you, permitting--
    we have worked hard over the years, and Congressman Westerman
    is a good friend of mine.
        We worked together very closely and we're very--we have a
    bill we think is very close to being done. We think you all can
    take it across the finish line. It really needs to be done.
        You need to codify that. Even executive orders by the
    President with all his good will kind of gets back and forth--
    seesaw back and forth in the process of legislation, if you
    will.
        But when you codify something it's much more permanent.
    That's what I would encourage. And timing is what's killing
    everything. They won't go into that unless they know there's
    going to be an off take.
        You can't get an off take to finance it unless you know
    they're time sensitive. People are not going to invest billions
    and billions of dollars knowing they may be strung out seven,
    10, 15 years to get something permitted. It has to come to
    market quicker than that.
        Ms. Biggs. Thank you so much for your insight.
        And my next question is for Mr. Fannon. A recent report
    highlights a critical vulnerability. The U.S. is completely
    dependent on imports for 10 essential minerals and over 50
    percent reliant on imports for 30 others.
        So these include vital materials like gallium. I think we
    have already mentioned a couple--germanium and graphite, which
    are crucial for everything from our weapon systems to batteries
    and electronics.
        So how important is it that we use supply chain tools
    capable of tracking these materials down to the specific bolt
    and chip in a system rather than just broad categories, and how
    does this level of detail help us pinpoint our vulnerabilities
    and precisely what needs fixing to keep our systems
    operational?
        Mr. Fannon. Yes, thank you for the question.
        The critical mineral supply chain is remarkably complex and
    it is opaque. It is not like--like, oil and gas are--they're
    huge commodities. They're liquid. They're widely known. Pricing
    is clear.
        When it comes to some of these critical minerals how you do
    you even realize price discovery? What is the price and how--
    who's exerting that pricing power? It's very difficult even to
    understand that, much less the provenance of some of these
    things.
        Some of the minerals--these minor but critically important
    minerals are actually produced alongside other commodities. The
    issue, germanium--the lack of that, there are defense primes
    who are in really dire straits because they can't source it.
        Where do they get it? This is an enormous problem. The
    challenge we have is also where within the U.S. Government
    should that kind of tracking sit. We have--because the
    administration--successful administration, the bipartisan issue
    of this has elevated the awareness of critical minerals.
        One of the issues now is we have about 15 Federal agencies
    asserting some kind of involvement. Well, how are we going to
    lead that?
        How are we going to coordinate that? I think the
    President's designation of the National Energy Dominance
    Council is a good start to help coordinate that and, perhaps,
    could start that tracking process for those minerals to
    understand where are they, where are they coming from, and how
    do we get more of them.
        Ms. Biggs. Thank you. And I'm sorry, my time has expired. I
    yield back.
        Mrs. Kim. Well, thank you.
        Let me now recognize the gentleman from Maryland Mr.
    Olszewski.
        Mr. Olszewski. Thank you, Madam Chair. Thank you, Ranking
    Member Bera, and thank you to all of our witnesses today. I
    appreciate the focus of this hearing and there's, clearly, no
    question that the PRC's control of much of the critical mineral
    supply chain makes us more vulnerable.
        And I want to echo Ranking Member Bera's comments about how
    I really appreciate the ways in which this has become and
    remains a bipartisan concern because it is a serious concern
    that our largest global competitor supplies more than 50
    percent of demand for 24 critical minerals including more than
    90 percent of those rare earth elements as discussed.
        So I think we all agree that the U.S. needs to do more to
    do this and I want to thank our witnesses for providing some
    suggestions in this space.
        But I also don't want this Congress or this administration
    to focus so heavily just on competition that we also lose sight
    and disregard the very real labor and human rights abuses that
    we know are happening that are so prevalent across the mineral
    supply chain, primarily in artisanal and small-scale mines that
    operate informally and that are least regulated by governments.
        For example, reports suggest that major Chinese critical
    mineral producers use forced labor programs in the Uighur
    region. Across the DRC there are as many as 40,000 child
    laborers in its cobalt mines.
        And so, sadly, while I applaud some of the actions taken by
    the administration in this space, some of the tools that are
    really important in addressing these concerns have actually
    been taken away by this administration.
        Just two quick examples. Many of the grant programs within
    the Department of Labor's Bureau of International Labor Affairs
    has been cut.
        We know these are programs that have played a critical role
    in addressing forced labor and human trafficking across the
    world. This administration has also paused enforcement of the
    Foreign Corrupt Practices Act, which has helped expose
    corruption in business practices.
        So I'm a member that believes we need all of the tools at
    our disposal to strengthen access to critical minerals but I
    also believe that goes hand in glove with our responsibility to
    ensure this is a sector that drives equitable growth, supports
    local communities, and is not built on the back of exploiting
    laborers and especially not exploiting children.
        So as our President ushers in a more transactional foreign
    policy I want to make sure that our investments are also
    staying aligned with our values.
        I'll start with you, Mr. Fernandez, in terms of questions.
    How do we strike that balance? How do we ensure that U.S.
    efforts to diversify our critical mineral supply chains don't
    come at the expense of human rights and transparency?
        Mr. Fernandez. Thank you for your question.
        Look, there is no--there's no conflict here. Good business
    practices, responsible business practices, are our calling
    card. If you talk to African leaders they want alternatives.
    They want alternatives to the PRC.
        We're not forcing them to do that. We're basically--they
    are basically saying to us, we want what they call
    beneficiation. They want value added investments, not just
    mining. They're looking for good labor practices. They complain
    that the PRC brings their own workers and takes the minerals
    back home.
        So they want those kinds of--those kinds of practices. It
    is our calling card. I've had African leaders get up and give
    me a hug when I talk to them about what we'd like to do for
    communities.
        There are lots of projects around the world that simply
    don't see the light of day because communities oppose them.
    They oppose them because of what you mentioned.
        So I don't see a conflict here. In fact, I see it as a
    business opportunity. I see it as part of what--our offer. Why
    is our offer better?
        Because we will not engage in the race to the bottom. We
    will not win a race to the bottom. We will engage in the race
    to the top. And if we do that I'll take my chances.
        Mr. Olszewski. Yes, good opportunity to both advance
    American interests but also do the right thing for humanity.
        I think I'll have time for one more question so I'll turn
    to workforce. We know that over half of the U.S. mining
    workforce, about 220,000 people, is projected to retire in the
    next 5 years.
        As we think about domestic production we should be
    concerned about that. We also know the number of mining and
    mineral engineering programs in the U.S. has dropped from 25 in
    1982 to 15 in 2023, a very stark contrast to China which
    actually has seen an increase in terms of their engineering
    programs.
        Senator Manchin, I know this is an issue you led on in the
    Senate quite a bit. How do you think we should address the
    critical talent gap so that Congress is doing all that we can
    to ensure that we're building a workforce to address the need?
        Mr. Manchin. Well, we would encourage you all to pass the
    Mining Schools Act that we sent over and I think you all took
    it under consideration and maybe ran out of time.
