▶ 0:11:45Representative Troy Downing be allowed to sit on this dis and participate in today's hearing without objection. So order. The committee on East Asia and the Pacific will come to order. This hearing aims to explore strategies for the United States to reduce global dependence on the People's Republic of China for critical minerals by partnering with the private sector and allied nations.
▶ 0:12:15Let me now recognize myself for an opening statement. I think we're still morning. So, good morning and welcome to East Asia and the Pacific Subcommittee's hearing titled Breaking China's Chokeold on critical mineral supply chain.
▶ 0:12:33I want to thank our witnesses for joining us this Critical minerals, lithium, cobalt, rail earth elements and others are the building blocks of modern technology powering electric vehicles, microchips and advanced defense systems.
▶ 0:12:54Global demand for these minerals is surging with lithium demand alone growing nearly 30% annually from 2021 to 2024 driven by rising electric vehicle battery production. Yet the People's Republic of China or PRC controls 92% of global rail earth element processing and dominates the manufacturing of battery and magnet components.
▶ 0:13:23This chokeold reinforced by China's tens of billions in global mining investments and tactics like price manipulation and export restrictions poses a direct threat to the United States and our allies. While the US possesses significant mineral resources, domestic production alone cannot meet the speed or scale of this demand.
▶ 0:13:49the US uh manufacturing uh they operate their operation costs uh increase significant in the region. Uh the increasing the regional bureau uh it will take decades to permit a uh natural uh mining in America.
▶ 0:14:09Moreover, the federal government lacks the financial capacity to fully subsidize the level of investment needed to drive large-scale private sector investment expansion of domestic production. Relying solely on domestic solutions is insufficient as therefore. So we need a bold global strategy to secure resilient diversified supply chains free from Chinese control.
▶ 0:14:37The current geopolitical landscape offers an opportune window to act. The recent developments such as President Trump's critical minerals agreement with Ukraine and the US facilitated peace deal in the Democratic pe uh Republic of Congo open new opportunities to access vital resources.
▶ 0:14:59We've also seen coordination like the re recently announced quadr critical minerals initiative underscore the importance of critical minerals to uh regional engagement. As the administration renegotiates trade relationships, we can strengthen partnerships with our allies to build non-Chinese supply chains, enhancing both economic and national security.
▶ 0:15:25So today's hearing we will explore these challenges and opportunities. We will examine how to build a proactive global strategy to establish supply chains free from Chinese dominance. So our goal today is very clear to ensure the United States and its allies have secure reliable access to the critical minerals that will define the future of technology and security. I look forward to a productive discussion.
▶ 0:15:55And now, let me now recognize the ranking member from California, Representative Barah, for his opening statement. Thank you, Madam Chairwoman. And obviously, this is an incredibly important hearing. You know, your testimony could be my testimony, and that demonstrates the bipartisan nature of um creating redundant supplies of um critical minerals and and rare earth elements.
▶ 0:16:18um weaning ourselves off of the choke hole that China currently has um where we've we've watched them, you know, use their current export restrictions on rare earths in retaliation to some of the trade negotiations that President Trump's leading. Um we can't be dependent on that. And again, so with that, certainly thank you for for this important hearing. Um creating and building a diversified, resilient, secure, critical mineral supply chain is crucial to our national security.
▶ 0:16:47That's why landmark legislation like the inflation reduction act in which um Senator Mansion played a key role led to historic investments to support domestic critical mineral supply chains and started to um diversify us away from foreign entities of concern. Unfortunately, in the big beautiful build, some of these um demand incentives um with regards to electric vehicles, battery manufacturing, etc. um potentially are going to be undermined.
▶ 0:17:15And that's something that you know certainly as we look at implementation of this bill I think we ought to ought to correct to continue to build those demand um signals. Also while domestic production of critical minerals is crucial for the United States security we can't do it alone if we want to shift away from reliance and with China.
▶ 0:17:35That's why our sub commmittee is going to play an important role to make sure the state department de development finance corporation and other national security agencies have the tools they need to build resilient global supply chains. Um, I have, you know, in in the prior administration worked closely with the State Department, work closely with Under Secretary Fernandez, um, to build those strong international partnerships on supply chain resilience both bilaterally and through multilaterally initiatives, including the mineral security partnership.
▶ 0:18:05The minerals, the MSP brings together 14 partner countries including Australia, India, Japan, South Korea, and the United Kingdom as well as the European Union to strengthen critical mineral supply chains. The MSP finance network convenes development finance institutions like the DFC and its equivalents in in the MSP partner nations to leverage private sector investment for critical mineral projects focusing on minerals that are most relevant for advanced technologies, defense, energy, and industrial
▶ 0:18:37It's a positive sign that our ally South Korea has now succeeded the United States as chair of the MSP. That said, we've got to continue to work with the State Department and continue its robust leadership in the MSP to ensure that MSP projects are meeting our national security goals. That's why today I've introduced the bipartisan Mineral Security Partnership Authorization Act with my colleague Chairwoman Kim and Representative Moland to authorize the State Department to lead the US participation in the MSP.
▶ 0:19:08As our committee works to pass bills, including reauthorizations of the Development Finance Corporation and State Department, it's critical that we work in a bipartisan nature to ensure that we have clear international strategy for securing critical mineral supply chains. The MSP is central to the State Department's role in this strategy and I look forward to hearing our witnesses suggestions on how we can strengthen the MSP to be more um expansive.
▶ 0:19:33With that, I look forward to hearing the testimony from the the witnesses and I'll yield Thank you. Other members of the committee are reminded that opening statements may be submitted for the record. We are pleased to now have a distinguished panel of witnesses before us today on this very important topic and I'll love to introduce them. The Honorable Frank Fannon, the managing director of Fannon Global Advisors. Thank you for joining us. The Honorable Joseph Mansion, former US Senator of West Virginia.
▶ 0:20:03Thank you for joining us. The Honorable Jose Fernandez, former under secretary for economic growth, energy, and the environment, the E family at the State Department of State. Thank you for joining us. This committee recognizes the importance of the issues before us and is grateful to have all of you here to speak with us today.
▶ 0:20:24Your full statements will be made part of the record and I'll ask each of you to keep your spoken remarks to five minutes in order to allow time for member questions. I now recognize Mr. Fenon for your opening statement. Thank you, Subcommittee Cherry Kim and Ranking Member Barra for the opportunity to speak on one of the most pressing national security challenges of our China has been waging what I have termed a quiet war against the United States for years.
▶ 0:20:54This is not a war fought with missiles and bullets, but one waged with minerals and refineries. The Chinese Communist Party has systematically weaponizes control over critical mineral supply chains as part of a broader strategy to displace the United States as the world's indispensable power. US intelligence agencies have confirmed that communist China is an existential threat for many years. Yet Washington has been reluctant to take the necessary and sometimes difficult actions.
▶ 0:21:20Unlike the West, Beijing does not subscribe to definition of war as simply acts of force, but instead follows SunSu's guidance that supreme excellence consists in breaking the enemy's resistance without fighting and recommends first attacking his strategy. Wars are fought with industrial capacity and the supply chains to fuel it. The CCP seeks to win its war by depriving the United States the means to ever wage a kinetic one.
▶ 0:21:47China controls most of the critical minerals that underpin defense and weapon systems, energy technologies, and the building blocks for the modern economy. Although America has a significant resource endowment, the US is 100% import reliant on nearly a quarter of the 50 critical minerals and over 50% reliant on 29 of them. The United States must take bold actions rather than spend time increasing awareness of the problem. President Trump's executive orders signal a meaningful shift toward action.
▶ 0:22:18With that in mind, I'd like to touch on a few of the recommendations from my written testimony. First, the United States should be clear that it is focused on critical minerals for national and economic security. By adopting security as America's organizing principle, the US can take the appropriate counter measures. Further, this clear goal will signal to partners, governments, resourcerich nations, and investors that America is serious and committed to mineral security.
▶ 0:22:44Next, the US must rightsize, modernize, and use its international finance tools. China has deployed more than a trillion dollars in Belt and Road initiatives, including in critical minerals, and in 2023, increased mining and metals focused investments 158% over 22 levels. The United States should not try to emulate the Chinese state-led model. Instead, should leverage its comparative advantage, the American private sector.
▶ 0:23:13This requires an appropriate federal financing partner on the other side. And then the DFC and XM bank are those for the US government. The DFC and XM can advance America's foreign policy from the business lens. their sources of catalytic compa capital and importantly a means to derisk investment opportunities in emerging markets. Congress should significantly increase the DFC's funding and fix the scoring problem that treats equity in investments as grants.
▶ 0:23:43The XM should be more nimble, lower domestic content requirement requirements and have greater risk tolerance. The DFC and XM should prioritize partnerships with American investors and companies and disqualify partners parties with substantial Chinese ownership interests. This approach is consistent with the important strengthening of the foreign entity of concern provisions included in the one big beautiful bill. To meet our challenges will require working with partners and allies.
▶ 0:24:08But America's minerals diplomacy should focus on performance-based partnerships that include objective measures such as dollars invested and tons of material China is the lowest cost producer through state investments and sherking labor and environmental protections. Congress should highlight China's unethical and humane practices. By increasing transparency, the US and free nations can impose penalties or establish barriers against unethically sourced critical minerals and thereby catalyze differential pricing.
▶ 0:24:40Breaking China's chokeold requires moving beyond semantic debates about decoupling versus d-risking and adopting a bold strategy necessary for victory. I stand ready to work with this committee and the administration and to ensure America wins this quiet war and secures our critical mineral independence for generations to come. Thank you. Thank you, Mr. Fannon. I now recognize Mr. Mansion for your opening statements chairwoman Kim and Ranking Member Bear.
▶ 0:25:10I want to thank you all and members of this committee for the opportunity to share my perspective on this vital and bipartisan economic and national security issue. It's something I put years of work into during my time as chair and ranking member of the Senate Committee on Energy and Natural Resources as well as the Senate Armed Services Committee. When I joined the Senate in 2010, China put rare earth export controls on Japan following a territorial dispute over islands they claimed ownership of, which should really sound familiar to all of us.
