Scarce Strategic Mineral Alternative Sourcing Likely To Leave US Supply Chain At Risk Over Next 3-5 Years

Key Findings:
Due to lack of alternative strategic mineral sources, susceptibility to supply chain vulnerabilities likely to persist in next 3-5 years:

The biggest risk the US faces is likely supply chain vulnerabilities:

• US imports 80 percent of all strategic minerals.
• US imports 28.4 percent of strategic minerals from China.
• Strategic minerals highly likely to remain essential for key industries, including defense, electronics and energy.
• National mining likely presents opportunity to reduce import dependence.
• One US company currently pursuing strategic mineral mining in the Arctic.
• Legislation to quicken mine opening unlikely to pass Congress.

Arctic likely opportunity to reduce dependence:

• US abuts Arctic region, allowing for undisputed access to resources.
• US federal government issued call to explore Arctic region for strategic minerals.
• China is likely to continue expanding its mining operations outside its mainland to include Africa and the Arctic.
• Greenland, with growing access due to ice shelf melt, is likely an opportunity for domestic mining; however, little is being pursued presently.

Law enforcement highly likely most at risk:

• Dependent on businesses and federal government for critical supplies, making its supply chain likely at high risk for potential disruptions.
• State-by-state legislation likely impedes proactive, unified response to supply chain risk.
• Metal theft likely to remain top strategic mineral priority for law enforcement.

About This Document:

The eleven students of the Collaborative Intelligence class assembled this document. Students researched and analyzed findings over the 2012 autumn term at Mercyhurst University. The class split into three teams with each team responsible for a specific topic. Four students were assigned to research national security issues, four were assigned to research business issues, and three students were assigned to research law enforcement issues. All three teams were tasked to answer the following question: “What are the likely US national security, business and law enforcement implications over the next 3-5 years of trends in critical or strategic minerals?” Teams collaborated to establish definitions and create a list of “critical strategic minerals.”

 

This report identifies the following as critical and strategic minerals for US national security, businesses, and law enforcement:

• Antimony
• Aragonite
• Arsenic (trioxide)
• Asbestos
• Barite
• Bismuth
• Calcite
• Cesium
• Chalcocite
• Chalcopyrite
• Chromium
• Cobalt
• Copper
• Gallium
• Germanium
• Gold
• Indium
• Iodine
• Lithium
• Magnesium metal
• Manganese
• Nickel
• Niobium
• Nitrogen (fixed),
• ammonia
• Peat
• Perlite
• Phosphate rock
• Platinum-group metals
• Potash
• Quartz crystal
• (industrial)
• Rare earth elements
• Rhenium
• Rubidium
• Scrap
• Selenium
• Strontium
• Tantalum
• Tellurium
• Thallium
• Thorium
• Tungsten
• Vanadium

Overall analytic confidence is moderate. All groups agreed on moderate analytic confidence for each set of group findings. Source reliability varied from medium to high, and sources could be successfully corroborated.

This book is a summary of a ten-week graduate class examining strategic mineral use and implications for US business, national security, and law enforcement. The project is the culmination of the research, along with the estimative findings, of the 11 second-year Intelligence Studies, Collaborative Intelligence (INTL 650) class in the Fall, 2012. It can be viewed and/or downloaded as a PDF from the link below. Scarce Strategic Mineral Alternatives Likely To Leave US Supply Chain At Risk Over Next 3-5 Years

Top 50 People To Follow In Strategic Minerals

Based on qualitative and quantitative analysis of Twitter users discussing critical and strategic minerals, it is likely that the 50 users listed are best to follow to keep up with developments in the field.

Methods and Processes:
Graduate students from the Collaborative Intelligence course in Mercyhurst University’s Applied Intelligence Program conducted this analysis. Students determined a network of Twitter users through their research related to the business, law enforcement, and national security implications of critical and strategic minerals. From this large network, the students used social network analysis and the ORA software to isolate the most connected users. This resulted in an initial list of 67 users. From there the class collectively researched the number of followers and membership on lists of each user, and determined the ratio of lists to followers, represented in the spreadsheet as a percentage.