        That's an easy one to pick up and run with right now, which
    puts us back into the game as far as educating the workforce
    we're going to need for the future.
        If I can just say something about what you said before. The
    bottom line is supply and demand. There's a tremendous demand
    for the products that China is supplying. People really, when
    push comes to shove, they don't worry a whole lot.
        They just want that product and they're paying prices for
    it, and humans are paying a price--a horrific price. Until we
    get into the game with our allies in the free world you're not
    going to offset that.
        We have to give an alternative and then protect it with,
    basically, tariffs so they can't come in and destroy our
    markets. Then you can put that.
        But also we have so many restrictions and obligations that
    we put on businesses doing business within our sphere of the
    free world that it makes it more difficult, time consuming, and
    costly. That's what we have to protect to be more efficient.
        But the bottom line is supply and demand is what drives it
    all. But the act that we have--I think you all have that--that
    we're happy to reintroduce it if I can't get some of our
    friends to hand it right back to you all.
        Mr. Olszewski. Appreciate that. Sounds like we have to get
    to work. I know I'm over time. So with that, Madam Chair, I
    yield back. Thank you all.
        Mrs. Kim.I now recognize the gentleman from Pennsylvania
    Mr. Mackenzie.
        Mr. Mackenzie. Thank you, Madam Chair, and thank you to all
    of our panelists for being here today. Very important topic
    about critical minerals, their importance for Americans'
    safety, security, economic prosperity, and also the challenge
    that we face with China and their control over key parts of the
    supply chain. So thank you all for being here.
        My first question is how is China currently leveraging its
    control over the supply chain against us and our allies? Is it
    mostly focused on economic control or is there also a national
    security element that they are laying a trap for us?
        And I'll go to any of the panelists who want to start.
        Mr. Manchin. Well, I mean, they started a long time ago.
    This is back in the 1990's when they saw something that they
    thought they could control and get involved with and they're
    doing the jobs that nobody else wanted to do.
        The refining they do is basically extremely harmful to the
    environment to a certain extent that we wouldn't accept that at
    all. With that being said, they don't have anybody to answer
    to.
        You know, their form of government basically allows them to
    do as they wish and they've been able to basically capture a
    market.
        Says, listen, you send all your product to us. They go over
    and do the mining--send their people over to do the mining.
    Send it back to China to do the processing and refining. No one
    else is willing to do it.
        And there is ways to do that. You know, there's technology
    that can do it much cleaner, much more safer for the
    environment and for the workers. But they dominated that market
    and had a 20-year start on all of us.
        So how do you get that? You can't say, well, we can't sit
    back and just accept what it is. We can get into the game very
    quickly. I think President Trump is in Pennsylvania today in
    your beautiful State right next door to my State and,
    hopefully, energy is going to be the topic of what they talk
    about today.
        And I think you're going to find some private sector
    willing to jump into the market now to accelerate that with the
    help of the government.
        Mr. Mackenzie. Mr. Fernandez?
        Mr. Fernandez. Congressman, they're using it right now with
    seven heavy rare earth materials. It's being used as we speak.
    But it's more than that. It's not just the exercise of that
    dominance. It's the threat of that dominance.
        There are many countries out there that will tell you, we
    do not want to do certain things because the PRC will take--
    will retaliate. And so just that threat sometimes is enough to
    change behavior among our allies and partners. So it's got to
    go beyond the actual public bans--export bans and export
    restrictions.
        Mr. Mackenzie. Mr. Fannon?
        Mr. Fannon. Yes, I just would just add to that the IEA did
    a did a N1 analysis to look at what are--what's the
    availability of global supplies if you take out China, and it's
    only about 35 percent for a lot of these minerals--35 to 50
    percent of available global supplies as of right now.
        That changes the entire psychology of when countries
    interact with one another. They don't want to offend the
    supplier. So, like, Germany for years claimed that Russia was a
    reliable gas supplier until they weren't.
        It's the same. It changes--why were they unable to do it?
    Just because so much of their economy was linked to having
    cheap gas to fuel their manufacturing base. The same now that,
    like, in German--Russia gas now we're America critical minerals
    with China.
        We need to reverse that. I think we have the ability to do
    it as has been discussed. We just have to move forward and
    execute quickly.
        Mr. Mackenzie. Well, I appreciate all of your comments,
    clearly, a recognition of the problem that we're facing with
    China's control of the supply chain so--and the way that
    they're using it and leveraging it against us.
        We have heard some great suggestions about improving
    permitting, increasing partnerships with our allies. My
    question is there has been some discussion around one component
    of a solution being that the U.S. establish a strategic
    minerals reserve or a critical minerals reserve.
        I would love to hear any of your thoughts on that as
    something that we could do to address this challenge.
        Mr. Manchin. Up to about 20, 30 years ago we used to have
    critical mineral reserves. You can go around the country and
    find different deposits of it and that was eliminated after the
    cold war.
        Thought it wasn't needed anymore, which is a bad mistake.
    You know, I guess everyone's at fault of that but never thought
    it was needed. But that was changed--changed everything.
        So that would be something that we should do but we have
    got to get to production first. Look at what we did with LNG.
    We were able to do something with LNGs quicker than anything
    that's ever been done, ever thought we could do, and now we
    replaced most of Russia's oil and gas that was going into our
    allies and U.K. and all that, you know, with what we were able
    to do because we were able to put that into the market. We
    could do the same here if we work collaboration.
        Mr. Fannon. Yes, I think it's a crucial issue. We have a
    national defense stockpile that exists but it's remarkably
    underfunded. There's very little in it.
        The other thing I think it's important to distinguish is,
    you know, we talk about the defense industrial base. I think
    that's a bit of a misnomer. It's just the industrial base. If
    things get hot all of our companies will throw in and be
    involved in an effort.
        What I think we have to think about is broader. The defense
    uses on an annualized basis about 500 tons of rare earth a
    year. The U.S. economy as a whole is 10,000 tons. We do have a
    stockpile that's for the U.S. economy when it comes to oil, the
    Strategic Petroleum Reserve.
        The question is do we consider that for the broad
    industrial base for the U.S. economy and then how do you do it.
    It's very, very challenging and I think that as Congress
    considers this and the administration, it's critical to talk to
    the private sector who are experts in this.
        Also, we're in a how do you fund it, how do you fill it,
    when we're so deficient currently. We're going to have to meet
    our needs and then start, not dissimilar to the question of
    recycling.
        We need to first have a foundation from which to recycle.
    We first need to have a foundation of resiliency from which to
    build a reserve.
        Thanks.
        Mr. Mackenzie. Thank you all. I think it is an important
    conversation that we have, going forward, and appreciate your
    input today.
        Thank you.
        Mrs. Kim. Thank you.
        Let me now recognize the representative from Florida
    Moskowitz since he was here first, with all due respect.
        Mr. Moskowitz. Thank you, Madam Chairwoman.
        Senator, good to see you again.
