Minerals market observers told lawmakers in Washington that while the coronavirus pandemic has illuminated a vulnerability in the United States' reliance on China and other nations for battery materials, there isn't currently infrastructure available to let U.S. manufacturers respond by localizing their supply chains.

At a Senate Energy and Natural Resources Committee hearing June 24 on the pandemic's impact on mineral supply chains, expert witnesses said that reducing U.S. mineral dependence on other nations requires increasing the processing capacity available for domestic producers of lithium, graphite and other materials designated critical by the federal government. One of those witnesses, Benchmark Mineral Intelligence Managing Director Simon Moores, told lawmakers that while automotive companies are aware of their sourcing needs for expanding production of electric vehicles, for example, the "divestment is not coming from the downstream fully to build these resources within the U.S."

"A new global lithium-ion economy is being created, yet any ambitions for the United States to be a leader continue to only creep forward and be outstripped by China and Europe," Moores said.

From a cost sensitivity perspective, U.S.-based junior mining and exploration companies have a "business case" because they could construct minerals processing capacity as they develop their mines. However that would only make sense "if there [were] cathode-anode manufacturers within the U.S. they could sell to, if there was battery manufacturing and the demand there," Moores said.

"Our weakness is throughout the supply chain, so if we have a stockpile of minerals but they're not processed and usable then I'm not sure how much good it does," Joe Bryan, a senior fellow at the Atlantic Council Global Energy Center, told lawmakers.

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The U.S. is reliant on foreign sources of a litany of minerals, including lithium, cobalt, tungsten, graphite and rare earth elements, with some sources posing a significant supply risk to the U.S. manufacturing sector, according to the U.S. Geological Survey. Shuttered mining operations and border closures in response to COVID-19 had ripple effects throughout global supply chains, including the trade needed to produce lithium-ion batteries for electric cars and consumer technology.

Dr. Nedal Nassar, a top official at USGS' National Minerals Information Center, told lawmakers the COVID-19 pandemic "highlights the fragility of global supply chains and underscores the risk of supply disruptions during a crisis." China's past threats to curb rare earth supplies in response to geopolitical conflicts "epitomizes these risks for importing countries who have limited alternatives due to China's narrow monopoly of rare earth supply chains."

Citing the risk of prolonged supply disruptions and Chinese dominance over minerals supply chains, some Republican lawmakers in the U.S. called for regulatory relief targeted at critical minerals production and others introduced legislation to unwind minerals supply from China. During the hearing, Senate Energy and Natural Resources Chairwoman Lisa Murkowski, R-Alaska, said she was encouraged by the Trump administration's continued focus on expanding access to critical minerals but that far more needed to be done in order to decouple U.S. manufacturers from outsize foreign dependence on these resources.

Murkowski said some senators would like to see legislation included in the upcoming National Defense Authorization Act that pursues a national critical minerals initiative. On June 2, she and other lawmakers called on Trump cabinet officials to use rulemakings to streamline production of locatable minerals and in February she shepherded legislation to the Senate floor in February that would create timetables for permitting critical minerals projects. That bill failed to garner enough support to reach a final vote.

"We're placing our fate on others' ability and willingness to sell to us, and we're forcing American manufacturers to develop complex global supply chains that sometimes prompt them to realize that it would be cheaper and easier to move somewhere else. And I think it's time that we actually address this," Murkowski said.