▶ 0:25:40From that moment through the energy act of 2020 which created the critical minerals it list itself through my last day in the Senate I focused on this issue and while there has been good legislation there remains much more to be done. If I could leave you with one thing today is to impress the urgent need for us and our allies to have strong reliable critical mineral supply chains across the three phases extraction processing and manufacturing so that no part of the process is in the hands of an adversary.
▶ 0:26:08The solution includes the use of our financing tools like the Development Finance Corporation, the Defense Production Act, and the Export Import Bank. We need to reauthorize and strengthen these key financial tools so that we have a full toolbox. And given the committee's focus, we must keep in mind that none of this works without diplomatic engagement.
▶ 0:26:26The Senate department must focus on energy security with experts who understand the complexity of resource economics and energy geopolitics with emphasis uh uh to prioritize the issue in country. Finally, we need to make sure that this effort is coordinated so that efforts across so many agencies are effective and don't work across purposes or waste investments. Here's why this matters now more than ever.
▶ 0:26:52Just like Putin weaponized Russia's oil and gas resources to try to scare off Europe from supporting Ukraine, Ci Jinping and the Chinese Communist Party are more than willing to use critical minerals as leverage to put Americans and the free world at risk. They have ramped that up in earnest recently by flooding the market with over supply, driving prices down, and leaving producers worldwide unable to compete and then using export controls once they dominate the market.
▶ 0:27:20In fact, at the end of 2023, I held a hearing in the wake of the first round of China's export restrictions on gallium and germanmanium, two critical minerals that are needed for semiconductor fabrication. As I feared that export restrictions became a ban in the late 2024 that uh with recent trade disputes, they have gone even further by cutting off our supplies of rare earths, anamani, tungsten, and more. That is why tariffs are so important.
▶ 0:27:49Tariffs are needed to protect the building blocks of our economy and national security as well those of our allies from China's market distortions and economic malfeasants. That is what tariffs are for. To protect strategic industries by penalizing bad actors and keeping the US prices competitive.
▶ 0:28:08Even worse than Europe's addiction to Russian gas, which is about 45% of supply in 2021, we are over 90% relying on China for graphite, gallium, rare earth, over 60% relying germananium, over 70% reliant for high-grade cobalt, nickel, and I could go on and on. And China's critical mineral grip extends around the entire globe. They control mines throughout the world.
▶ 0:28:35All of which feed a processing and manufacturing powerhouse that they control. So just as we cannot solve this problem alone, we are not in this mess by ourselves either. We must acknowledge that while we can provide much of the minerals we need domestically, we don't have the capacity to produce or process every mineral in the quantities that we need here in the United States, in North America, or even in a newly formed AA security partnership between Australia, the United Kingdom and the US.
▶ 0:29:05Even if capacity weren't an issue, we can't afford to spend a billion dollars per mineral to support domestic suppliers. Our debt is a national security threat too and we must come to grips with that. Permitting reform is essential to fasttrack domestic production. But we also need to ensure that we are working with trusted and reliable partners when it comes to overseas and mineral sourcing.
▶ 0:29:31That means looking first to friends like Canada, Australia, Japan, and Norway, but also building new trusted partners throughout efforts like the Mineral Security Partnership and countering China through the energy and mineral diplomacy efforts under the committee's jurisdiction. We must also be extremely cautious of our policies where the Chinese have a majority of control, like the Democratic Republic of Congo and Indonesia, and don't get sucked in when they have total control either.
▶ 0:30:00So in closing, the time to solve this issue, this issue is now and Congress has a grave responsibility to step up to the plate. I look forward to your questions and thank you for asking me to be here today. Thank you, Mr. Manion. And now I recognize Mr. Fernandez for your opening Thank you. Thank you. And good morning. Um Chairwoman Kim, Ranking Member Bear, um members of this committee, thank you for having me here.
▶ 0:30:28Uh I'm going to try and be brief because uh I I I very much share uh what's been said before me. Briefly stated that we have a need and we have a problem. The need is that the world needs exponentially more critical minerals and rare earths. We need them for just about anything and everything that we use data centers, semiconductors, energy battery storage, uh EVs. And these numbers are staggering. In the last couple of years, uh the demand for energy battery battery storage has doubled.
▶ 0:30:56Uh the IEA tells us that by 2050 we'll need 42 times the amount of lithium that we use today. That's the need. The problem is that the PRC controls or owns just about uh all if not or at least most of these minerals, twothirds of the world's lithium uh and cobalt, 100% of the graphite, 19 out of 20 strategic minerals. This is a strategy that the PRC has followed now for over decades. It also involves subsidies.
▶ 0:31:22Uh the IIA has estimated that 20 to 40% of the cost of a of a uh um of a mine in China is subsidized by the government. That is the problem. And and we as as the senator just outlined, the PRC has been willing to exercise this dominance. We saw it uh even this year with the seven heavy uh rare earths. When I was in office, we helped to deal with the Germanmanium export controls.
▶ 0:31:50We were able to secure 25% of the world's global supply through our allies and partners. We've also seen the the PRC use predatory pricing. That's what a that's what a monopolist does. It uses its it uses its its power in order to drive down the competition. So what have they done? They have flooded the market. The cost the the price of cobalt the price of lithium has gone down 75 80%. the price of cobalt today is is lower than the price in 2017.
▶ 0:32:20That is a that is part of the strategy. But there's a bright side. There's a bright side. Uh and that is that we are pushing in an open door. When uh when we started working on the mineral security partnership and I went to our allies and partners, they shared the same concerns. They actually were looking to do something about their diversification of of critical minerals. They saw the same need and when we proposed the MSP concept, they bought it immediately. They wanted US leadership.
▶ 0:32:50That's our partners and allies. Producing countries want our investments. Uh we don't bribe. We follow the law. We uh don't bring in our workers. So we created the mineral security partnership based on the on the premise that no country can solve this problem alone. We had four lines of effort.
▶ 0:33:10We shared information with our partners because if we didn't couldn't put together the the the the deal for a mine perhaps other countries could we uh we did what private equity and banks do which is we finance together in order to derisk and minimize the the risk. We uh included recycling projects because we are told that 30% of the world's need could be could be met in the next 10 20 years by recycling.
▶ 0:33:39And lastly, we we had to make a better offer and our offer was we would adhere to high ESG principles because we could not win a race to the bottom. And so we had to change the terms of the debate. Uh we were successful. We were a deal shop. We were not a talk shop. Uh we had over 30 projects that we supported by in our two years. Uh 13 of those are public.
▶ 0:34:05We actually had uh countries come to me and say, "Uh, Jose, if if our companies invest in in in a mining deal in country X, we're going to get screwed." Uh, but if the US comes, they won't mess with us. So, some of what we did was diplomatic support. We also were able to uh work with our colleagues at the DFC, at XM Bank, at USDA in order to finance together. And we were just getting started.
▶ 0:34:33Um, I am very uh happy to see the your your proposed MSP authorization bill. I welcome it. It incorporates the lessons of the MSP. It gives it the tools for success. It's it's a partnership with partner countries that tries to galvanize the private sector and that is our best weapon. That is our our secret weapon, our private sector as well as our allies. I've made three suggestions in my testimony that I hope we can discuss today.
▶ 0:35:02I think we're going to need more funding. Um if you look at what uh France, Germany, Australia, Japan, Korea, and others have done, all of those have billiond dollar investment funds in order to derisk and do early stage investing. Uh they also I I've also proposed that we not ignore recycling and lastly that we create an emergency uh response team in order to address the continued weaponization by the PRC.
▶ 0:35:33Uh but again I very much welcome your proposed bill and I hope I I we can discuss it later this morning. Thank you and I look forward to your questions. Thank you to all of our witnesses for your wonderful uh opening statements and uh we'll go into member questioning and I recognize myself to first ask questions and I want to pick up on what uh Mr. Fernandez said about the Chinese predatory uh tactics.
▶ 0:36:00So let me talk about how the significant challenge we face today is China's ability to flood global markets with lowcost criminal I mean yes criminal critical minerals uh leveraging statebacked uh subsidies. Uh for example nickel prices have fallen 75% in the last several years because of the Chinese uh over supply. So let me ask this question to uh Senator Munchin.
▶ 0:36:29uh why does China's chokeold on critical minerals threaten the US economic competitiveness and national security and if you can talk about to what extent can domestic production reduce this uh dependence and why is international engagement still essential you look when you look at what we're dealing with and look in history 20th century beginning of the 20th century United States became a powerhouse because of our energy back then it was relied upon on coal made the
▶ 0:36:59steel. We did an awful lot of things and we basically pulled ourselves out of poverty. Became an industrial leader that was necessary for us to have reliable, dependable, affordable energy. Today, critical minerals is the same as that energy was needed back in the 20th century. So, the 21st century, the new boom is going to be basically critical minerals. Well, everything that we do depends on these superconductors and the magnets and all the different things and special alloys and steels that we use.
▶ 0:37:27Those are building blocks where I think that we've made a mistake that we should have trade agreements and we should have basically penalties with tariffs in order to protect our building blocks. That's it. Everything else should be used as an incentive to do trade. But protecting basically our allies and countries across the world that we can rely on and we have a chain of of allies that we can depend on. You have Canada, tremendous cache of of rare earth minerals. Australia tremendous cache.
▶ 0:37:58United States possibility of a tremendous cache. We weren't allowed to to mine and process. And then you have Japan and South Korea able to do refining. We have a building block right there that we could start and get in the game very quickly. You got to let the private sector in. We can't take this debt on, continue to take all these debts on and the risk. Those are the things. And what happens if you let China control that? It'll be no different than what Putin tried to do with uh oil and gas and our allies. Same thing.