        Mr. Manchin. Good to see you.
        Mr. Moskowitz. So some really good questions on this. I
    want to spend my 5 minutes with trying to break this down for
    the American people because being the emergency management
    director during COVID in Florida I saw how the lack of
    manufacturing in this country, the reliance on China, was a
    major detriment in a pandemic.
        I can't imagine, God forbid, we got into a war in the near
    future, the surprise that the American people would have of the
    things that we, A, don't make here anymore, or B, rely on other
    folks to supply us supplies that could be cutoff.
        How do we educate the American people? Like, I got to be
    honest, when I started learning about antimony I was, like, is
    that adamantium in ``Wolverine?'' Like, I had no idea. I had no
    idea what it was and then I realized, oh, this is a real
    problem.
        China has us and they know it and, you know, so what I want
    to spend some time with you guys is how do we tell the American
    people, like, this is kind of wrapped up in the tariff issue
    with China.
        China is controlling exports--threatening to control
    exports and our U.S. military literally relies on this stuff
    for some of the most critical weapons that we make.
        And so China has such a huge advantage and I want to talk
    about the stockpile because that was another lesson we learned
    during COVID, right?
        We went to the cupboard and the cupboards were bare, right?
    That was what we heard. But it was true. It was true. The
    National Strategic Stockpile was empty.
        Now, they put $2 billion to build a stockpile but that's
    not going to be enough. So I kind of want to open it up. How do
    we educate the American people on the national security risk
    and why this is so important?
        Senator, I'll give you the first bite at that.
        Mr. Manchin. Well, thank you so much, and, you know, I
    would just take off of that. If history--knowing our history if
    you want to read one book that tells you how we became the
    superpower of the world, how we won World War II, how we were
    able to be the armament of the world, we supplied the arms that
    were needed around the world--we outproduced everybody--read
    ``Freedom's Forge'' if you want to read one book that tells you
    exactly who we became and how we became who we are today.
        That would put everything in perspective what we need to do
    now because we're way behind the curve and you went--and
    eloquently went into that. If we don't get back to producing,
    you know--well, you can go back to NAFTA and blame NAFTA. You
    can blame USMC.
        You can blame anything you want. You can blame 1990's,
    allowing China in the WTO, everything that we allowed to happen
    thinking that we could open up after the wall fell, you know.
        Mr. Moskowitz. No, and that's exactly right. Like, we could
    go back and----
        Mr. Manchin. We have been lulled to sleep. That's all.
        Mr. Moskowitz. We could figure out how we got here.
        Mr. Manchin. Yes.
        Mr. Moskowitz. But how do we--the American people have a
    lot going on. There's a lot of incoming, a lot of----
        Mr. Manchin. We have got to produce.
        Mr. Moskowitz. A lot of distractions. In the rare earth
    space, especially in antimony, which I want to focus on, how do
    we cut through to the American people to make them understand
    how--what a dangerous situation, quite frankly, we find
    ourselves in in this rare earth space.
        I supported when the President wanted to sign a deal with
    Ukraine on rare earth minerals. Most Americans were probably
    thinking to themself why are we even talking--why is that part
    of the equation, right?
        And so we're going to have to--we're never going to
    manufacture this stuff here, you know, with all the
    environmental rules, or even if we try it's going to be such a
    small amount.
        We're going to have to depend on allies to do that. And
    even if we can find the rare earth we don't have the experience
    to manufacture it. I mean, the Chinese it's literally a closely
    guarded secret.
        They got specific people with the specific techniques
    that's been passed down through generations of people and they
    are not letting those people leave to go other places to show
    you how you refine this stuff.
        How do we explain this to the American people?
        Mr. Fannon. Yes, I think it's--I guess it's really a
    political question because how do you--what I think you're
    asking, Congressman, is how do you get the American people to
    buy in so that they are able to--because it's going to cost
    more eventually to do things in a way that----
        Mr. Moskowitz. Yes, that's right.
        Mr. Fannon [continuing]. as we discussed does not offend
    human rights and the environment.
        Mr. Moskowitz. But that's exactly right. I mean, like,
    look, the White House I've seen them working on this but they
    got to work on the communications piece of this to look the
    American people in the face and say, you want to know why the
    cost of military weapons are going up?
        Here is why we have to spend more money. You want to know
    why we're doing these tariffs with China? Here is why.
        Mr. Fernandez, I want to give you a chance before I run out
    of time.
        Mr. Fernandez. Look, I think we need a little bit of
    humility. It took us a long time to get--to dig this hole and
    we are in a hole. I think you go--you take some examples. Two
    years ago the PRC imposed restrictions on germanium.
        I had never heard of germanium but turns out germanium is
    needed for semiconductors. At that point we had a problem. We
    literally spoke to a hundred countries and said, do you have
    any extra germanium you can sell to the world?
        We actually found some through the MSP, 25 percent of the
    world's supply we were able to have. It was just hanging around
    in a country that we'd never heard of.
        And so I think you've got to go example by example and do
    the same thing we did with--during COVID which is, you know, we
    have a problem that we didn't have active ingredients in that
    supply chain, as you know.
        But you've got to go--you've got to take a couple of
    examples and say, we have got a problem. And it took us a while
    to get here. It'll take us a while to dig out of this hole.
        Mrs. Kim. The gentleman's time is up. Great question. Great
    answers. I wish we just had more time.
        Now let me recognize the gentleman from Guam Mr. Moylan.
        Mr. Moylan. Thank you, Madam Chair, for setting this timely
    topic especially. Two weeks ago, the Quad 4 Ministers met in
    Washington, DC, and announced the launch of a major new
    initiative, and as they clearly stated reliance on any one
    country for processing and refining critical minerals further
    harms our economic and national security.
        Given this understanding, we need to strengthen both our
    domestic efforts and international cooperation to build more
    resilient and diversified critical mineral supply chains.
        As part of the domestic efforts our vast offshore sea bed
    areas has significant potential to boost the supply of critical
    minerals. The Bureau of Ocean Energy Management says the
    Pacific Outer Continental Shelf, including the surrounding area
    of Guam, contains four different mineral deposit types, and if
    we can successfully utilize these resources on a commercial
    scale it will greatly enhance our supply chain resilience and
    national security.
        I hope this effort will be carried out in a matter of
    respect both local--to local stakeholders and the environment.
    Another important aspect of the international cooperation to
    counter China's dominance in critical minerals, China's abrupt
    restriction of critical material exports caused major
    disruption in global automotive industry and posed serious
    threats to defense equipment suppliers.
        However, we cannot leave these challenges solely to the
    private entities because, as we know, China employs nonmarket
    practices such as large-scale subsidies and it's extremely
    difficult for private actors to compete on their own.
        Securing stable and reliable supply chains is an urgent
    issue not only for the U.S. but also international communities.
    So we need to develop a shared strategy and framework among
    like minded countries to build alternative and resilient supply
    chains.