Increased Legislation And Cooperation Between Public And Private Sectors Likely Needed To Curtail Metal Theft In The Next 1-2 Years

Analytic Question: 
What measures could be taken to reduce the frequency of metal theft cases in the United States in the next one to two years?

Key Findings:
Due to an increasing amount of metal theft fueled by rising metal prices, it is likely that law enforcement across the United States will take action to reduce the problem by enacting laws which grant more power to law enforcement agencies and prosecutors, while increasing regulations on scrap yards. Improved legislation and powers granted to law enforcement, combined with education and cooperation with businesses and the public, will likely curtail the overall amount of metal theft. However, it is unlikely to solve the issue, as the practice will likely move underground to an increasingly organized black market, localized in metal theft rings.

• Due to the lack of a federal law designed to combat metal theft and regulate scrap yards, it is likely that enacting a federal law would reduce the amount of metal theft taking place in the United States in the next one to two years. The Metal Theft Prevention Act, proposed by Senator Charles Schumer (D-NY), would likely help resolve many of the problems dealing with the theft of metal within the United States. States would likely build upon this law, as metal theft and scrap yard regulation vary greatly state by state.
• Due to the high profits and low risk of being caught, it is likely that metal thefts will persist over the next one to two years, mostly in the form of metal theft rings. While new legislation and more power granted to law enforcement will likely deter many, it is unlikely that these actions alone will completely resolve the metal theft epidemic in the next one to two years.

• In spite of the recent influx of metal thefts, local and state law enforcement agencies are likely to reduce the number of metal thefts over the next one to two years through educating the public on preventative measures and working closely with local recyclers and scrap yards to catch those trying to sell stolen metals. Companies are likely to increase the risk of the crime thus reducing total number of thefts by utilizing simple deterrent techniques such as refusing cash payments for sold metal and by collaborating with local police with theft alert websites like ScrapTheftAlert.com.  

Abbreviated Dissents - There are no dissents over any aspect of this report.

Link to full document: Metal Theft Report

Mineral And Mining Legislation Highly Likely To Hamper US Business

Analytic Question:

How will mineral and mining legislation affect United States businesses in the next three to five years?

Overall Finding:

It is highly likely that mineral and mining legislation will hamper the US business sector over the next three to five years.

Key Findings:

• Re-opening dormant mines will likely remain the most attractive method to procure strategic minerals domestically
• Mining industry must adhere to over 80 laws through 20 agencies
• Opening mines in the US takes, on average, seven years
• It is likely that the effects of the Dodd-Franks bill on conflict minerals will be far-reaching, across many industries. 
• Dodd-Franks legislation creates a competitive disadvantage for US public industries
• US industries could incur between USD 3 and 4 billion in implementing Dodd-Franks legislation
• It is likely that passage of US Congressional bills relating to strategic and rare earth minerals would improve the job market; however it is unlikely legislation will be implemented
• Only 29 percent of bills sent to the floor for a vote pass both the US Senate and Congress
• Ten strategic mineral-related bills have been introduced to the 112th Congress
• In spite of growing non-Chinese supply of minerals, US businesses are likely to remain heavily dependent on Chinese rare-earth sources.
• A number of strategic minerals, including Rare Earths, are 100 percent imported
• China supplies 79 percent of the rare earths used by US industries, increasing trade tensions

Mineral and Mining Legislation Highly Likely to Hamper US Businesses

Rare Earth Plant Delayed Again

Save Malaysia Stop Lynas are the primary activist group
attempting to stop production of rare earths in Malaysia.