▶ 0:38:27So, you've got to have an on that and then ask Mr. Fannon uh similar questions too. Uh given China's capacity to undercut uh the uh competitors, what policies can we consider to shield domestic and allied mineral uh producers from predatory pricing tactics? Yeah, thank you for the question. I think um this is this is key.
▶ 0:38:51Um what I don't think we can do is rely on traditional conventional norms and practices um because China rejects them. Um we talked senator spoke about the the rare earth dispute in 2010 um and the the response from the United States at the time along with Europe and Japan was to initiate a WTO action uh against against China. It took two years for that to be concluded and and it found what we knew China was cheating.
▶ 0:39:19But in that interim, China dumped material onto the market and killed the economic basis for that company. So they went out of business. Um what so what we have to do is a new way of of thinking about these things. Uh in terms of what the steps we should pursue, one of those would be and senator mentioned tariffs. I think targeted tariffs is exactly uh the right approach.
▶ 0:39:42China, according to the International Energy Agency, recently concluded that China's cost of capital is 50% less than than anywhere else in the world to do a mining project. That's very hard to compete with. Second, the the issues on how they do their business. It's very opaque. We don't know how they do their business. Uh it's hard to see. What we know is that they violate environmental and human rights all the time. And actually last year, the Department of Labor issued a report underscoring that. I think a higher degree of scrutiny is important.
▶ 0:40:11that could create differential pricing. We always talk about having a green premium because there will be uh a commodity will produce in a way with lower carbon but industry is reluctant to pay more for it if they're competing against a a commodity at a lower cost. Rather than ask US uh industry and US companies to pay more, we should try to level the playing field. I think the administration is keen to do that by making the cost of the taking increasing the cost on the Chinese side.
▶ 0:40:40At the same time, we have a pacing challenge. Senator noted the amazing re resource abundance in America. It takes a long time to develop a mine. We have to go where the rocks are and where there's political will to develop them. So it'll be a combination of domestic side uh market interventions uh on pricing uh but also to create a favorable environment to develop minds in some of these resourcerich jurisdictions and the mobilization of entities like the DFC.
▶ 0:41:10Thank you. I have a lot of questions to ask you. So hopefully we'll have a second chance to uh come around questioning but for now I'm going to turn it over to my ranking member to ask questions. Thank you, Madam Chairwoman. And again, listening to each of the witnesses, you couldn't tell who were the Republican witnesses or who were the Democratic witnesses, which again just emphasizes why this is a nonpartisan issue and it's in our national security interest and we should certainly approach it from that perspective.
▶ 0:41:39Um, under Secretary Fernandez, we work pretty closely on the the mineral security partnership and again, I think it is the right strategy working with countries that share our values. um um take a free market approach and and obviously are um have directly felt the impact of economic coercion from the Chinese which again um I think we're very afraid of.
▶ 0:42:03I'm going to ask you about you made three recommendations that we should be thinking about and one that I've thought a lot about I don't think we talk as much about is the recycling component of it and if you want to expand on that and how you would think about it as we think about authorizations investments in in recycling. I think you mentioned up to 30% of our supply could come from Thank you for thank you for your question. Um this is not my number.
▶ 0:42:31This is the IA saying that that in in a few years 30% of our minerals could come from recycled batteries. Right now we don't have enough batteries to recycle, but in the few years we will. And that's that's huge. I mean we we heard uh before that it takes 10, 15, sometimes 20 years for a mine to come on stream. It's much quicker to do a to do a recycling project. The issue has been that there's not enough feed stock in order to feed uh recycling right now.
▶ 0:43:00But but so we need to put together uh incentives. We need to put together mandates in order to make sure that that feed stock exists. But right now there are companies uh the MSP funded uh uh and supported a project in uh in the UK, a recycling project that the EU has also supported. There are opportunities right now and it's yet another opportunity for our private sector to get involved because there's money to be made here. Great.
▶ 0:43:28Um, Senator Mansion, you talked about the various tools that we have available, whether that's the DFC, XM Bank, Defense Protection Act. Do you want to elaborate a little bit more on that? And, you know, I think one thing is we this committee goes through the the reauthorization process for DFC. Um, what are some fundamental changes other than we do think we need to um increase the the the limits?
▶ 0:43:52Representative Barrett, uh the question you've asked is a good question because basically what we have is a critical situation in our country right today. National defense uh authorization would be the way to go right now because you can accelerate whether it be permitting that you need it for these projects. Permitting is something we've worked on very very diligently. We've made some inroads but not enough in order to do that to get into the rare earth minerals that we have in our country. I've always said this, you can't ask other countries to do what you won't do for yourself.
▶ 0:44:23If we have a cache of rare earth minerals, we should be able to mine them. We should be able to process and we should be able to manufacture. And working with our allies around the world, we should do the same. You got to form a block really. And basically a national defense authorization for the defense of our country. And this is what is at stake right now. Can we defend ourselves? Can we have the defense we need? Do we have the critical minerals for that? Computers and chips. Do we have it for economic growth, compete in AI, all the things we're competing with right now?
▶ 0:44:53It's a race basically who's going to lead the 21st century and who and beyond. And the United States has been a leader. It's basically leadership's looked upon from the free world and whether we survive or not. So with that, I think it's critical use what you have now.
▶ 0:45:09But the big the big elephant in the room right now is national defense authorization allows you to bypass an awful lot of this and determination that we've got to have this done as quickly as possible and it could be great and you know under secretary Fernandez if my colleague from California um Dr. Ruiz was here. He's bent my ear a lot on um you know lithium valley, the salt and sea and the possibilities there.
▶ 0:45:34Thinking about just the vast supplies of lithium potentially there and doing it in an economically responsible way. Um I know he's talked to you in the past about this. Would you want to just expand on the potential that is one of the poorest counties in in California if not the c country and you know doing something like that in a responsible way seems possible.
▶ 0:45:57I'm I'm familiar with that project and that's a project that like several other projects in the US is quite promising and I think we we need to find ways of supporting it. Uh the senator spoke about permitting uh both sides recognize that this is a problem. We've got to speed that up. We don't have the luxury of time. The other thing on lithium uh goes to the question that chairwoman Kim asked about over over supply. We have overupp is is a temporary problem.
▶ 0:46:26Uh our lithium our demand for lithium keeps going up year after year 10 20% over the last five five years but the prices go down. Why is that? Because of our over supply. But if you look at the numbers if you look at the at the history uh in 10 years the the world will need more lithium even with the overabundance that we have today. So what we have to do is find ways to help our industries, to help our companies um survive the next 5 to 10 years.
▶ 0:46:56Almost like a boxer hanging on for that round to end so that they they can take a break. And so I think we ought to we we ought to be looking at lithium and we ought to be looking at the overabundance problem is something that we're going to need to deal now, but that won't be there hopefully if we do our job right in the next 10 years. Thank you. All right. I now recognize the general lady from South Carolina, Miss Bicks. Thank you, Madam Chairwoman.
▶ 0:47:23And my first question is for Senator Mansion. Um, given President Trump's March the 20th executive order titled Immediate Measures to Increase American Mineral Production, to what extent can Congress direct the Development Finance Corporation to use the authorities available under the Defense Production Act to finance domestic mining projects?
▶ 0:47:52uh anything anything we do today from the government we have to consider the uh debt of the nation I think is very important to all of us but with that being said how do we partner up with private is what you're asking and we can do that I think the M and the MP project that that president just announced is a very good start basically it's a company that's uh was kind of toyed with with the J Chinese forever they really broke the company put them in bankruptcy took over basically their production
▶ 0:48:23and basically now we're coming back to where the federal government stepped in to have ownership. A company I'm involved with is is called Aramico just now that we've announced it mining coal first coal mine in 70 years in Wyoming. It has critical minerals in the binding which is tremendous opportunity for us to get two for one and that's going to be something we think is going to be very promising. There's others in the United States that we can do, but the federal government really has to make who's going to be the offtake. Is it Department of Defense?
▶ 0:48:52Is it going to be the private sector and economy? Well, you've got to protect it from the standpoint that private sector capitalization is going to go where the cheapest prices are. That's just the way the system works. Unless it's protected by tariffs that does not allow China to dump on us.
▶ 0:49:07when you have rare earth whether it be lithium granite germanmanium whatever it may be they can't come in and undercut it to where someone says well in the private sector I'll buy there versus here and that's where you offset with your with your tariffs that's what we think the federal government can do is they can be the referee they can put the guard rails on that protects us to grow not just here with Canada Australia some of our leading partners Japan things that they've been able to do uh so there's an awful lot that we have that people work with us and be part be a partnership
▶ 0:49:38versus us trying to do it by ourel. Thank you. And the second part um what what do you feel like are the primary reasons for DFC's limited success in financing mining and um quaring projects as evidenced by only a 1.2% of its active projects being in this sector.
▶ 0:50:00time just time permitting you know I give you an example you can start I'll give you a perfect example the mountain valley pipeline MVP we tried for a long time it started out as a $3.2 2 billion dollar project because of litigation and time end up $8 billion. Companies won't do that. They just won't unless there's some certainty. And that's why I encourage all of you permitting. We've worked hard over the years and Congressman Westerman is a good friend of mine.
▶ 0:50:28We work together very closely and we're very we have a bill we think that's very close to being done. We think you all can take it across the finish line. It really needs to be done. You need to codify that. Even executive orders by the president with all his goodwill kind of gets back and forth, seesaw back and forth and process of legislation, if you will. But when you codify something, it's much more diff uh much more permanent. That's what I would encourage. And timing is what's killing everything. They won't go into that unless they knew there's going to be an offtake.
▶ 0:50:57You can't get an offtake to finance unless you know they're timesensitive. People are not going to invest billions and billions of dollars knowing they may be strung out 7, 10, 15 years to get something permitted. It has to come to marker quicker than that. Thank you so much for your insight. And my next question is for Mr. Fannon. A recent report highlights a critical vulnerability.
▶ 0:51:19The US is completely dependent on imports for 10 essential minerals and over 50% reliant on imports for 30 others. So these include vital materials like um gallium. I think we've already mentioned a couple uh germananium and graphite which are crucial for everything from our weapons systems to batteries and electronics.