        So, Mr. Fannon, you have great experience being the first
    Assistant Secretary of State Energy Resources and do you
    believe that the State Department needs additional authorities
    to develop international cooperation and support of private
    sector investment in foreign countries?
        Mr. Fannon. Thank you, Congressman, for the question.
        I would say that I think--believe the State Department has
    considerable authorities. What I think what would be useful is
    to increase the authorities of sister agencies, the
    International Development Finance Corporation, over which the
    Secretary of State serves as the chairman.
        The DFC also is an entity that by its mandate is supposed
    to integrate America's foreign policy as part of their
    investment thesis. So I think that working with the State
    Department and that--the body of the chair could--to empower
    the DFC to do more and that has a significant role for Congress
    in the reauthorization to empower them to do more, increasing
    the investment limits and also to allow for greater equity to
    be invested.
        I think that will--this capital from the DFC is catalytic
    in the sense that it unlocks other investors. As Jose was
    speaking, other countries want a U.S. investor there but how do
    we get them there?
        How do we crowd source additional co-investors? And this is
    a critically important tool.
        Thank you.
        Mr. Moylan. Thank you.
        Senator, of course, we know China controls over, roughly,
    90 percent and you were talking about this question earlier as
    well of all our critical minerals, but yet we have all these
    minerals spread across the U.S., Australia, and parts of East
    Asia and beyond.
        So in your view what's the most significant factor that
    enabled China to dominate the market and what's the most urgent
    action that we and our partners should take to counter it?
        Mr. Manchin. I think, first of all, I want to thank you and
    your wonderful people, your beautiful island of Guam. I've
    slept there many times and just have the most respect for the
    strategic position that you have for our great country in the
    Pacific Rim.
        Next of all, I think I really, truly believe the Defense
    Production Act--if we announced the Defense Production Act is
    what we're going to use in order to have the defense of our
    country and our economy and all of our allies it would give us
    the catalyst that's going to be needed for the Development
    Finance Corporation to show how determined we are to make sure
    that we're up and running as quickly as humanly possible, be
    able to extract and assist all of our friends around the world
    in the free world, if you will, to contribute toward this.
        It's going to be a total all in effort. It's not just one
    of us can do it. We cannot get up to speed quickly by ourselves
    without you and all of our friends around the world.
        That's what we have to rely on and that's really how we can
    protect your markets also with the trade, if you will, tariffs
    protecting so China doesn't come in and distort your markets
    that they've tried to do.
        We have watched how they've been very aggressive in that
    part of the world, and we're determined basically to defend and
    help you.
        I would say one more thing, too. Is there some way that--
    when you think about if it wasn't for the ore that China gets
    from Australia right now what kind of a crimp would that put?
        What kind of a buy would they be on if we were able to--all
    the free world--consume Australia's ore so they wouldn't have
    to go to China for that market? That might be things we could
    do to really put a pinch on them, too.
        Mr. Moylan. Thank you. Thank you, you all.
        Thank you, Madam Chair. I yield back.
        Mrs. Kim.Thank you. I now recognize the representative from
    Rhode Island Mr. Amo.
        Mr. Amo. Thank you, Chairwoman Kim, and thank you to our
    witnesses for being here including the distinguished former
    senator. It's an honor to be with you.
        For those watching at home, critical minerals and their
    supply chains are, like the name suggests, critical to our
    national security and American domestic manufacturing
    industries. From cell phones to solar panels to our most
    sensitive defense technologies, we rely on critical minerals
    every day.
        But as you know, China is the dominant processor of 19 of
    the 20 minerals the International Energy Agency considers key
    minerals and China has 70 percent of the global processing
    capabilities for these minerals.
        Through export controls the CCP wields access to these
    minerals to advance their global policy goals like a guillotine
    over everyone's head.
        In December 2024, China banned the export of gallium,
    germanium, and antimony to the U.S. In February 2025 China
    further restricted exports of tungsten, tellurium, bismuth,
    indium, and other minerals, and in April 2025 China cracked
    down on the exports of seven heavy rare earth and magnets
    derived from them: dysprosium, gadolinium, lutetium, samarium,
    scandium, terbium, and so on.
        And now, you know, the fact of the matter is most
    Americans, the folks that we're talking to at home, have not
    heard these names since studying the periodic table and even
    then I'm not sure they stored them to memory in their high
    school science classes.
        But it's important to break this down for the American
    people. It's critical because of the semiconductor,
    telecommunication, defense, and renewable energy industries.
    People around the country need to know this critical impact.
        Thankfully, President Biden understood the importance of
    securing our critical mineral supply chains. Under his
    leadership the State Department worked with the Development
    Finance Corporation and our allies to ensure that American
    businesses were shielded from the CCP's market pressures.
        In 2022 we established the Mineral Security Partnership,
    the State Department program that was dedicated to accelerating
    the development of diverse critical mineral supply chains free
    from China's control.
        But we have a challenge at hand because the Trump
    administration has gone forward with reductions in force that
    can have an impact that undermines all of these efforts, this
    awareness that we do have in a bipartisan way to have access to
    critical minerals.
        And we saw just last Friday the State Department lose
    through their reduction in force and firing of 1,300 employees
    as a part of a plan to shrink that workforce in a way that is
    not thoughtful, and instead of working to secure our critical
    mineral supply chains Trump is firing experts and causing those
    remaining to be distracted by fear for their jobs instead of
    focusing on American interests, and it is a real distraction.
        So, Under Secretary Fernandez, you know, I'd love to hear
    from you how these reductions in force harm State's work with
    other Federal agencies like the DFC to help American businesses
    secure our supply chains and what should we be doing to work
    with DFC to continue to play a supporting role in securing
    critical mineral supply chains?
        Mr. Fernandez. Thank you for your question.
        We could talk for a long time about this and I'll be brief.
        This has got to be a bipartisan issue because it's a
    bipartisan problem. It's also an international problem. Our
    allies and partners understand that this is a problem, which is
    why we need a strategy.
        Part of that strategy has to be--has to include the DFC.
    The DFC was a very good partner in the Mineral Security
    Partnership. Why? Because funding is often the problem that we
    all need to crack.
        There are a number of changes in the DFC authorization
    that, in my eyes, would help the equity scoring, for example.
    They have--there's a penalty for investing in equity.
        The number of countries, the types of countries they can
    finance projects in upper middle income countries are a
    problem. Argentina and Chile have the world's largest deposits
    of lithium and, yet, the DFC can't work in those two countries.
        And so we have got to find a strategy that turns the DFC
    loose, that allows us to use all of the tools at our disposal,
    EXIM Bank and TBA as well, and I think that's what the MSP did
    and, frankly, we had very good cooperation from the DFC.
        Mr. Amo. Thank you. My time has expired so I'll yield back.
        Mrs. Kim. I now recognize the gentleman from Kentucky Mr.
    Barr for 5 minutes.
        Mr. Barr. Thank you all. Thanks to our witnesses. Senator,
    good to see you again----
        Mr. Manchin. You, too.
