Strategic Minerals: Is China’s Consumption a Threat to United States Security? – by Dr. Kent Hughes Butts, Mr. Brent Bankus, and 2nd Lieutenant Adam Norris (U.S. Army War College – July, 2011)

“China’s resulting role in the mineral trade has increased
Western security community concern over strategic minerals
to its highest point since the end of the Cold War….The
U.S. dependence on overseas sources of strategic minerals
essential to sustain its economy and defense sector is more
pronounced than its dependence upon foreign oil….There is
not, for example, a substitute for … chromium in the
production of stainless steel.”
(U.S. Army War College Issue Paper)

 Center for Strategic Leadership,U.S. Army War College

For the web’s largest database of articles on the Ring of Fire mining camp, please go to: Ontario’s Ring of Fire Mineral Discovery

No great nation willingly allows its standard of life and culture to be lowered and no great nation accepts the risk that it will go hungry. — Hjalmer Schacht, German Minister of Economics, 1937

The vitality of a powerful nation depends upon its ability to secure access to the strategic resources necessary to sustain its economy and produce effective weapons for defense. This is especially true for the world’s two largest economies, those of the United States and China, which are similarly import dependent for around half of their petroleum imports and large quantities of their strategic minerals.

Because China’s economy and resource import dependence continue to grow at a high rate it has adopted a geopolitical strategy to secure strategic resources. China’s resulting role in the mineral trade has increased Western security community concern over strategic minerals to its highest point since the end of the Cold War.

The importance of mineral access to security policy turns on the adequacy of domestic supply, reliability of mineral imports, rate of economic growth, and the degree to which the nation perceives threats from external actors. Security policy makers should become alarmed when resource imports are concentrated in a limited number of unstable countries, scarcity drives up commodity prices, external actors undertake behavior that interferes with free trade and mineral access, or peer competitors demonstrate a geopolitical interest in trade vulnerabilities. Today, the rise of China and its growing import dependence are creating conditions that call into question the continued security of mineral imports to the United States and the West.

The U.S. dependence on overseas sources of strategic minerals essential to sustain its economy and defense sector is more pronounced than its dependence upon foreign oil. Approximately 60% of the petroleum consumed in the United States is imported. By comparison the American nation depends upon overseas suppliers for over 80% of its most important strategic minerals, including cobalt, manganese, platinum group metals, rare earths, tantalum, and yttrium. Of interest, 47% of the 19 minerals on which the United States is 100% import dependent upon are produced in China (U.S. Geological Survey, Mineral Commodity Summaries 2010 and 2011). There are substitutes for petroleum as a source of energy, but this is not true of many strategic minerals.

There is not, for example, a substitute for manganese in the production of steel, or chromium in the production of stainless steel. While the United States continues to trust the free market to meet its import needs, similarly import dependent China does not and has developed a geopolitical strategy and industrial policy to secure its import supplies in the increasingly tight minerals market. During the Cold War, U.S. vulnerability to mineral import interruption became an active part of Soviet geopolitical strategy and much national security literature reflected upon the resource war between the import reliant U.S. and the mineral rich Soviet Union. United States vulnerability to a loss of access to these important mineral supplies is more pronounced today than at any time since the end of the Cold War. The uneven distribution of strategic mineral reserves and their concentration in a handful of politically unstable or potentially hostile countries makes it necessary that U.S. policymakers recognize the security of resource supply as a top national security issue.

Strategic Resources

Geopolitics may be described as the relationship of international political power to the geographic setting. Strategic resources provide an excellent example of this concept. Resources are anything that satisfies the needs of humankind. Because those needs change, resources change. As E.S. Zimmerman is famously quoted, “Resources are not, they become” (1933). Salt was once a strategic mineral, because of its limited known deposits and essential preservative capability. Salt was once so valuable that it served as currency, drove the establishment of trade routes, and provoked wars. Advances in geology and exploration led to the discovery of widespread deposits and along with the technology of refrigeration reduced salt’s strategic importance (Kurlansky 2002). The discovery of petroleum reduced the strategic importance of whale oil.