▶ 0:51:44So how important is it that we use supply chain tools capable of tracking these materials down to the specific bolt and chip in a system rather than just uh broad categories. And how does this level of detail help us pinpoint our vulnerabilities and precisely um what needs fixing to keep our systems Uh yeah, thank you for the question.
▶ 0:52:12It's um it's the the critical mineral supply chain is is remarkably complex and it is opaque. It is not like um like oil and gas are they're huge commodities. They're they're they're liquid. They're widely known. Pricing's clear. When it comes to some of these critical minerals, how do you even realize price discovery? Um what is the and and and how who's exerting that pricing power?
▶ 0:52:39It's very difficult even to understand that much less the provenence of some of these things. Some of the some of the minerals these minor but critically important minerals are actually produced alongside other uh other other commodities. Um the issue germanmanium uh the the lack of that there are defense primes who are in really dire straits because they can't source it. Where do they get it?
▶ 0:53:04Um this is an enormous problem that the the the challenge we have is also where within the US government should that kind of tracking sit. Um we have because uh the administration successive administrations the bipartisan nature of this has elevated the awareness of critical minerals. One of the issues now is we have about 15 federal agencies asserting some kind of involvement. Well, how how are we going to lead that? How are we going to coordinate that?
▶ 0:53:31I think the president's the designation of the National Energy Dominance Council is a good start to help coordinate that and perhaps could start that that tracking process for those minerals uh to understand where where are they where are they coming from and how do we get more of them. Thank you and I'm sorry my time has expired. I yield back. Well, thank you. Let me now recognize the gentleman from Maryland, Mr. Oriski. Thank you, Madam Chair. Uh thank you, Ranking Member Barra.
▶ 0:54:01And thank you to all of our witnesses today. I appreciate the focus of this hearing and there's clearly no question that the PRC's control of much of the critical mineral supply chain makes us more vulnerable. Uh and I want to echo ranking member Barah's comments about how I really appreciate the ways in which this has become and remains a bipartisan concern.
▶ 0:54:22uh because it is a serious concern that our largest global competitor supplies more than 50% of demand for 24 critical minerals including more than 90% of those rare earth elements as discussed. So I think we all agree that the US needs to do more to do this and I'm going to thank our witnesses for providing some suggestions in this space.
▶ 0:54:42Uh, but I also don't want this Congress or this administration to focus so heavily just on competition that we also lose sight and disregard the very real labor and human rights abuses that we know are happening and that are so prevalent across the min mineral supply chain primarily in arteasonal and smallcale mines that operate informally and that are least regulated by governments.
▶ 0:55:07Uh, for example, reports suggests that major Chinese critical mineral producers use force labor programs in the weaker region. Across the DRC, there are as many as 40,000 child laborers in its cobalt mines. And so, sadly, um, while we I applaud some of the actions taken by the administration in this space, um, some of the tools that are really important in addressing these concerns have actually been taken away by this administration. Just two quick examples.
▶ 0:55:34Many of the grant programs within the Department of Labor's Bureau of International Labor Affairs has been cut. We know these are programs that have played a critical role in addressing forced labor and human trafficking across the world. And this administration has also paused enforcement of the Foreign Corrupt Practices Act, which has helped expose corruption in business practices.
▶ 0:55:53So, uh, I'm a member that believes we need all of the tools at our disposal to strengthen access to critical minerals, but I also believe that goes handin glove with our responsibility to ensure this is a sector that drives equitable growth, supports local communities, and is not built on the back of exploiting laborers and especially not exploiting children. Uh, so as our president ushers in a more transactional foreign policy, I want to make sure that our investments are also staying aligned with our values. Um, I'll start with you, Mr.
▶ 0:56:23Fernandez, in terms of questions. How do we strike that balance? How do we ensure that US efforts to diversify our critical mineral supply chains don't come at the expense of human rights and Thank you for your question. Look, there is there is no there's no conflict here. Um, good business practices, responsible business practices are our calling card. If you talk to African leaders, they want alternatives.
▶ 0:56:52They want alternatives to the PRC. We're not forcing them to do that. We're basically, they are basically saying to us, we want what they call beneficiation. They want value added uh investments, not just mining. They're looking for good labor practices. They complain that the PRC brings their own workers and takes the minerals back back home. So, they want those kinds of those kinds of practices. It is our calling card. I've had African leaders get up and give me a hug.
▶ 0:57:22When I talk to them about what we'd like to do for communities, there are lots of projects around the world that simply don't make don't see the light of day because communities oppose them. They don't they oppose them because of what you mentioned. So, I don't see it I I don't see a conflict here. In fact, I see it as a business opportunity. I see it as part of what our offer. Why is our offer better? Because we will not engage in the race to the bottom. We will not win the race to the bottom. We will engage in the race to the top. And if we do that, I'll take my chances. Yeah.
▶ 0:57:51Good opportunity to both advance American interests, but also do the right thing for humanity. Um I I think I'll have time for one more question, so I'll turn to workforce. Uh we know that over half of the US mining workforce, about 220,000 people, is projected to retire in the next 5 years. As we think about domestic production, um we should be concerned about that. We also know the number of mining and mineral engineering programs in the US has dropped from 25 in 82 to 15 in 2023.
▶ 0:58:21Uh very stark contrast to China which actually seen an increase in terms of their engineering programs. Uh Senator Mansion, this is an issue you you led on in the Senate quite a bit. Um how do you think we should address the critical talent gap so that um Congress is doing all that we can to ensure that we're building a workforce to address the We would encourage you all to pass the mining schools act that we sent over. Uh, and I think you all took it under consideration and maybe ran out of time.
▶ 0:58:47That's an easy one to pick up and run with right now, which puts us back into the game as far as educating the workforce we're going to need for the future. Let me if I can just say something about what what you had said before. The bottom line is supply and demand. There's a tremendous demand for the products that China's supplying. People really when push comes to shove, they don't worry a whole lot. They just want that product and they're paying prices for it and humans are paying a price horrific price.
▶ 0:59:16Until we get in the game with our allies in the free world, you're not going to offset that. We have to give an alternative then protect it with basically tariffs so they can't come in destroy our markets. Then you can put that. But also we have so many restrictions and obligations that we put on businesses doing business within our sphere of the free world that it makes it more difficult and timeconuming and costly. That's where we have to protect be more efficient. But the bottom line is supply and demand is what drives it all.
▶ 0:59:43But uh the the act that we have I think you all have that we're happy to reinduce it. I can get some of our friends right back to you Appreciate that. It sounds like we have to get to work. Uh I know I'm over time. So with that, Madam Chair, I yield back. Thank you all. I now recognize the gentleman from Pennsylvania, Mr. McKenzie. Thank you, Madam Chair, and thank you to all of our panelists uh for being here today. Very important topic about critical minerals.
▶ 1:00:08uh their importance for American safety, security, economic prosperity and also the challenge that we face with China and their control over key parts of this supply chain. So, thank you all for being here. My first question is how is China currently leveraging its control over the supply chain against us and our allies? Is it mostly focused on economic control or is there also a national security element?
▶ 1:00:37uh that they are laying a trap for us. And I'll I'll go to any of the panelists who want to start. Well, I mean, they started a long time ago. This is back in the 90s when they saw something that they thought they could control and get involved with and they're doing the jobs that nobody else wanted to do. The refining they do is basically extremely harmful to the environment to a certain extent that we wouldn't accept that at all. With that being said, they don't have anybody to answer to. you know, their form of government basically allows them to do as they wish.
▶ 1:01:06And they've been able to basically capture a market says, "Listen, you send all your product to us. They go over and do the mining, send their people over, do the mining, send it back to to China to do the processing, refining." No one else is willing to do it. And there is ways to do that. You know, there's technology that can do it much cleaner, much more safer for the environment and for the workers. But they dominated that market and had a 20-year start on all of us. So, how do you get that? You you can't say, "Well, we we can't sit back and just accept what it is." We can get into the game very quickly.
▶ 1:01:36I think the President Trump is in Pennsylvania today and you're in your beautiful state right next door to my state and hopefully energy is going to be the the topic of what what they talk about today. And I think you're going to find some private sector willing to jump into the market now to accelerate that with the help of the government. Mr. Fernandez, Congressman, um they're they're using it right now uh with seven heavy uh rare earth materials.
▶ 1:02:04Uh it's being used as we speak, but it's more than that. It's not just the the exercise of that dominance. It's the threat of that dominance. There are many countries out there that will tell you we do not want to do certain things because the PRC will take rep will take will retaliate. And so just that threat sometimes is enough to change behavior among our allies and partners. So it's got to go beyond the actual public bans, export bands and export restrictions. Mr.
▶ 1:02:34Vanna, yeah, I just would just just add to that. Um the IA did a did a N1 analysis to to look at what are glo what's the availability of global supplies if you take out China and it's only about 35% for a lot of these minerals. 35 to 50% of of available global supplies uh as of right now. That changes the entire psycholog psychology of when countries interact with one another. They don't want to offend uh the the the supplier.
▶ 1:03:03It's so like Germany for years claimed that Russia was a reliable gas supplier until they weren't. It's the same. It changes. Why were they unable to do it? is because there's so much of their economy was linked to having cheap gas to fuel their manufacturing base. The same now that like in German Russia gas now we're America critical minerals with China. We need to we need to reverse that. I think we have the ability to do it as as been discussed. We just have to move forward with and execute quickly.
▶ 1:03:33Well, I appreciate all of your comments. Clearly a recognition of the problem that we're facing uh with China's control of of the supply chain. So, and the way that they're using it and leveraging it against us, we've heard some great suggestions about improving permitting, increasing partnerships with our allies.
▶ 1:03:51My question is there has been some discussion around uh one component of a solution uh being that the US establish a strategic minerals reserve or a critical mineral reserve. Uh I would love to hear any of your thoughts on that as something that we could do to address this challenge. up to about 20 or 30 years ago, we used to have critical mineral reserves. You could go around the country and find different deposits of it.
