Critical minerals are the bedrock for almost every form of defense technologies. When we think about rare-earth elements, which are actually the minerals that China most recently restricted, we see that they are in F-35 fighter jets, Virginia- and Columbia-class submarines, missiles, radar systems, Predator unmanned aerial vehicles, and the Joint Direct Attack Munition series of smart bombs. Now, the difficulty that we've had in recent years is China has shown that not only are they dominant, we know that they have processing capabilities for between 40 and 90% of these key critical mineral supply chains. However, they are also now willing to weaponize this…It's a multipronged strategy. So, one of the key things they're trying to do is slash regulation and fast-track permitting, because this has been a huge issue for domestic miners, is just the amount of time it takes to get a mine off the ground. And then at the same time, they're trying to provide a lot more funding from the state for it. So using things like the Defense Production Act, and sort of in a novel way, the International Development Finance Corporation is intended to provide support for projects abroad, specifically in developing countries. But they're actually going to use that funding to support domestic mining projects. So, it's a new funding instrument. In addition to these measures, they've also struck critical minerals deals with Ukraine. And there's also rumors and talk that potentially there could be a deal with the Democratic Republic of Congo, which, of course, has tons of cobalt and copper…When you're going up against China, which has huge mining companies and huge processing companies that have been at this for decades, that has access to sort of the plum resources around the globe, and you try to set up a mine in the United States, even if you have some regulations that are removed and you can maybe do it a bit quicker now, you still have much higher labor costs. And just you look at the price of a lot of these minerals, and they're quite low. Things like cobalt, the price has sunk dramatically in recent years. Same with nickel and lithium. Because China continues to produce more…Globally, on average, it takes 18 years to build a mine, from the time I identify a deposit to the time it is producing. That is four-and-a-half presidential administrations…We have the DRC, which is an incredibly rich mining jurisdiction. Even though only 20% of the Congo has been geologically mapped, when you look at the 20 biggest copper deposits in the world, the top 2 in terms of quality are in the Congo, 70% of cobalt…One interesting thing is that China has, as Gracelin mentioned, started restricting exports of key minerals. And that really terrifies companies in the US that rely on them. For example, car companies like General Motors, they need rare-earth magnets. And if they can't get them, it risks real production slowdowns. So, then companies like General Motors will be willing to pay more for domestically-produced or at least ally-produced rare-earth magnets. What might start happening as China throws its weight around more with minerals is that you will start seeing that there will be a real price premium for domestically-produced minerals or for ally-produced minerals. And that's what's kind of necessary to get these infant industries started, is a real sign from the end users that they're actually willing to pay a lot of extra money to get these minerals from someplace other than China.

Frank Eckard, CEO of a German magnet maker, has been fielding a flood of calls in recent weeks. Exasperated automakers and parts suppliers have been desperate to find alternative sources of magnets, which are in short supply due to Chinese export curbs…Some told Eckard their factories could be idled by mid-July without backup magnet supplies. "The whole car industry is in full panic," said Eckard, CEO of Magnosphere, based in Troisdorf, Germany. "They are willing to pay any price."…Car executives have once again been driven into their war rooms, concerned that China's tight export controls on rare-earth magnets – crucially needed to make cars – could cripple production…Judging from Eckard's inbound calls, though, "nobody has learned from the past," he said…This time, as the rare-earths bottleneck tightens, the industry has few good options, given the extent to which China dominates the market. The fate of automakers' assembly lines has been left to a small team of Chinese bureaucrats as it reviews hundreds of applications for export permits…Several European auto-supplier plants have already shut down, with more outages coming, said the region's auto supplier association, CLEPA…Cars today use rare-earths-based motors in dozens of components – side mirrors, stereo speakers, oil pumps, windshield wipers, and sensors for fuel leakage and braking sensors... Across the industry, automakers have been trying to wean off China for rare-earth magnets, or even develop magnets that do not need those elements. But most efforts are years away from the scale needed…"It's really about identifying ... and finding alternative solutions" outside China, Joseph Palmieri, head of supply chain management at supplier Aptiv , said at a conference in Detroit last week…As auto companies scout longer-term solutions, they are left scrambling to avert imminent factory shutdowns…Automakers must figure out which of their suppliers – and smaller ones a few links up the supply chain – need export permits. Mercedes-Benz, for example, is talking to suppliers about building rare-earth stockpiles…Analysts said the constraints could force automakers to make cars without certain parts and park them until they become available, as GM and others did during the semiconductor crisis…Automakers' reliance on China does not end with rare earth elements…Andy Leyland, co-founder of supply chain specialist SC Insights, said any of those elements could be used as leverage by China. "This just is a warning shot," he said.