The political power of states controlling access to, and the supply of these resources diminished, while the power of states producing replacement resources, such as the countries of the Arabian Gulf, grew exponentially. The historic OPEC oil embargo of 1973 and 1974 reminded the national security community of the imbalance of resource supply and demand and the geopolitical importance of resource control. As stated by then Secretary of State Henry Kissinger, “This came as somewhat of a surprise. Oil supplies had been affordable and seemingly plentiful, and so it was hard to envisage the resulting disruption and price spikes that ensued….To say we were complacent is an understatement” (2009).

The history of resource geopolitics is long and varied. Roman access to the tin deposits of Cornwall provided the critical alloy to produce resilient bronze weapons. Access to the New World and colonial empires provided the resource imports that delayed the veracity of Thomas Malthus’ thesis. The U.S. decision to embargo petroleum and scrap metal to Japan played a major role in Japan’s entry into World War II. Germany’s lack of resource rich colonies and limited domestic resources underpinned Hitler’s expansionist strategy and quest for “lebensraum.” The importance of resources to the conduct of war was underscored by Hitler’s Minister of Industry, Albert Speer, who wrote, “The consumption of our latest reserves of chromium ore (Turkish) would have ended the war on January 1, 1946 at the very latest.” (1970)

During both world wars, U.S. mineral import dependence was a major strategic priority. At the end of World War II, security analysts wrongfully assumed that new high-tech nuclear weapons would obviate the need for conventional warfare and drew down force structures and conventional logistical support systems to low levels. Within five years, the Korean War had broken out and the United States was forced to spend $6 billion under Title III of the Defense Production Act to expand supplies of the strategic minerals essential to the defense and economy of the country (Eckes 1979).

The Soviet Union was essentially autarkic. In the strategic minerals and fuels area, the Soviet Union had no peers. It was the largest producer of crude oil, the second largest producer of chromium, the third-largest producer of cobalt, the number one producer of manganese and the second largest producer of platinum. The United States and its Western allies, Japan and Europe, were forced to import virtually all of the four most important strategic and critical minerals (chromium, platinum, manganese and cobalt). The Soviet Union was not unaware of the strategic vulnerabilities and in1973 Leonid Brezhnev said:
Our aim is to gain control of the two great treasure houses on which the West depends, the energy treasure house of the Persian Gulf and the mineral treasure house of Central and Southern Africa (Nixon 1980).

The Soviet Union embargoed shipments of manganese and chromium to the United States during the Berlin blockade and the Korean War, and purchased a two-year supply of cobalt on the eve of the 1978 invasion of Zaire’s Shaba Province by rebels from Soviet-backed Angola. The United State took an appropriate response. President Jimmy Carter, in his 1980 State of the Union Address, “drew a line in the sand” and declared the security of the Persian Gulf to be a vital U.S. interest, one for which men, if necessary, would fight and die. The two Gulf Wars reflect this strategic imperative.

In 1980, the National Defense Stockpile, maintained since 1939 to provide a political, economic, and security advantage against supply import interruption, reached $14.8 billion in materials. In 1988 the stockpile was transferred to the Department of Defense, and in the wake of the Cold War it has been sold down to a 2009 inventory of $1.4 billion (U.S. Congress 2010). The decision to sell off the stockpile was not based on a reduced importance for strategic minerals to the U.S. economy or defense sector. The decision reflected defense budget pressure and the belief that in the absence of a peer competitor, the United States could purchase its resource requirements on the free market and simply pay more than competitors should the price rise. The rise of China is challenging those assumptions.

The Rise of China

The ongoing purchase of new high-tech weapons platforms and the need to replace legacy weapons systems worn out by the recent wars is placing a premium on strategic mineral imports at a time when the price for all minerals has risen dramatically and China is rising as a new peer competitor. Moreover, China has made the assured access of strategic mineral imports a critical component of its geopolitical strategy and is moving aggressively to purchase control of mineral concessions and mining companies.

For the rest of this U.S. Military Issue Paper, please go to this link”