▶ 1:04:16And that was eliminated after the cold war thought was wasn't needed anymore, which was a bad mistake. And you know, I guess everyone's at fault of that, but never thought was needed, but that's what's changed every changed everything. So, uh uh that would be something that we should do, but we've got to get up to production first. Look at what we did with LG. We were able to do something with LG is quicker than anything's ever been done, ever thought we could do.
▶ 1:04:40And now we replaced most of Russia's uh oil and gas that was going into our allies and UK and all that, you know, with what we were able to do because we were able to put that into the market. We could do the same here if we work in Yeah, I think it's it's a it's a crucial issue. Um, we have a national defense stockpile uh that exists, but it's remarkably underfunded. There's very little in it.
▶ 1:05:05uh to to the other thing I think it's important to distinguish is you know we talk about the defense industrial base I think that's a bit of a misnomer it's just the industrial base uh if if if things get hot all of our companies will throw in and be involved in in a in an effort what what I think we have to think about is is broader um the defense uses on an annualized basis about 500 tons of rare earth a year the US economy as a whole is 10,000 tons
▶ 1:05:35um we do have a stockpile that's for the US economy when it comes to oil the national the strategic petroleum reserve the question is do we do we consider that for the in broad industrial base for the US economy um and then how do you do it it's very very challenging and I I think the as as Congress considers this and the administration it's critical to to talk to the private sector who are experts in this um also we're in a how do you fund it and how do you fill it uh when we when we're so efficient currently.
▶ 1:06:05Uh we're going to have to meet our needs and then start uh not dissimilar to the question of recycling. We need to first have a a foundation from which to recycle. We first need to have a foundation uh of resiliency from which to build a reserve. Thanks. Thank you all. I think it is a a important conversation that we have going forward and appreciate your input today. Thank you. Thank you. Let me now recognize representative from Florida, Moscow with since he was here first.
▶ 1:06:34With all due uh, thank you, Madam Chairwoman. Uh, Senator, good to see you again. Good to see you. So, I some really good questions on this. I want to spend my five minutes with trying to break this down for the American people because I being the emergency management director during COVID in Florida, I saw how the lack of manufacturing in this country, the reliance on China was
▶ 1:07:04a major detriment in a pandemic. I can't imagine, God forbid, we got into a war in the near future, the surprise that the American people would have of the things that we a don't make here anymore or b rely on other folks to supply us supplies that could be cut off. H how do we educate the American people?
▶ 1:07:31Like I gotta be honest, when I started learning about antimony, I I was like, is that adamantium and wolverine? Like I had no idea. I had no idea what it was. And then I realized, oh, this is a real problem. China has us and they know it. And and you know, so what I want to spend some time with you guys is how do we tell the American people like this is kind of wrapped up in the tariff issue with China.
▶ 1:07:56China is controlling exports, threatening to control exports and our US military literally relies on this stuff for some of the most critical uh weapons that we make and and so China has such a huge advantage and I want to talk about the stockpile because that was another lesson we learned during co right we went to the cupboard and the cupboards were bare right that's that was the that was this what we heard but in it was true it was true the National Strategic Stockpile
▶ 1:08:27was empty. Now, they put $2 billion to build a stockpile. Um, but that's not going to be enough. So, I I kind of want to open it up. How do we educate the American people on the national security risk and why this is so important? Senator, I'll give you the first the Thank you so much.
▶ 1:08:47And and you know, I would just uh take off of that if if history, knowing our history, if you want to read one book that tells you how we became the superpower of the world, how we won World War II, how we were able to be the armament of the world, we supplied the arms that were needed around the world. We outproduced everybody. Read Freedom's Forge if you want to read one book that tells you exactly who we became and how we became who we are today.
▶ 1:09:14that would put everything in perspective what we need to do now because we're way behind the curve and you you went in eloquently and went into that if we don't get back to producing you know well you can go back to NAFTA and blame NAFTA you can blame USMC you can blame anything you want you can blame 1990s allowing China in the WTO everything that we allowed to happen thinking that we could open up after the after the uh wall fell you know no and and that's exactly right like we could go back and we've been we've been lauled sleep.
▶ 1:09:44we we could figure out how we got here. But how do we The American people have a lot going on. There's a lot of incoming, a lot of a lot of distractions in in the rare earth space, especially in antimony, which I want to focus on. How do we cut through to the American people to make them understand how what a dangerous situation quite frankly we find ourselves in in this rare earth space? I supported when the president wanted to sign a deal with Ukraine on rare earth minerals.
▶ 1:10:12Most Americans were probably thinking to themselves, wh why are we even talking why is that part of the equation, right? And so we're we're going to have to we're never going to manufacture this stuff here, you know, with all the environmental rules or even if we try, it's going to be such a small amount. We're going to have to depend on allies to do that. And even if we can find the rare earth, we don't have the experience to manufacture it. I mean the Chinese it's a literally a closely guarded secret.
▶ 1:10:39They got specific people with the specific techniques that's been passed down through generations of people and they are not letting those people leave to go other places to show you how you refine this stuff. H how do we explain this to the to the American Yeah. I think it's I guess it's a really a political question because how do you what you're I think you're asking Congressman is how do you get the American people to to buy in?
▶ 1:11:05so that they were able to because it's going to cost more eventually to do things in a way that as we discussed does not offend human rights. But but but that's exactly right. I mean like look the White House I've seen them working on this but they got to work on the communications piece of this to look the American people in the face and say you want to know why the cost of military weapons are going up. Here is why we have to spend more money. You want to know why we're doing these tariffs with China here? Here here is why Mr. Mr.
▶ 1:11:34Fern, I want to give you a chance before I run out of time. Look, I I think we we need a little bit of humility. We it took us a long time to get to dig this hole and we are in a hole. I think you go you take some examples. Uh two years ago, the the PRC imposed restrictions on Germanmanium. I'd never heard of Germanium, but turns out Germanium is needed for semiconductors. Uh what at that point, we had a problem.
▶ 1:12:03We literally sh spoke to a hundred countries and said, "Do you have any extra geranium you can sell to the world? We actually found some to the MSP. 25% of the world's supply we were able to add." It was just hanging around the country that we' never heard of. Uh and so I think you've got to go example by example uh and do the same thing we did with during COVID, which is, you know, we have a problem that we didn't have active ingredients in that supply chain as you know.
▶ 1:12:30Uh, but you've got you've got to go you've got to take a couple of examples and say we've got a problem and it took us a while to get here. It'll take us a while to dig out of this hole. The gentleman's times up. Great question, great answers. I wish we just had more time. But now, let me recognize the gentleman from Guam, Mr. Mand. Thank you, Madam Chair, for setting this timely topic. Especially two weeks ago, the Quad Foreign Minister met in Washington, DC, and announced the launch of a major new initiative.
▶ 1:12:59And as they clearly stated, reliance on any one country for processing and refining critical minerals further harms our economic and national security. Given this understanding, we need to strengthen both our domestic efforts and international cooperation to build more resilient and diversified critical mineral supply chains. So as part of the domestic efforts, our vast offshore seabed areas has significant potential to boost the supply of crit critical minerals.
▶ 1:13:27The Bureau of Ocean Energy Management says the Pacific outer continental shelf, including the surrounding area of Guam, contains four different mineral deposit types. And if we can successfully utilize these resources on a commercial scale, it will greatly enhance our supply chain resilience and national security. I hope this effort will be uh carried out in a manner of respect both local to local stakeholders and the environment.
▶ 1:13:55Another important aspect of the international cooperation to counter China's dominance in critical minerals. China's abrupt restriction of critical material exports cause major disruption in global automotive industry and pose serious threats to defense equipment suppliers.
▶ 1:14:12However, we cannot leave these challenges solely to the private entities because as we know, China employs non-market practices such as large-scale subsidies and it's extremely difficult for private actors to compete on their own. Securing stable and reliable supply chains is an urgent issue not only for the US but also international communities. So, we need to develop a shared strategy and framework among like-minded uh countries uh to build alternative and re resilient supply chains. So, Mr.
▶ 1:14:42Fallon, you have great experience being the first assistant secretary of state energy resources and do you believe that the state department needs additional authorities uh to develop international cooperation in support of private sector investment in foreign countries? Uh thank you congressman for the uh the question. I I would say that the I think believe the state department has considerable authorities.
▶ 1:15:04What I what I think what um would be useful is to increase the authorities of uh sister agencies the the international development finance corporation over which the secretary of state serves as the chairman. Um the DFC also is an entity that by its mandate is supposed to integrate America's foreign policy as part of their their investment thesis.
▶ 1:15:26Uh so I I think that working with the state department and that uh the body of the chair uh could could could to empower the DFC to do more uh to and that has a significant role for Congress in the reauthorization uh to empower them to do more increasing the the the the the investment uh limits and also to uh to to allow for greater equity to be invested.
▶ 1:15:52Um I think that will this capital from the DFC is catalytic in the sense that it unlocks other investors as as Jose was speaking other countries want the US investor there but how do we get them there? How do we and how do we crowdsource additional uh co-investors and and this is a critically important tool. Thank you. Thank you. Um, Senator, uh, of course we know that China controls over roughly 90%.
▶ 1:16:19And you were talking about this, uh, question earlier as well of all our critical minerals. Uh, but yet we have all these minerals spread across the US, Australia and parts of East Asia and beyond. So in your view, what's the most significant factor that enabled China to dominate the market and what's the most urgent action that we and our partners should take to counter it? I think first of all I want to thank you and and the wonderful people your beautiful island of Guam.