KUALA LUMPER, MALAYSIA (NY TIMES) -- A court in Malaysia has delayed the license for Lynas Corp to begin production at a controversial rare earth plant. A decision will be made on October 10th on whether production will be blocked permanently.
The plant is built and ready to go, but production has been delayed due to environmental and safety disputes. It is one of the biggest plant of its kind outside of China and has faced resistance since construction started two years ago.
In order to break China's grip on rare earths supply, plants such as these, need to be built and producing in order to compete. The current delay is based on safety concerns, however, activists are reviewing whether the government has the right to allow the plant to operate. 'Save Malaysia Stop Lynas' has its work cut out as it tries to prevent Lynas corp from starting production at a plant valued well over $800 million.
Source: Malaysian Court Delays Rare Earth Plant (Reliability: High)

Comment: US businesses will be hoping that Lynas corp wins this battle with activists and those wishing to see their license to mine revoked. If China's stranglehold on rare earths and minerals continues, they will control supply and prices of these components that are attributed to technology products, cars and many other industries in the US.

N.C. Scrap Metal Buyer Permitting Law Goes Into Effect 1 October 2012

The act aims to cut down on theft by adding to the
paper trail for the sale of scrap metal; N.C. now has
a cap on cash purchase of metal at 100 USD

KINSTON, NC (FREE PRESS & JONES POST) --In order to address the steady increase in the theft of scrap metals, especially copper, the North Carolina General Assembly recently passed House Bill 199, the Metal Theft Prevention Act. On 1 October, the Act went into law. Now, any business involved in the purchase and recycling of metals must apply to the local sheriff’s office for a permit to be in compliance with the act. The permits are available free of charge and are valid for 12 months at “fixed sites in the county of issuance,” according to the LCSO. The law applies to purchasers of ferrous and nonferrous metals. Nonferrous metals such as copper, aluminum not used in cans and stainless-steel beer kegs do not have large amounts of iron and steel in them.The law also limits cash payments for metals — buyers of nonferrous metals cannot pay cash for copper, and any purchase of other nonferrous metals worth more than $100 must be paid by either check, cash card or money order. “A nonferrous metals purchaser shall not make more than one cash purchase per day from any individual, business, corporation or partnership,” the law states. Scrap yards already had to keep detailed records of customers who brought them scrap metal,  even taking their fingerprints if they brought in catalytic converters, air conditioning condensers or evaporator coils, but the new law also requires them to obtain a permit from the sheriff’s office and get a photo or video of the seller with the materials. Source: New Metal Theft Law Takes Effect Today (Reliability: High)

Comment: This is just one example of the legislature taking action against the increases in copper theft in the US. Law enforcement is attempting to take proactive steps to address these thefts. The permitting process in North Carolina and increased paper trail will likely discourage large-scale theft of copper in the state.

Dodd-Frank Wording Creates Unfairness Amongst Competitors

General Motors must comply with section 1502 of the
Dodd-Frank Act, but competitors like Volkswagen AG
and Daimler AG do not, creating unfairness in the market.

NEW YORK (WSJ) -- The Security Exchange Commission (SEC) recently adopted section 1502 of the Dodd-Frank Act, which requires companies that meet certain criteria to publish if conflict minerals are used in any part of the supply chain for the company. These minerals come from the Congo and surrounding areas, and the proceeds are used to fuel wars and other conflict in the region. Industries impacted by section 1502 include automobile, jewelry, electronics, aerospace, and others. These industries stated that the section will add to costs and is difficult to comply with, as their whole supply chain will have to be audited and new minerals will have to be sourced if it is found that conflict minerals are used. However, even if a company does not have to comply with section 1502, there is a growing movement of corporate responsibility, in which many businesses are removing conflict minerals from their supply chains in order to maintain a favorable reputation. Source: Nuances in Conflict Minerals Rules Creates Uneven Playing Field. (Reliability: High)

Comment: Section 1502 was created to cut off funding to warlords in and around the Congo. It will be years before an assessment can be made to determine if the rule had the desired outcome.