Column: US forms ‘friendly’ coalition to secure critical minerals: Andy Home

LONDON, June 30 (Reuters) – A metallic NATO is beginning to take shape, though no one is calling it that yet.

The Minerals Security Partnership (MSP) is in theory open to all countries that engage in “responsible supply chains of critical minerals to support economic prosperity and climate goals”. Read more

But the coalition assembled by the United States is one of like-minded countries like Australia, Canada, the United Kingdom, France and Germany with an Asian axis in the form of Japan and the South Korea.

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It’s defined as much as anything not on the guest list – China and Russia.

China’s dominance over key enabler minerals such as lithium and rare earths is the main reason Western countries seek to build their own supply chains.

Russia, a major producer of nickel, aluminum and platinum group metals, is now also a very problematic trading partner as its war in Ukraine, which the Kremlin calls a “special military operation”, continues.

A previously highly globalized mineral supply network looks set to split into politically polarized spheres of influence, a tectonic realignment with profound implications.


The United States and Europe realized they could not build purely domestic supply chains fast enough to meet the demand of the transition to electric vehicles.

The answer is “friend-shoring”. If you can’t produce it yourself, find a friendly country that can.

“Friend-shoring is the idea that countries that espouse a common set of values ​​(…) enjoy the benefits of trade so that we have multiple sources of supply and are not overly dependent on the supply of essential goods from countries where we have geopolitical concerns, said U.S. Treasury Secretary Janet Yellen during a “fireside chat” with Canada’s Deputy Prime Minister and Finance Minister Chrystia Freeland. .

The process was already well underway before the US State Department announced the formation of the MSP on June 14.

U.S. and Canadian officials have worked closely as Canada fleshes out a promised C$3.8 billion ($3.02 billion) package to boost production of lithium, copper and other strategic minerals. Read more

The Vice-President of the European Commission, Maroš Šefčovič, has just visited Norway to seal “a strategic partnership” on battery technologies and critical raw materials.

The Pentagon is also embracing the trend of outsourcing friends.

He has asked Congress to amend the Cold War-era Defense Production Act (DPA) to allow him to invest directly in Australia and the UK. Read more

The Department of Defense (DoD) says it is “unnecessarily” constrained by the existing requirement to invest only on its home soil or in Canada. Leveraging the resources of two “closest allies” would “increase the nation’s advantage in a highly competitive environment.”


The first tangible rewards of all this increased mining diplomacy are beginning to be felt.

Rare earths have posed a particular headache to Western countries due to China’s dominance over the supply chain, especially the processing stage of production.

The only operating rare earth mine in the United States, for example, ships its concentrate to China for refinement.

The DoD is investing $120 million in a new heavy rare earth separation plant. She chose an Australian company as a partner.

Lynas Rare Earths (LYC.AX) will supply the Texas plant with mixed rare earth carbonate from its mine in Western Australia and will work with third-party suppliers “as they become available”, a- he declared.

The plant is expected to become operational in 2025, and Lynas and the DoD are already working on a complementary light rare earth separation facility.

Expect many more such “friendly” rapprochements in the coming months as the United States and Europe try to distance themselves from “unfriendly” nations.


As for China and Russia, “we are always going to have a relationship with countries outside this closest circle but it will be a (…) relationship that has less confidence in its heart”, according to Chrystia Freeland .

The days of unlimited Chinese mining investment in countries like Canada and Australia are probably over.

Canada welcomed Zijin Mining Group’s (601899.SS) acquisition of Toronto-listed Neo Lithium Corp last year, saying it saw no national security risk. Read more

But speaking to The Globe and Mail earlier this month, Jonathan Wilkinson, Minister of Natural Resources, signaled a shift in stance. “I think it’s appropriate for us to pause and reflect on whether we will allow these types of transactions in the future,” he said.

It’s not just a matter of ownership, but also off-take agreements if the material is shipped to China for refining. “Canada needs to make sure it protects itself in an area that is clearly strategic and make sure those supply chains will be robust for our allies,” Wilkinson said.

The investment climate has just become much colder for Chinese operators and there has already been a backlash.

The DoD said Tuesday it was “aware of the recent disinformation campaign” against Lynas and other rare earth mining companies operating in the United States.

This follows claims by US cybersecurity firm Mandiant that a pro-China propaganda campaign has used fake social media accounts to try to drum up opposition to proposed new mines and factories. Read more

China’s Computer Emergency Response Team (CERT) and Embassy in Washington did not respond to a Reuters request for comment.

It is a harbinger of what could happen if the geopolitical polarization of the supply of critical minerals goes wrong.


MSP marks a new chapter in the history of critical minerals. The pressure to decouple from China has been increasing for several years, but the invasion of Ukraine by Russia is concentrating people’s minds.

While the immediate focus is on Russia’s role in the energy sector, it is recognized that critical minerals could be next.

“To be dependent on countries that do not always share our outlook on world affairs, and which have sometimes shown the ability to use their control of some of these resources as a weapon, is not a very good strategy,” warned Wilkinson of Canada.

According to Chrystia Freeman, the era of globalized strategic commodity business models is over.

Relocating friends is going to be “the big economic and geopolitical issue” going forward and “the world hasn’t really started to properly address the magnitude of this matter yet.”

The opinions expressed here are those of the author, columnist for Reuters.

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Editing by Emelia Sithole-Matarise

Our standards: The Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and non-partisanship by principles of trust.

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