        Mr. Barr [continuing]. my neighbor from West Virginia and I
    want to talk about West Virginia and Kentucky coal in a minute.
    But let's just frame the problem.
        Today, China accounts for 70 percent of global rare earth
    element mining, 92 percent of rare earth refining, and 90
    percent of rare earth magnet production.
        It controls 99 percent of global gallium refining, which is
    a key material for advanced microelectronics used in U.S.
    defense systems, and this is a real concern because, as you
    know, in April China imposed export restrictions on seven of 17
    rare earths, many of which--many of which are essential for
    U.S. defense platforms such as the F-35 fighter which contains
    920-plus pounds of rare earths per unit, Tomahawk cruise
    missiles, and joint direct attack munition smart bombs.
        U.S. defense firms such as Raytheon, Honeywell, Lockheed
    Martin face supply delays, rising costs, and potential
    production halts. So breaking China's choke hold on these
    critical mineral supply chains will require more domestic
    production.
        Senator Manchin, you know this well. The Department of
    Energy estimates that recoverable coal, coal ash, and coal
    waste in the United States contains between 11 and 17 million
    metric tons of rare earth elements.
        U.S. consumption last year was just 8,800 metric tons. So
    we're talking about a domestic resource of rare earths that
    contains over a thousand times our annual demand for rare
    earths.
        Given that scale, Senator Manchin, wouldn't it be a
    strategic failure not to include coal-based mineral recovery
    from West Virginia, Kentucky, Wyoming, Pennsylvania, across
    this great fruited plain as a core pillar of our national
    critical mineral policy?
        Mr. Manchin. Well, thank you, and I think both of our
    respective states, both of our universities, are working very
    closely on this now as far as extraction from our waste--from
    our coal finds--things of that sort, and also water coming from
    coal mines.
        All that stuff can be turned into a tremendous value for
    our country and we're looking at that too and the cost of that
    versus with some new mining. I just said earlier that I'm
    involved with a company called Ramaco, basically, who's coal
    mining.
        They're going to open a new coal mine in Wyoming, first one
    in 70 years, and with that in the bindings, as people know
    layers between the coal, there's an awful lot of critical
    minerals in that, too, which is a great opportunity for us.
        So I think in all of this we have to do everything that we
    can. The bottom line is is that we can't make it more difficult
    for companies in the U.S. through the permitting constraints
    that happen for us to do what we need to do.
        If we can get that accelerated that's going to help us
    tremendously on that and I think there's a lot of inroads being
    made.
        Mr. Barr. Yes, and I've introduced a bill that would help
    my constituent company you referred to, Ramaco, expedite the
    permitting there. I know you were a real leader in reforming
    Federal permitting laws but there--in the Senate but we--
    there's more work to be done there.
        I do have a bill called the RESCUE Act which I would
    share--I would urge my colleagues to support which would use
    that Fast-41 streamlining process for--streamline permitting
    for rare earth extraction from coal. I think that's important.
        But also, Senator Manchin, speak to the potential of using
    the Defense Production Act. I don't know if you've thought
    about that--the Defense Production Act--to cut through all this
    red tape to allow for coal mining or extraction of rare earths
    from coal.
        Mr. Manchin. I definitely have been speaking about defense
    production. I think it's the one tool that shows the urgency
    that we have in our country to defend ourselves and be able to
    help our allies.
        The other thing is the permitting process. Congressman
    Westerman and I worked very, very hard and very close and got
    very close last year, right down to the final bell when the
    bell rang.
        There's a piece of legislation I think that you all could
    take and run with very quickly. We passed it in the Senate. It
    came out of our committee basically 15 to four the first time,
    a bipartisan overhaul working with Senator John Barrasso, our
    Republican and Democrat colleagues seeing the need for this.
        Hopefully, you all can take it and make some changes if you
    need, whatever would be helpful.
        Judicial reform was the big thing in permitting. The courts
    will hold you up no matter what you try to do. The courts can
    hold you up for infinity and just wear you out price wise.
        Mr. Barr. That's why we might need to cut through that with
    the Defense Production Act.
        Mr. Manchin. Well, I hope you can.
        Mr. Barr. Thank you for your leadership on that.
        Mr. Fannon, let me just ask you real quick. You answered
    Mr. Moylan's question well on the potency of DFC in alternative
    critical mineral supply chains.
        What about the Office of Strategic Capital at the
    Department of Defense also supplementing the catalytic
    opportunities for supply chain resiliency outside of the United
    States?
        Mr. Fannon. I think it's an incredible tool that hasn't
    really been utilized yet. I think it's time to get that tool
    out of the toolbox and start using it.
        I would also say one of the--the construct of the OSC is
    only--it's only debt. It only provides debt. I think that we
    talked about fixing the equity fix in the DFC.
        I would propose, respectfully, that you consider OSC have
    some equity authority as well. It makes all the sense in the
    world.
        There is a huge level of dry powder there and also they
    need help getting that organization up and running and really
    moving forward. But it's an amazing tool that needs to be used.
        Thank you.
        Mr. Barr. Thank you for your time. I yield back.
        Mrs. Kim. Thank you.
        I now recognize the gentleman from Montana Mr. Downing for
    5 minutes of questioning.
        Mr. Downing. Thank you, Madam Chair, and thank you for
    allowing me to waive into this hearing on such an important
    topic, and thank you for the--to the witnesses for being here.
        In my home district I've got central and eastern Montana.
    You know, we have seen firsthand the ability of American
    adversaries to dominate and manipulate critical minerals
    markets.
        You know, the Stillwater Mine in Stillwater County,
    Montana, is the United States' only platinum and palladium mine
    and has been the victim of deliberate market manipulation by
    Russia.
        Russia's dumping of cheap minerals into the international
    market forced the Sibanye-Stillwater--he owners of the mine to
    scale back its operations and lay off 700 well-paid workers at
    the end of last year. Obviously, it's had an incredible impact
    on my district in those counties.
        So China employs similar manipulative tactics to an even
    greater degree in order to promote dependence and freeze out
    competition.
        So I'm going to start with Mr. Fannon. In your testimony
    you discuss how China will eagerly manipulate the global
    critical minerals market by restricting supplies on one hand
    and dumping them later to kill off growing competition.
        Can you elaborate on the degree to which global market
    manipulation is part of China's overall critical mineral
    strategy?
        Mr. Fannon. Yes, thank you for the question. This is a play
    book that they have used and deployed multiple times, really,
    since 2010 when they first banned the export of rare earths.
        At the time, President Obama initiated a WTO challenge
    against China. It took years for that case to go through the
    WTO process. In the interim period China dumped material onto
    the market, crashed prices, and sent the one company--rare
    earth company into bankruptcy.
        A few years ago, China--Xi Jinping said he didn't like the
    way cobalt was being priced and announced he was going to look
    into that.
        The one cobalt mine in the development project in the State
    of Idaho that was starting to ramp up the U.S. Government was
    an investor in announced that they were going into care and
    maintenance because the prices crashed.
