The rare earths Achilles’ heel

Rare earths production in Russia

Nice rare earths you’ve got there. Be a shame if something… happened to the supply chain:

Despite an abundance of minerals reserves, America has become increasingly dependent on imports to meet demand. The U.S. Geological Survey reports that America is now 100 percent import-reliant for 21 minerals, and at least 50 percent import-reliant for another 29. Most troubling is that the U.S. is now 100 percent import-dependent for all of the 17 minerals that constitute the rare-earth minerals group. And China, which controls more than 95 percent of global rare-earth minerals production, has a monopoly.

Whether it’s cellphones, electric motors, batteries, aircraft, wind turbines or MRI machines, rare earths play an essential role. But it’s not just commercial manufacturing assembly lines that are vulnerable to an embargo; it’s also military hardware.

Whether it’s the advanced electronics and control systems in F-22 and F-35 aircraft, night vision devices, guidance, targeting systems, or dozens of other critical defense technologies, they’re all built with rare earth components. While the U.S. has a small strategic reserve of some of these minerals — to provide a short-term supply for our military supply chain — we have allowed ourselves to become unnervingly comfortable in China’s vise.

The executive order President Trump signed Friday ordering a government-wide review of America’s defense industry aims to help fulfill Trump’s promise to “rebuild” the military, a top U.S. trade official says.

Just a few decades ago, the U.S. was the world’s largest rare earths producer. The erosion of our production and its shift to China is a complex story, but the common thread across our growing minerals-import dependence is a regulatory approach to mining that has seen investment flee despite world-class resources. For example, the U.S. possesses 13 percent of global rare-earth minerals reserves, with significant deposits in California, Alaska, Idaho, Montana and Missouri. Yet increased import reliance has become a national security issue.

This needs to be fixed ASAP. It’s really not that hard. Some ideas from a previous article:

The first step to a whole-of-market approach to spur innovation in minerals production is removing regulatory hurdles that dissuade would-be investors. Most notably, the United States must accelerate its mine permitting process. The current seven to 10 year timeline is simply untenable. Australia and Canada adhere to similarly stringent environmental guidelines, yet maintain permitting processes that average just two years. […]

The Pentagon must also focus on existing Department of Defense programs designed to support the U.S. defense industrial base. Each branch of service has a ManTech program intended to improve the productivity and responsiveness of the industrial base and to enable manufacturing technologies. In the president’s fiscal 2019 budget request, the Army, Navy, and Air Force are only requesting approximately $60 million each for ManTech. Furthermore, the Pentagon only requested $38 million for Defense Production Act (DPA) purchases—a defense-wide program focused on expanding and restoring domestic production capacity. This is down from the $63 million requested for DPA in FY2018. With a $700 billion defense budget, dedicating just 0.025 percent of the budget to the next generation of manufacturing technologies is nowhere near enough to catch up to China and shore up domestic capabilities.

Pathetic, is it not? This goes back to what I was saying about the need for an industrial policy. Securing the minerals supply chain should be one element (heh) of a technology-focused economic strategy designed to restore American self-sufficiency and maintain America’s military edge.

OPM: The other shoe drops

I was wondering when we would start hearing about the consequences of the massive Office of Personnel Management data breach back in 2014. Well, that particular shoe now appears to be dropping:

Some current and former federal government employees are taking a look at their credit activity after the Justice Department said this week that data stolen by suspected Chinese hackers in 2014 cyberattacks at the Office of Personnel Management may have been used to commit identity fraud.

Federal prosecutors on Monday said a Maryland couple had pleaded guilty to using information stolen in the OPM breach to set up fraudulent car-loan applications with a Newport News, Va., credit union.

Disclosure of the car-loan scheme, which took place in 2015 and 2016, has prompted new worries of potential identity theft for the more than 21 million current and former federal employees and contractors affected by the breach, which exposed Social Security numbers, addresses and other sensitive information, in addition to 5.6 million fingerprints. […]

Current and former U.S. officials familiar with the OPM breach said it wasn’t clear how the hacked files would have ended up in the hands of people in Maryland seeking to commit identity fraud. China has denied any involvement in the hack.

“This fraud case makes no sense,” said one former federal investigator who worked on the OPM investigation.

The use of stolen data to wreak havoc on individuals’ lives could become a very “disruptive” form of cross-border psychological warfare.