▶ 1:16:44I've stopped there many times and and and and uh I just have the mo most respect for the strategic position that you have for our great country in the Pacific Rim. Next of all, I think I really truly believe the Defense Production Act, if we announced the Defense Production Act is what we're going to use in order to have the defense of our country and our economy and all of our allies, will give us the catalyst that's going to be needed for the Development Finance Corporation and show how how determined we are to make sure that we're
▶ 1:17:14up and running as quickly as humanly possible, be able to extract and assist all of our friends around the world in the free the free world, if you will, to contribute towards this. It's going to be a total all-in effort. It's not just one of us can do it. We cannot get up to speed quickly by oursel without you and all of our friends around the world. That's what we have to rely on.
▶ 1:17:35And that's really how we can protect your markets also with the trade if you will, tariffs protecting so China doesn't come in and distort your markets that they've tried to do. We've watched how they've been very aggressive in that part of the world and we're determined basically to defend and help you. I would say one more thing too. Is there some way that when you think about it, if it wasn't for the ore that China gets from Australia right now, what kind of a crimp would that put?
▶ 1:18:02What kind of a buy would they be on if we were able to all the free world consume Australia's or so they wouldn't have to go to China for that market? That might be things we could do to really put a pinch on them, Thank you. Thank you all. Thank you, Madam Chair. I yield back. Thank you. I now recognize representative from Rhode Island, Mr. Thank you, Chairwoman Kim, and thank you to our witnesses for being here, including the distinguished former senator. It's an honor to be with you.
▶ 1:18:31Uh for those watching at home, uh critical minerals and their supply chains are, like the name suggests, critical to our national security and American domestic manufacturing industries. From cell phones to solar panels to our most sensitive defense technologies, we rely on critical minerals every day. Uh but as you know, China is a dominant processor of 19 of the 20 minerals the International Energy Agency considers key minerals. And China has 70% of the global processing capabilities for these minerals.
▶ 1:19:02Through export controls, the CCP wields access to these minerals to advance their global policy goals like a guillotine over everyone's head. In December 2024, China banned the export of gallium, germanmanium, and antimony to the US. In February 2025, China further restricted exports of tungsten, telure, bismouth, indium, and and other uh minerals.
▶ 1:19:28And in April 2025, China cracked down on the exports of seven heavy rare earth and magnets derived uh from them. Uh dprosium, gadalinium, lutinum, samarium, scandium, turbium and so on. And now you know the fact of the matter is most Americans, the folks that we're talking to at home have not heard these names since studying the periodic table.
▶ 1:19:54And even then, I'm not sure they stored them uh to memory in their uh high school sciences classes. But it's important to break this down for the American people. It's critical because uh of the semiconductor, telecommunication, defense, and renewable energy industries. People around the country need to know this critical impact. Uh thankfully, uh President Biden understood the importance of securing our critical mineral supply chains.
▶ 1:20:19Under his leadership, the State Department worked uh with the Development Finance Corporation and our allies to ensure that American businesses were shielded from the CCP's market pressures. In 2022, we established the Mineral Security Partnership, the State Department program that was dedicated to accelerating the development of diverse critical mineral supply chains free from China's control.
▶ 1:20:40But we have a challenge uh at hand because the uh Trump administration has gone forward uh with reductions in force that can have an an an impact that undermines all of these efforts. This awareness that we do have in a bipartisan way to have access to critical minerals.
▶ 1:21:00And we saw just last Friday the State Department lose uh through their reduction in force and firing of 1300 employees as a part of a plan to to shrink that workforce in a way that is not uh thoughtful. Uh and instead of working to secure our critical mineral supply chains, Trump is firing experts and causing those remaining to be distracted by fear for their jobs instead of focusing on American interests. and it is a real distraction.
▶ 1:21:30So, uh, Under Secretary Fernandez, uh, you know, I love to hear from you how these reductions enforce harm states work, uh, with other federal agencies like the DFC to help American businesses secure our supply chains and what should we be doing to work with DFC to continue to play a supporting role uh, in securing uh, critical mineral supply chains? Thank you for your question. We could talk for a long time about this.
▶ 1:21:59Um, and I'll I'll be brief. The um, this has got to be a bipartisan issue because it's a bipartisan problem. It's also an international problem. Our our allies and partners understand that this is a problem, which is why we need a strategy. Part of that strategy has to be has to include the the DFC. The DFC was a very good partner in the mineral security partnership. Why? because funding is often the problem that we all need to crack.
▶ 1:22:28Um we there are a number of of changes in the in the auth DFC authorization that in my eye in my eyes would help uh the the equity scoring for example they they have uh they they have there's a penalty for investing in equity the the uh the number of countries the types of countries they can finance projects in upper upper middle inome countries are are are are Argentina and Chile have have the
▶ 1:22:58world's largest deposits of lithium. And yet the DFC can't work in those two countries. And so we've got to find a a a strategy that that u turns the DFC loose that allows us to to use all of the tools at our disposal, XM Bank and TDA as well. Uh and I think that's what the the MSP did and frankly we had very good cooperation from the DFC. Thank you. My time is expired, so I yield back.
▶ 1:23:33I now recognize gentleman from Kentucky, Mr. Bar for five minutes. Thank you all. Thanks to our witnesses, uh, Senator, good to see you again. Uh, my neighbor from West Virginia, and I want to talk about West Virginia and Kentucky coal in a minute, but let's just frame the problem. Today, China accounts for 70% of global rare earth element mining, 92% of rare earth refining, and 90% of rare earth magnet production.
▶ 1:23:58It controls 99% of global gallium refining, which is a key material for advanced micro electronics used in US defense systems. Um, and this is a real concern.
▶ 1:24:12Um because as you know uh in April, China imposed export restrictions on seven of 17 rare earths, many of which uh many of which are are essential for US defense platforms such as the F-35 fighter uh which contains 920 plus pounds of rare earths per unit. Tomahawk cruise missiles and joint direct attack munition smart bombs. US defense firms such as Rathon, Honeywell, Loheed Martin face uh supply delays, rising costs, and potential production halts.
▶ 1:24:43So, breaking China's chokeold on these critical mineral supply chains will require more domestic production. Um, Senator Mansion, uh, you know this well. The Department of Energy estimates that recoverable coal, coal ash, and coal waste in the United States contains between 11 and 17 million metric tons of rare earth elements. US consumption last year was just uh 8,800 metric tons.
▶ 1:25:09So, we're talking about a domestic resource of rare earths that contains over a thousand times our annual demand for rare earths. Given that scale, uh, Senator Mansion, wouldn't it be a strategic failure not to include coalbased mineral recovery, uh, from West Virginia, Kentucky, Wyoming, Pennsylvania, uh, across this great, uh, fruited plane as a core pillar of our national critical mineral policy. Well, thank you.
▶ 1:25:38And I think both our respective states, both of our universities are working very closely on this now as far as extraction from our waste, from our coal fines, things of that sort. and also water coming from coal mines. All that stuff can be turned into a tremendous value for our country. And we're looking at that too. And the cost of that versus with some new mining. I just said earlier that I'm involved with a company called Ramco. Ramaco basically who's coal mining.
▶ 1:26:04They're going to open a new coal mine and and uh Wyoming uh first one in 70 years. And with that in the bindings as people know layers between the coal there's an awful lot of critical minerals in that too which is a great opportunity for us. So I think in all of this we have to do everything that we can. The bottom line is is that we can't make it more difficult for companies in the US through the permitting constraints that happen for us to do what we need to do.
▶ 1:26:30If we can get that accelerated that's going to help us tremendously on that and I think there's a lot of a lot of inroads being made. Yeah. Yeah. And I've introduced a bill um that would help my constituent company, you referred to, Ramico, uh expedite the permitting there. I know you were a real leader uh in reforming federal permitting laws, but there in the Senate, but we there's more work to be done there.
▶ 1:26:51Um uh I do have a bill called the rescue act which I would um I would share u I would urge my colleagues to support which would use that fast 41 streamlining process for streamline permitting for um rare earth extraction from coal. I think that's important but also Senator Mansion speak to um the potential of using the defense production act. I don't know if you've thought about that.
▶ 1:27:15The Defense Production Act to uh cut through all this red tape to allow for coal mining or extraction of rare earths from coal. I I definitely have been speaking about defense production. I think it's the one tool that shows the urgency that we have in our country to defend ourselves and be able to help our allies. The other thing is the permitting process. Uh Congressman Wester and I work very very hard and very close and got very close last year right down to the final bell when the bell rang.
▶ 1:27:42Uh there's a piece of legislation I think that you all could take and run with very quickly. We passed it in the Senate. It came out of our committee basically 15 to4 first time a bipartisan overhaul working with Senator John Baraso our Republican and Democrat colleagues seeing the need for this. Hopefully you all can take it and make some changes if you need whatever would be helpful. Judicial reform was the big thing in permitting. The courts will hold you up no matter what you try to do.
▶ 1:28:09the courts can hold you up for infinity and just wear you out That's why we might need to cut through that with the defense production. Well, I hope you can, Miss M. Thank you for your leadership on that. Mr. Fannon, um, let me just ask you real quick. You you answered Mr. Moan's question well on on the the the potency uh of DFC in uh alternative critical mineral supply chains.
▶ 1:28:32What about the office of strategic capital at the Department of Defense also supplementing the catalytic opportunities for uh supply chain resiliency outside of the United States? I think it's an incredible tool that hasn't really been utilized yet. Uh I think it's time to get that tool out of the toolbox and start using it. I would also say one of the one of the the construct of the OSC is only it's only debt. It only provides debt. I think that we talked about fixing the equity fix in the DC.
▶ 1:29:00I would propose respectfully that you consider OSC being have have some equity authority as well. Uh it makes all the sense in the world. There is a huge uh level of dry powder there and also they they need help getting getting that organization up and running and and really moving forward, but it's an amazing tool that needs to be used. Thank you. Thank you for your time. I yield back. Thank you. I now recognize the gentleman from Montana, Mr. Downing for five minutes of questioning.
▶ 1:29:30Thank you, Madam Chair, and thank you for allowing me to uh wave into uh this uh hearing on such an important topic and and thank you for the to the witnesses for being here. Uh in my home district, I've got central and eastern Montana. You know, we've seen firsthand the ability of American adversaries to dominate and manipulate critical minerals markets.
