China's copper stockpile; America's metals deficit

What we’re seeing is the early positioning in a resource war that will increasingly define economic growth and national security in the 21st century, as the twin forces of technology and demography accelerate demand for metals and minerals often in short supply.

Transformed by a steady stream of new applications, “old school” copper – a mainstay industrial metal –remains critical for three key reasons:

National security.  Copper is the second most widely used metal by weight in U.S. defense systems.  According to a DoD study, lack of timely copper supply has already led to a significant weapons system delay.  An MIT study found that the "risk of copper disruption is significantly greater than for the other major metals… and is at or near a historical high."

Alternative energy.   A single industrial wind turbine requires more than three tons of copper.  Next generation solar power looks to CIGS-based photovoltaic cells – where the C stands for copper and the S for selenium, 95 percent of which is derived from copper mining.  Electric vehicles require 25 percent more copper than gas-fed cars – more than a mile
worth of copper wire per EV.

Versatility.  Copper is often extracted in conjunction with other critical metals, like rhenium, which is used in jet fighter turbines and to formulate lead-free gas.  Three-quarters of global Rhenium supply comes from the copper smelting process. And copper yields 95 percent of the world’s tellurium – like selenium, key to solar power cells.

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American policymakers once treated copper as a strategic metal.  It was held in the National Defense Stockpile during the Cold War.  When the Soviet Union imploded two decades ago, the U.S. produced 93 percent of the copper we consumed.  Copper was sold out of the stockpile – which today stands at zero.  In the past 20 years, copper imports have
increased five-fold, to 35 percent.

In other words, we've gone from a situation of near self-sufficiency to a shortfall of more than 600,000 tons per year – demand that must be met by imports.

Without new sources of U.S. production, the situation will get worse. That’s good news if you're Angola, Russia, Pakistan, DRC Congo, or even Iran – all of which are copper producers, and all of which receive the lowest ranking in the annual Freedom House index on political freedoms and human rights.

In a global market, every pound of American copper that remains in the ground is a de facto “price support” for copper mined elsewhere, feeding U.S. import dependency.  Today, the effect is largely economic.  In the future, we may well find that metals dependency – like oil dependency in the 20th Century – becomes a geo-political weapon in the hands of the producing nations.

It needn't be that way.  The U.S. is resource rich; in the case of copper – and many other metals – known resources exist that, if mined, would meet domestic demand. Indeed, American miners could help the U.S. become a copper exporter – just as American farmers feed the world.  American alternative energy manufacturers, seeking to build wind turbines and solar panels, would enjoy sources of selenium and tellurium here in the U.S.

What stands in the way of all this?  The single largest obstacle to resource independence:  America’s worst-in-the-world permitting system, averaging seven to 10 years to bring a new mine into production. Australia permits mines in 18 to 24 months.  Canada does it in three to five years.  Sweden – no one’s idea of an environmental scofflaw – manages to rank in the top five globally for both its mining regime and sustainable living indices.

The U.S. Government has it in its power to act now to close our “copper gap.”

Consider two proposed mining projects, Resolution Copper in Arizona and Pumpkin Hollow in Nevada, which, at full estimated production, could produce nearly 650,000 metric tons per year – enough to eliminate U.S. import dependency.  What’s holding up the projects? Both need Congress to pass legislation that would bring more environmentally valuable land under federal protection, in exchange for allowing metal development on smaller amounts of land that offer less in terms of biodiversity or unique habitat.

As the Chinese stockpiling move suggests, this is no time to delay new mine production.  It’s time for the U.S. to adopt a 21st century critical metals strategy – and reform our ever-expanding process.  The strength of the U.S. economy – and our national security – depends on it.

McGroarty is President of American Resources Policy Network, a non-profit, non-partisan education and public policy research organization headquartered in Washington, D.C.