        Just the signal that China has, because it's not just that
    they're the biggest producer. It's also important to recognize
    they're also the largest purchaser.
        Mr. Downing. Right.
        Mr. Fannon. So they're working it on both sides of the
    ledger, which gives them massive, massive pricing power and it
    goes back to this price discovery challenge we have with China.
        Mr. Downing. Thank you.
        With regard to combating Russian dumping, I introduced the
    Stop Russian Market Manipulation Act. It's a bill to ban the
    importation of platinum and palladium from Russia.
        And I'll go to the whole panel on this one. What steps can
    Congress take in order to combat similar efforts by Chinese
    producers to dominate the international market and crush
    American competition?
        Mr. Manchin. So trade and tariffs are the thing I think
    which--it's your tool and the tool we have in our great
    country, basically.
        Tariffs should be used as an incentive and a protection,
    protection, basically, of your building blocks and we talked
    about this earlier. The building blocks--we have to have what
    you're producing in Montana. We have to have that. The free
    world has to have that.
        But unless you're protected against the unfair practices of
    China and countries of concern, whether it be Russia, China,
    North Korea, Iran, they're never going to have our interests.
    They're never going to have our view.
        And with that you have to protect against them coming in
    and distorting our markets. That's where the tariffs can be
    used to protect building blocks.
        Mr. Downing. Thank you. Any further comments?
        Mr. Fannon?
        Mr. Fannon. Yes, I would just--I would just say I would
    look to--we could shift the presumption. I think Congress
    already made a pretty important passed legislation in the
    Uyghur Forced Labor Prevention Act, which created a presumption
    that if material--something's being produced in Xinjiang region
    it was presumed to be tainted and it requires Chinese suppliers
    to disclose where they're--their methods.
        I think we could apply that thinking into the critical
    minerals debate. You don't have to do anything, just ask them
    to start to disclose.
        U.S. mining companies are remarkably transparent and they
    disclose all this stuff all the time in response to government,
    in response to the NGO community, and other interested
    stakeholders. Why aren't we asking the Chinese to do the same
    thing?
        Thank you.
        Mr. Downing. Thank you. Mr. Fernandez?
        Mr. Fernandez. Thank you.
        As I mentioned earlier, this is what a monopolist does. It
    floods the market. It cuts out the competitors. It's not just
    only in Montana but Australian mines have closed. Mines
    throughout the world have closed because of Chinese oversupply.
        I think tariffs are a tool. I would caution the overuse of
    tariffs. If we don't have the minerals in our country to
    replace those then it doesn't do us any good. But in the case
    of minerals that we do have I think tariffs are one of the
    tools that we have in our toolbox.
        Mr. Downing. Well, thank you. I've got a lot more but,
    unfortunately, I've run out of time.
        So Madam Chair, I yield.
        Mrs. Kim.Thank you. We have some time for a second round of
    questioning if the witnesses are OK to stay with us a little
    longer.
        Great. So let me first start with followup questions from
    what we were discussing earlier regarding the use of the
    Defense Production Act.
        I know, Senator, you just mentioned that you had
    legislation in the Senate. I would love to take a look at it
    because I also serve on the House Financial Services Committee
    Subcommittee on National Security and Illicit Finance and we
    are trying to work for a modernized DPA.
        So your input today as well as giving us some suggestions
    and recommendations on that regard is greatly appreciated.
        So if you want to just talk about that, just quickly.
        Mr. Manchin. Well, Madam Chair, first of all, I have two
    other articles I'd like to present for the consideration of the
    committee which gives a breakdown on the background of critical
    minerals and mineral sectors, and also the partners' critical
    minerals supply chain by country, the largest producers outside
    of China so we know we can get these two things. I think they'd
    be helpful.
        We'll share also with you, as we talked about, the
    workforce, what we have done in that, and also the comparison
    we have done with some other bills.
        Happy to share all that with you. I'll make sure that Peter
    back here gets it to you, OK, to----
        Mrs. Kim.Thank you very much. Thank you.
        And then as we are talking about breaking the chokehold on
    China's dominance on critical minerals, rare earth elements,
    mining, producing, manufacturing, we just recently saw the
    announcement coming from the administration that the Defense
    Department will be the largest shareholder of our--probably the
    biggest rare earth producer, MP Materials.
        So I just wanted you to comment on that a little bit
    because we also saw this morning Amazon--no, Apple, its big
    investment in the field as well.
        So can you, Mr. Fannon, talk about what we can learn from
    this deal?
        Mr. Fannon. Yes, thank you. I would say that this deal is
    absolutely transformative in terms of the boldness and the
    scope, given that it's not just an investment but also over
    time off take and also price security, I would say.
        The Apple point is--I saw that announcement too where Apple
    is going to invest as well because they want these magnets,
    which is critical to their business. And so what I think that
    the lesson here is there's a role for the U.S. Government as an
    investor in these projects, first, whether in the United States
    or internationally.
        But also the lesson is that if there's an alternative
    supply chain then U.S. companies will source from it. The move
    by the Defense Department is answering the chicken or egg
    problem, I would say, and so now we see a major investor coming
    in.
        I think that this is a model, whether it's the Defense
    Department, the DFC, any other variety of other investors from
    the U.S. side. But it's that derisking where you'll see those
    off takes and other co-investments. And so I think it's
    absolutely transformative.
        Thank you.
        Mr. Manchin. Madam Chair, if I could say one thing.
        Mrs. Kim. Yes, go ahead.
        Mr. Manchin. I think basically with the Federal Government,
    as you saw, made the announcement last week into MP which is
    what it's about, when you see an off take coming to the Federal
    Government guaranteed by we're going to be needing this product
    and we're only going to buy it from an American producer
    changed the whole dynamic and that allowed Apple and other
    people with large sums of money that can invest, knowing it's
    going to be protected and basically used within our own system.
        Mrs. Kim. Got it.
        Well, we also, I mean, we--go ahead. Sorry about that, Mr.
    Fernandez.
        Mr. Fernandez. Just quickly.
        There are a couple of successful examples of the DPA being
    used in Canada for critical minerals and that was done during
    the Biden administration. I would suggest you look at that.
    Those were successful.
        Also, the--one of the beauties of the--of a deal with MP is
    that it actually--in the past what we have done is we
    privatized the gains and socialized the losses.
        What this does is it actually makes the U.S. Government a
    partner in the success and I would--and I would look at that as
    an example, going forward. It's not going to replace the
    private sector but it certainly can be an early stage investor.
        Mrs. Kim. Sure. Well, thank you so much, all of you, for
    that.
        Again, during our discussion we also talked about the role
    of DFC playing a bigger role in this space. So our subcommittee
    is also charged with reauthorizing DFC this--before this fall
    and we hope to do this soon.
        So we are looking at equity fix. We are also looking at
    expanding the countries that we can utilize our DFC in.