▶ 1:29:52You know, the Still Water Mine in Stillwater County, Montana is the United States only platinum and palladium mine and has been the victim of deliberate market manipulation by Russia. You know, Russia's dumping of cheap minerals into the international market forced the SA Stillwater, the owners of the mine, to scale back its operations and lay off well-paid workers at the end of last year. Obviously, it's had an incredible impact on my district in those counties.
▶ 1:30:23So, China employs similar manipulative tactics to an even greater degree in order to promote dependence and freeze out competition. So, I start with Mr. Fannon. Um, in your testimony, you discuss how China will eagerly manipulate the global critical minerals market by restricting supplies on one hand and dumping them later to kill off growing competition.
▶ 1:30:47Can you elaborate on the degree to which global market manipulation is part of China's overall critical mineral strategy? Yeah, thank you for the question. The um this is a a playbook that they have used and and and deployed multiple times really since 2010 when they first banned the export of rare earths. Uh at the time, President Obama initiated a WTO challenge uh against China. It took years for that case to go through the WTA process.
▶ 1:31:17Um, in the interim period, China dumped material onto the market, crashed prices, and sent the one company, rare earth company, into bankruptcy. Uh, a few years ago, China uh, Xiinping said he didn't like the way cobalt was being priced. Uh, and announced he was going to look into that.
▶ 1:31:38uh the one cobalt mine in the development project in the state of Idaho that was starting to ramp up uh the US government was an investor in uh announced that they were going into care and maintenance because that because of prices crashed just the signal that China has because it's not just that they're the biggest producer it's also important to recognize they're also the largest purchaser so they're working it on both sides of of the ledger uh which gives them uh massive massive pricing power and it goes back to this price discovery challenge we we have with China thank you with With regard to combating
▶ 1:32:09Russian dumping, I introduced uh the StopRussian Market Manipulation Act. It's a bill to ban the importation of platinum and platium from Russia. And uh I'll go to the whole panel on this one. What steps can Congress take in order to combat similar efforts by Chinese producers to dominate the international market and crush American competition? So trade trade and tariffs are the thing I think it's it's your tool and the tool we have in our great country. Basically, uh, tariffs should be used as an incentive and a protection.
▶ 1:32:39Protection basically of your building blocks. And we talked about this earlier. The building blocks. We have to have what you're producing in Montana. We have to have that. The free world has to have that. But unless you're protected against the unfair practices of China and countries of concern, whether it be Russia, China, North Korea, Iran, they're never going to have our interest. They're never going to have our view. And with that, you have to protect against them coming in and distorting our markets. That's where the tariffs can be used to protect building blocks. Thank you.
▶ 1:33:08Any further comments, Mr. Yeah, I would just I would just say I would look to um we could shift the presumption. I think Congress has already made a pretty important pass legislation in the Weaguer Forced Labor Prevention Act which created a presumption that if material something's being produced in Jinang Xening Jang region it was presumed to be tainted and it requires Chinese suppliers to disclose where they're their methods. I think we could apply that thinking into uh the critical minerals debate.
▶ 1:33:39You don't have to do anything. Just just ask them to start to disclose. Uh, US mining companies are remarkably transparent and they disclose all this stuff all the time in response to governments, in response to the NGO community and other interested stakeholders. Why aren't we asking the Chinese to do the same thing? Thank you. Thank you, Mr. Fernandez. Thank you. U, as I mentioned earlier, this is what u what a monopolist does. It it floods the market. It cuts out the competitors.
▶ 1:34:05Um, it's not just only in Montana, but in Australian mines have closed. mines in throughout the world have closed because of Chinese over supply. I think tariffs are a tool. I would I would caution the the overuse of tariffs. If we don't have the the minerals in our country to to replace those and it doesn't do us any good. But in the case of minerals that we do have, I think tariffs are are one of the tools that we have in our toolbox. Well, thank you. Uh I've got a lot more, but unfortunately I've run out of time. So, Madam Chair, I yield. Thank you.
▶ 1:34:36We have some time for second rounds of questioning if the witnesses are okay to stay with us a little longer. Great. So, let me uh first start with uh follow-up questions from what we were discussing earlier regarding the um the use of the defense production act. I know senator you just mentioned that you had a legislation in the senate.
▶ 1:34:59I would love to take a look at it because I also serve on the House Financial Services Committee subcommittee on national security and illicit finance and uh we are trying to uh work for a modernized uh DPA. So uh your input today as well as uh giving us uh some suggestion and recommendation on that regard is greatly appreciated. So if you want to just talk about that just quickly.
▶ 1:35:24Well, madam chair, first of all, I have two other articles I'd like to present for the consideration of the committee which gives a breakdown on the background of critical minerals and merit sectors and also the partners critical mineral supply chain by country, the largest producers outside of China so we know we can get these two things. I think they'd be helpful. We'll share also with you as we talked about the workforce, what we've done in that and also the comparison we've done with some other bills. happy to share all that with you and I'll make sure that Peter back here gets it to you. Okay.
▶ 1:35:54Thank you very much. Thank you. And then uh as we are talking about breaking choke hold on China's dominance on critical minerals rare earth elements uh mining producing manufacturing uh we just recently uh saw the uh announcement coming from the uh the administration that uh defense department will be the largest uh shareholder of our probably the um the biggest uh rail earth uh producer MP materials.
▶ 1:36:24Uh so I just wanted you to comment on that a little bit because we also saw this morning Amazon oh no Apple uh it's a big investment in the field as well. So can you Mr. Fannon talk about what we can learn from this deal? Yeah thank you.
▶ 1:36:42it uh I would say that this deal uh is absolutely transformative in terms of the boldness and the scope uh given that it's not just an investment but also over time offtake and also price guar price price security I would say the Apple point is I saw that announcement too um where Apple is is going to invest as well because they want these magnets which is critical to their business and so what what I think that the lesson here is um there's a role for the US government as an
▶ 1:37:12investor in these projects firstly whether in the United States or internationally but also the lesson is that uh if there's an alternative supply chain then US companies will source from it uh the the move by the defense department is answering the chicken or egg problem uh I would say and and so now we see a major investor coming in I I think that this is a model whether it's defense department the DFC any other variety of other investors from the US side Um but it it's that d-risking
▶ 1:37:43uh where you'll you'll see those off takes and other co-investments. Uh and so I think it's absolutely transformative. Thank you. Madam Chair, if I could say one thing. Yes, good. I think basically with the federal government as you saw made the announcement last week into MP which this is what it's about.
▶ 1:37:58When you see an offtake coming to the federal government guaranteed by we're going to be needing this product and we're only going to buy it from American producer changed the whole dynamic and that allowed Apple and other people with large sums of money that can invest knowing that it's going to be protected and basically used within our own system. Got it. Well, we also I mean we go ahead. There are a couple of successful examples of the DPA being used in Canada for critical minerals and that was done during the Biden administration.
▶ 1:38:28I would suggest you look at that. Those were Um also the one of the beauties of the of the deal with MP is that it actually in the past what we've done is we we privatized the gains and socialized the losses. uh what this does is it actually makes the US government a partner uh in the success and I would and I would look at that as an example going forward. It's not going to replace the private sector but it certainly can be an early stage investor. Thank you.
▶ 1:38:58Well, thank you so much uh all of you for that. Again during our uh discussion we also talked about the role of DFC playing a bigger role in this space. Um so our subcommittee is also charged with reauthorizing DFC um this before this fall and we hope to do this soon. So we are looking at uh equit effects.
▶ 1:39:23Uh we are also looking at expanding the countries that we can utilize our DFC in. So uh if you can talk about how that can be important tool going forward. Obviously domestic production is critically needed. We all establish that but we also need to work work with our uh allies and partners in the region. So how can this be a critical tool in our also diplomatic toolkit? Go ahead Mr.
▶ 1:39:53Fernandez. If I may the um I've already talked about the need to fix the equity issue and also the need to expand the number of countries. Uh but another something we did as part of the mineral security partnership is we we created a finance network and it is so I would urge the DFC as well as XM and others to spend more time with their with their counterparts in other countries.
▶ 1:40:20Why sometimes they can they can band together to do derisk some of these projects but also just by sharing projects. there may be a project that the DFC is not interested in and you'd be surprised often they wouldn't talk to their to their counterparts because they might be competitors and so uh I would urge more involvement in terms of just exchanging uh projects which is what the private sector does uh often.
▶ 1:40:47I know my time's up and I want to uh turn it over to my ranking member to ask more questions, but hopefully we can uh continue that conversation about some of the projects that our private sector can be encouraged and enticed to uh uh invest in utilizing our tools like DFC and so forth. Madam Chair, one final thing was uh access to capital is a mother's milk of Without capital, they can't produce or they won't come to fruition.
▶ 1:41:14And so that's what access to capital in every way, shape, and form is going to make the difference whether we produce in time or we don't. Thank you. Ranking number and just for those watching at home, antimony is atomic number 51 on the periodic table with a symbol of SB just in case I ever make it on Jeopardy. Um that's important information. Um I'm old enough to remember the energy crisis of the 1970s.
▶ 1:41:42just the long lines of folks waiting to fill up their cars with with gasoline. And you know, we responded as a nation, right? We created the strategic petroleum reserve um which has been used now over the the last few decades um to smooth out markets to address um this you know we we're doing the same in APIs.
▶ 1:42:05you know, Representative Moswitz talked about COVID and, you know, we realized very quickly our pharmaceutical industry was um overly dependent and in this case again on the PRC um for those APIs. We do have a national defense stockpile um for rare arts and critical minerals, but again, as been alluded to, it's woefully inadequate at this juncture.
▶ 1:42:29Again, I'm not a complicated person, but if prices are historic lows, it would seem to me that now would be the time for us to actually be gobbling up that market um and creating that national um stockpile. You know, maybe you know, Secret Under Secretary Hernand Fernandez, you were um in an administration and again doesn't seem like rocket science and then maybe Senator Mansion since you're a fellow legislator. Why is it that we seem to be lethargic in terms of recogni? We know the risk.