        So if you can talk about how that can be important tool,
    going forward. Obviously, domestic production is critically
    needed. We all established that. But we also need to work with
    our allies and partners in the region.
        So how can this be a critical tool in our also diplomatic
    toolkit? Go ahead, Mr. Fernandez.
        Mr. Fernandez. If I may.
        I've already talked about the need to fix the equity issue
    and also the need to expand the number of countries. Another--
    something we did as part of the Mineral Security Partnership is
    we created a finance network and it is--so I would urge the DFC
    as well as EXIM and others to spend more time with their--with
    their counterparts in other countries.
        Why? Sometimes they can band together to derisk some of
    these projects but also just by sharing projects. There may be
    a project that the DFC is not interested in and you'd be
    surprised how often they wouldn't talk to their counterparts
    because they might be competitors.
        And so I would urge more involvement in terms of just
    exchanging projects, which is what the private sector does
    often.
        Mrs. Kim. I know my time is up and I want to turn it over
    to my ranking member to ask more questions but, hopefully, we
    can continue that conversation about some of the projects that
    our private sector can be encouraged and enticed to invest in
    utilizing our tools like DFC and so forth.
        Go ahead.
        Mr. Manchin. Madam Chair, one final thing.
        Access to capital is the mother's milk of production.
    Without capital they can't produce or they won't come to
    fruition.
        So that's what--access to capital in every way, shape and
    form is going to make the difference whether we produce in time
    or we don't.
        Mrs. Kim. Thank you.
        Ranking Member?
        Mr. Bera. And just for those watching at home, antimony is
    atomic number 51 on the periodic table with a symbol of SB.
    Just in case I ever make it on ``Jeopardy'' that's important
    information.
        I'm old enough to remember the energy crisis of the 1970's,
    just the long lines of folks waiting to fill up their cars with
    gasoline, and we responded as a Nation, right?
        We created the Strategic Petroleum Reserve, which has been
    used now over the last few decades to smooth out markets to
    address this.
        You know, we're doing the same in APIs. You know,
    Representative Moskowitz talked about COVID and, you know, we
    realized very quickly our pharmaceutical industry was overly
    dependent in this case, again, on the PRC for those APIs.
        We do have a national defense stockpile for rare earths and
    critical minerals that, again, has been alluded to. It's
    woefully inadequate at this juncture. Again, I'm not a
    complicated person but if prices are at historic lows it would
    seem to me that now would be the time for us to actually be
    gobbling up that market and creating that national stockpile.
        Maybe, Under Secretary Fernandez, you were in an
    administration and, again, it doesn't seem like rocket science.
    And then maybe Senator Manchin, since you're a fellow
    legislator, why is it that we seem to be lethargic in terms of
    recognize--we know the risk.
        It's not a partisan issue. What's holding us back from
    actually very intentionally going in and creating the
    stockpile?
        Mr. Fernandez. Well, I remember talking about it. Frankly,
    there was a lot of talk but not a lot of action. The funding is
    an issue and also I think we have been slow to realize the
    vulnerability.
        But I do think your suggestion that we consider it is one
    that the time is now because, you know, when you're as far
    behind as we are you need all hands on deck.
        You need everyone on board, and unless we move quickly,
    unless we do what, for example, the senator just mentioned in
    terms of permitting, takes us 10 to 20 years to build a mine.
        We can't continue operating that way. So it's all of the
    above and all hands on deck.
        Mr. Manchin. I think timing--I think, Congressman Bera,
    timing is the thing and uncertainty is the cost that no one can
    factor in.
        Those are the two things that really--permitting, like you
    said, from that standpoint the people jumping in, a lot of
    people litigation--they know they're going through litigation.
    You know, we're a litigious type of mentality, good in certain
    areas for protection but also overdone in so many areas that
    stymies it.
        Mr. Bera. Yes. So there's nothing that prevents us from
    doing both of these things, right? Because we can build the
    stockpile immediately if we were to appropriate the right
    resources and funds, which it sounds like we really ought to
    do, and then opening the mines.
        Doing the permitting reform will take a little bit longer
    but, you know, earlier in this Congress in a bipartisan way we
    passed the Fix Our Forests Act.
        Now, not necessarily the same thing but it was bipartisan.
    You know, a lot of us as Democrats got tired of watching our
    forests burn, certainly in California. It has NEPA reforms in
    there, et cetera.
        So we can do permitting reforms. You know, again, might be
    easier under a Republican administration.
        Mr. Manchin. We have the urgency now that we had with that,
    right now.
        Mr. Bera. Absolutely. Again, what I would urge my
    Republican colleagues to do is now is the time. I'm not asking
    to meet at the 50-yard line.
        We're not--we don't have the White House. We don't have the
    majorities in the Senate or the House. But don't take us to the
    end zone. Like, we can meet at the 35-yard line. We can do this
    if we're willing to negotiate.
        And, Senator Manchin, you did lead some of these efforts in
    the Senate. So maybe that is the starting point.
        Mr. Manchin. We have got some--yes, we have some good--
    we're going to share that with you all what we had done and
    what we have come close to doing.
        Mr. Bera. Yes, and we ought to do it.
        Mr. Fannon, do you want to add anything on the petroleum
    reserves or the defense stockpile or permitting reform?
        Mr. Fannon. Yes, I think the--I think it's important to
    acknowledge the administration has started to talk about
    permitting reform. It has some executive orders to try to
    shorten some of these time horizons.
        I think the point about--you made about the forests is a
    good one. You decided to pass this legislation and move this
    bill--bipartisan bill because you saw a crisis, and the crisis
    was real. It was material. It was--you know, the smoke was
    around your house. People acted.
        I think we need to--this goes back to an earlier comment.
    This is a political problem. How do we create that sense of
    urgency with the American people that the smoke is around the
    house to create that move and I think once you do that then
    we'll see some action. I think we're starting that now.
        Mr. Bera. Right. Thank you. I yield back.
        Mr. Moylan.
        [Presiding.] Thank you.
        The chair now recognizes Representative Sherman from
    California for 5 minutes.
        Mr. Sherman. China controls most of this market. Is that
    because China is uniquely blessed by ores of all these rare
    earth minerals or is that just because China decades ago
    decided to do the mining, which is difficult, and the
    processing, which I believe is even more difficult?
        I'll ask any of the witnesses.
        Mr. Manchin. Let me just say, if I can, very quickly
    everything you just said was correct. They did something nobody
    else wanted to do, and if you won't do it in your own backyard
    don't expect someone else to do it.
        China took--filled the void and they saw it back when we
    got into the WTO in the 1990's and they went afterward and they
    captured some markets and basically hold it hostage and they've
    done it extremely, extremely efficient.
        Mr. Sherman. But it's--but other countries in the world
    have the ore deposits and could have done it. China did it.
        Mr. Manchin. China put the resources to it.
        Mr. Sherman. Got you.
        Mr. Manchin. They put the money to it.
        Mr. Sherman. There are those who advocate us--that America
    should have a strategic crypto currency.
        What? I guess one of our witnesses needed to leave.
        A crypto currency reserve, which seems bizarre. I've never
    heard of a short of crypto currency. As a matter of fact, if
    you want to get some Mongoose Coin or some Skibidi Toilet Coin
    that's available to you right away as are all the currencies.
        Do we have a rare earth minerals strategic reserve of any
    significance?
        Mr. Fannon. We have a defense reserve which is woefully
    underfunded and not terribly well stocked wherein there's some
    critical minerals I don't have insight into what the volume is.
        Mr. Sherman. And that's not designed to support our
    economy. That's just designed to allow us to make weapons that
    we might not otherwise----
        Mr. Fannon. It's still for defense.
        Mr. Sherman. And I'd point out we have a Strategic
    Petroleum Reserve that we should be refilling now because oil
    is under $70 in both administrations. Particularly the prior
    ones said that they would refill the reserve when oil went
    below $70 and that hasn't been done. But we continue to hold
    over $10 billion worth of crypto currency for reasons I have
    yet to figure out.
        China wants us to give them--sell them the most advanced
    chips. Nvidia is apparently going to be allowed to do that. To
    what extent did they get that incredible concession from us
    because otherwise they wouldn't sell us the rare earth
    minerals?
        Was that their big--their big stick?
        Mr. Fernandez. I'm not going to--I have no inside
    information on that one but I will say that its dominance--
    China's dominance of critical minerals is a weapon and they
    weaponize it and they're good at it.
        Mr. Sherman. What other countries are moving toward
    developing rare earth minerals in a major way?
        Mr. Fannon. Other--Australia is a big--is very much in the
    game. The Japanese are one of the leaders in some of the
    refining and magnet production as well.
        There's actually joint development programs with those
    three countries already in a company or two. But those would
    be----
        Mr. Sherman. Now, China has lower labor costs than us and
    most of those other countries. Is a low labor cost critically
    important to being able to be competitive in this business?
        Mr. Fannon. I think when we talked about the rare earths
    it's more than just the labor. It's also the cost of the
    capital to run the plants, and I think someone has already
    alluded to the way in which they do it is a manner that would
    be objectionable in the United States or in most other Western
    countries.
        Mr. Sherman. What would be objectionable in the----
        Mr. Fannon. The way in the way in which they refine the
    rare earths. It's toxic.
        Mr. Sherman. Oh, you're talking about the local
    environmental impact?
        Mr. Fannon. Correct. Correct.
        Mr. Sherman. If you spend a bit more money can you refine
    these minerals and still meet the community standards we expect
    in America?
        Mr. Fannon. For sure, yes. That's--I think the announcement
    that was talked about earlier MP--the MP announcement--that's
    what they're seeking to do. There are other companies that are
    doing it as well.
        Mr. Sherman. Thank you.
        Mr. Fernandez. Of course we can. I mean, it's--it goes back
    to capital and the fact that the PRC has not--doesn't have the
    same standards that we do--environmental standards, labor
    standards.
        But that's an opportunity. That's why countries follow our
    record.
        Mr. Sherman. We certainly have capital. Much of it we bring
    in from China.
        And I'm going to yield back 10 seconds.
        Mr. Manchin. If I can just say one thing to you.
        Mr. Sherman. Yes, go ahead.
        Mr. Manchin. As far as you have the United States, you have
    Canada, and you have Australia, three main caches of where we
    know we have critical minerals we all need, then you have the
    ability of Japan to do the refining and South Korea is coming
    on strong, too.
        So these are all allies of ours in the free world. It's
    something we should be building an alliance with.
        Mr. Sherman. Thank you.
        Mr. Moylan. Thank you.
        The chair now recognizes Rep. Bera.
        Mr. Bera. I just want to ask a quick followup question.
        Absolutely, we can do this. You know, we have talked to the
    Australians a lot about it. We recognize that our price point,
    you know, given the environmental standards and everything
    else, is going to be a little bit higher than where China is.
        We also recognize that China--you know, Under Secretary
    Fernandez, you've talked about the monopolistic power. I think
    what I worry a little bit about is, you know, this is
    tangential but shareholder activism, right?
        There's tremendous pressure on boardrooms and companies for
    earnings--quarterly earnings--and it's proven extremely
    difficult for us to move some of our companies that even know
    the vulnerabilities because there is going to be a short-term
    cost here that will impact their quarterly earnings.
        And we don't have to get into it but I'd just put that one
    out there. That is something that we actually have to also
    think about is the long-term investments that, you know, give
    them long-term profitability as opposed to really the short-
    term investments that drive some of these decisions to continue
    staying invested in China or making further investments in
    China even when they know the long-term vulnerabilities are
    there.
        So I don't--do you want to talk about that?
        Mr. Manchin. It's become the American way, which is not
    beneficial for us right now. Basically, everything is return on
    investment.
        Shareholders demand. It makes very, very bad decisions and
    the bottom line is pay me now or pay me later, and right now
    we're paying the price.
        And if we don't get in the game pretty quick and we don't
    look past the bottom line right now, if we'd have done that
    during World War II we'd have never won it and we're in that
    same situation right now.
        It's a life or death matter for the 21st century, our
    children and grandchildren. So we're either going to get
    involved, commit ourselves to making us independent and making
    our supply chain intertwined. If not, God help us.
        Mr. Fernandez. But it's also, I think, a role that
    government should play, and you're right that there is a short-
    term view. But that's where government support can become
    involved to encourage a longer-term view.
        If you start from the premise that by 2035, according to
    most experts lithium prices will recover then you're looking at
    a short-term problem and then you need to find a way for--to
    help our companies and our partner countries' companies
    survive.
        And so that's an opportunity and--but you're right, we do
    have a--if we just let the market run the show the PRC will
    dominate. We have got to find a way of changing that debate.
        Mr. Fannon. Yes, I would just say that the shareholder
    issue is--of course, plays both ways. It's also one of the
    reasons why it's--some of the--why the mining industry in the
    United States in particular has--and a lot of other places has
    died down and why the best in class miners are reluctant to go
    to many emerging markets because of--there's a fear of
    shareholder activism.
        There's a fear of going into certain countries because
    there's a perceived--there's a perceived view that political
    risk. There may have been a history.
        Maybe it's there. But they don't go there and so what--that
    simply leaves those emerging markets susceptible to Chinese
    opaque practices, which is one of the reasons why we're where
    we are.
        So I think--I think it goes back to the earlier discussion
    about getting the American people to understand where things
    come from and how and differentiate those.
        Mr. Moylan. OK. With that, I thank the witnesses for their
    valuable testimony and the members for their questions.
        The members of this subcommittee may have some additional
    questions for the witnesses and we ask you to respond to these
    in writing.
        Pursuant to committee rules, all members may have 5 days to
    submit statements, questions, and extraneous materials for the
    record, subject to the length and limitations.
        So without objection, the committee stands adjourned.
        [Whereupon, at 11:47 a.m., the committee was adjourned.]

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