▶ 1:42:58It's not a partisan issue. Um, what's holding us back from actually very intentionally going in and creating the stockpile? Well, I remember talking about it. Frankly, there was a lot of talk but not a lot of action. Uh, the funding is an issue. Uh, and also I think we've been slow to realize the vulnerability.
▶ 1:43:20Uh and but I do think uh your suggestion that we we consider it uh is one that that the time is now because you know when you're when you're as far behind as we are you need all hands on deck you need you need uh everyone on board and unless we move quickly unless we do what for example the senator just mentioned in terms of permitting takes us 10 to 20 years to build a mine we can't continue operating that way. So, it's it's all of the above and all hands on deck.
▶ 1:43:51I think timing I think uh Congressman Barer timing is the thing and and uncertainty is the cost that no one can factor in. Those are the two things that really permitting like you said from that standpoint, but people jumping in a lot of people litigation know they're going to go through litigation. You know, we're latigious type of mentality. Good in certain areas for protection but also overdone in so many areas that styies it. Yeah. So there's nothing that prevents us from doing both of these things, right?
▶ 1:44:20Because we can build the stockpile immediately if we were to appropriate the right resources and funds, which it sounds like we really ought to do. And then opening up minds, doing the permanent reform will take a little bit longer, but you know, earlier in this Congress, um, in a bipartisan way, we passed the Fix Our Forest Act. Now, not not necessarily the same thing, but it was bipartisan. You know, a lot of us as Democrats got tired of watching our forest burn. Certainly in California, it has NEPA reforms in there, etc.
▶ 1:44:50So, we can do permitting reforms. And, you know, again, might be easier under a Republican We have the urgency now that we have with that. Absolutely. And again, what I would urge my Republican colleagues to do is now's the time. I'm not asking to meet at the 50ard line. We're not we don't have the White House. We don't have the the majorities in the Senate or the House. But don't take us to the end zone. Like we can meet at 35 yard. We can do this if we're willing to negotiate. And Senator Mansion, you did lead some of these efforts in the Senate.
▶ 1:45:20So maybe that is the starting point. We've got some Yeah, we have some good. We're going to share that with you all what we had done and what we come close Yeah, and we ought to do it. Um, you know, Mr. Fannon, do you want to add anything on the petroleum reserves or or the the defense stock or pering reform? Yeah, I think that I think it's important to acknowledge the administration has started to talk about permitting reform and has some executive orders to try to shorten some of these time horizons. I think your the point about you made about the forest is a good one.
▶ 1:45:50U you decided pass this legislation, move this bill, bipartisan bill, because you saw a crisis and the crisis was real, it was material, it was, you know, the smoke was around your house. Um, people acted. Uh I think we need to this goes back to an earlier comment. Uh this is a political problem. Uh how do we how do we create that sense of urgency to with the with the American people that the smoke is around is around the house uh to create that that move.
▶ 1:46:18And I think once you do that um then then then we'll see some action. I think we're starting that now. Great. Thank you. With that, I'll go and yield back. Thank you. Uh, chair now recognizes Representative Sherman from California for five minutes. controls most of this market.
▶ 1:46:41Is that because China is uniquely blessed by ores of all these rare earth minerals or is that just because China decades ago decided to do the mining which is difficult and the processing which I believe is even more difficult while asking any of the witness. Let me just say if I can very quickly everything you just said was correct. They did something nobody else wanted to do. And if you won't do it in your own backyard, don't expect someone else to do it.
▶ 1:47:08China took filled the void and they saw it back when we got into the WTO 1990s and they went after they captured some markets and basically hold us hostage and they've done it extremely extremely efficient but it's but other countries in the world have the or deposits and could have done it. Uh China did it China put the resources to it. Yeah, they put they put the money to it.
▶ 1:47:34it's there are those who advocate us if that that America should have a strategic cryptocurrency. I guess one of our witnesses needed to uh a cryptocurrency reserve uh which seems bizarre. I've never heard of a short of cryptocurrency. As a matter of fact, if you want to get some mongoose coin or some scippity toilet coin, that that's available to you right away.
▶ 1:48:03Uh as is as are all the currencies. Um do we have a uh a rare earth minerals uh strategic reserve of any uh significance? We have a a a defense uh reserve which is woy underfunded and not terribly well stocked. uh wherein there are some critical minerals.
▶ 1:48:26I don't have uh insight into why and that's not designed to support our economy that's just designed to allow us to make uh weapons uh that we might not for for defense. And I'd point out we're we have a strategic petroleum reserve that we should be refill refilling now because oil is under $70 in both administrations uh particularly the prior one so that they would refill the reserve when oil went below 70 and uh uh that hasn't been done but we continue to hold over 10 billion worth of
▶ 1:48:56cryptocurrency for reasons I have yet to figure out. Um China wants us to give them sell them the most advanced chips. Nvidia is apparently going to be allowed to do that. Uh to what extent did they get that incredible concession from us because otherwise uh they wouldn't sell us the rare earth minerals.
▶ 1:49:25Was that their big their big stick? I'm not going to I I I have no inside information on that one. Um but I I will say that its dominance, China's dominance and of critical minerals is a weapon and they weaponize it and they're good at it. Uh what other countries are moving toward developing rare earth minerals in a major way?
▶ 1:49:51uh there Australia is a big uh is is very much in the game. Uh the Japanese uh are one of the leaders uh in in some of the refining and magnet production as well. Um there's actually joint development programs with those three countries already uh in a company or two. Um those China has lower labor costs than us and most of those other countries.
▶ 1:50:16Is a low labor cost uh critically important to being able to be competitive in this I think when we c talked about the rear is more than just the labor. It's it's also the cost of the capital to to run the plants. And I think with someone who's already alluded to the the way in which they do it is is is a manner that would be objectionable in the United States or in most other western what would be objectionable in the the way in which they refine the rarers. or you talking about the envi the local environmental impact. That's right. That's right.
▶ 1:50:45uh if you spend a bit more money, can you refine these minerals without and and still meet the community standards we expect in America? I don't I for sure. Yes. That's I think the announcement was we talked about earlier MP uh the MP announcement that's that's what they're seeking to do. There are other companies that are doing it as Thank you. Of course you can.
▶ 1:51:05I mean, it's it's it's you you goes back to capital uh and and and and the fact that uh the PRC has not um doesn't have the same standards that we do, environmental standards, labor standards, but that's an opportunity. That's why countries we we certainly have capital. Much of it we bring in from China. And uh I'm going to yield back 10 seconds. If I can just say one thing to you as far as you have United States, you have Canada, and you have Australia.
▶ 1:51:34three main caches of where we know we have critical minerals we all need. Then you have the ability of Japan to do the refining and South Korea is coming on strong too. So these are all allies of our in the free world. It's but something we should be building an alliance with. Thank you. Thank you. Chair now recognizes Rick I just ask a quick follow-up question. Um absolutely we can we can do this. Um you know we've talked to the Australians a lot about it.
▶ 1:52:02We recognize that our price point, you know, given um the environmental standards, everything else is going to be a little bit higher than where China is. We also recognize that China, you know, under Secretary Fernandez, you've talked about the monopolistic power. I I think what I worry a little bit about is, you know, this is tangential, but shareholder activism, right?
▶ 1:52:26there's tremendous pressure on um boardrooms and and and companies for earnings um quarterly earnings and and it's it's proven extremely difficult for us to move some of our companies that even know the vulnerabilities because there is going to be a short-term cost here that will impact their um quarterly earnings. Um, and we don't have to get into it, but I I just put that one out there.
▶ 1:52:53That is something that we actually have to also think about is, you know, the long-term investments that, you know, give them long-term profitability as opposed to really the short-term investments that drive some of these decisions to continue staying invested in in China or making further investments in China even when they know the long-term v vulnerabilities are there. So, I don't you want to talk about that? It's just it's become the American way which is not beneficial for us right now.
▶ 1:53:21Basically everything's return on investment uh shareholders uh demand uh makes very very bad decisions and the bottom line is pay me now or pay me later. And right now we're paying the price and if we don't get in the game pretty quick and we don't look past the bottom line right now. Uh if we' have done that during World War II we never won it and we're in that same situation right now. It's a life ordeath matter for the 21st century, our children and grandchildren.
▶ 1:53:50So, we're either going to get involved, commit ourselves to making us independent and making our supply chain inter in in intertwined. If not, God help us. But, but it's also, I think, a role that government should play and and you're right that there is a short-term view, but that's where the government support can can can become involved to to to uh encourage a longer term view.
▶ 1:54:15If you start from the premise that by 2035, according to most experts, lithium prices will recover, then you're looking at a short-term problem. And then you need to find a way for to to help our our companies and our partner count's companies um survive. And so that's an opportunity and and but you're right, we do have if you if we just let the market run the show, the PRC will dominate.
▶ 1:54:44we we've got to find a way of changing that uh that debate. Yeah, I would just say that the shareholder issue is of course placed both ways. It's also one of the reasons why it's some of the why the mining industry in the United States in particular has and a lot of other places has has has died down and why the best-in-class miners are reluctant to go to many emerging markets because of there's a fear of shareholder activism.
▶ 1:55:11there's a fear of uh uh uh going into certain countries because there's a perceived there's a perceived uh view that of political risk may have been a history maybe it's there but they don't go there and so what that simply leaves those emerging markets susceptible to Chinese opaque practices which is one of the reasons why we're where we are um so I I think I think it goes back to the earlier discussion about getting the American people to understand where things come from and and how and
▶ 1:55:43Okay, with that, I thank the witnesses for their valuable testimony and the members for their questions. The members of this subcommittee may have some additional questions for the witnesses and we ask you to respond to these in writing. Pursuant to committee rules, all members may have 5 days to submit statements, questions, and extraneous materials for the record subject to the length of limitations. So, without objection, the committee stands