In a war with China over Taiwan, the U.S. could run out of certain weapons like long-range precision-guided bombs in less than a week, according to tabletop war game simulations run by the Washington, D.C.-based Center for Strategic and International Studies.
The loss of American industrial capacity to China is a national security concern, which explains why the U.S. has, in recent years, been so focused on reshoring its manufacturing base and securing the resources needed to make everything from semiconductors to smart bombs.
“China’s near monopolistic control of many critical minerals, which are essential for both for consumer products and defense production, represents an unacceptable risk to the national security of the United States at a time of heightened geopolitical tension,” argued the American defence and geopolitical think tank in its Mining for Defense report, which was sponsored by Vancouver’s Taseko Mines.
“Given this reality, rebuilding the U.S. defense industrial base for deterrence—or, if necessary, to effectively fight a conventional great power war—means securing enough critical minerals domestically and from stable, reliable partners and allies to avoid the chokehold China has on these minerals.”
Following the Trump administration’s imposition of 10-per-cent tariffs on China, the People’s Republic of China retaliated with export controls on five critical minerals with defence applications, including tungsten, according to the Center for Strategic and International Studies report.
When it comes to securing defence metals, the U.S. has a natural ally in Canada, which is one reason why the ongoing trade war between both allies is troubling.
“While fears of a trade war have rattled U.S.-Canada relations, cooperation between the two countries remains essential to safeguard North American prosperity in the face of rising threats,” the report states. “With enhanced cooperation and new incentives, Canada could be well poised to solve at least some of the critical mineral supply chain vulnerabilities the U.S. defense industrial base faces.”
Canada ramped up aluminum production “a thousandfold” to supply 40 per cent of the aluminum for production of aircraft by Second World War allies, including the U.S. Canada also contributed 95 per cent of the nickel used by allies in the production of tanks and anti-aircraft guns, according to the report.
The Mining for Defense report focused on five critical minerals that Canada has, and that the U.S. needs for industrial security: Gallium, niobium, cobalt, tungsten and rare earths.
“All these minerals are found or are already produced in appreciable quantities in Canada, making them prime targets for increased bilateral cooperation,” it says.
“With enhanced cooperation and new incentives, Canada could be well poised to solve at least some of the critical mineral supply chain vulnerabilities the U.S. defense industrial base faces.”
Since the Canada-U.S. Joint Action Plan on Critical Minerals Collaboration was signed during Trump’s first term, the U.S. Department of Defense has made investments in Canadian critical minerals projects, including US$15.8 million in a tungsten project being developed by Vancouver’s Fireweed Metals in Yukon and Northwest Territories. Another US$6.4 million was invested under the Defense Protection Act in a Fortune Minerals polymetallic mine project in the Northwest Territories—a project that includes cobalt and copper.
Taseko Mines CEO Stuart McDonald said he fears strained trade relations between Canada and the U.S. could jeopardize collaboration between the two countries on critical minerals.
“Everything’s up in the air right now, when you see these previous trade agreements being basically ripped up,” he told BIV. “Hopefully, over time, cooler heads are going to prevail here, and we’ll get back to the bargaining table, and critical minerals can be an area of cooperation between Canada and the U.S.”
Taseko is among a handful of Canadian mining companies with critical minerals exploration and development projects in Canada. One early-stage project is Taseko’s Aley niobium mine proposal east of Williston Lake in the Mackenzie-Fort St. John region.
Taseko did a bulk sample in 2018 and is now focused on figuring out how to refine the ore into ferro-niobium.
“With these speciality metals, it’s not like copper or gold,” McDonald said. “There’s no textbook which tells you how to recover niobium. You’ve got to figure it out yourself. We expect to be producing metal in a lab scale this year.”
There are only three operating niobium mines in the world, McDonald said, and one of them in Canada: The Niobec mine in Quebec. According to Taseko, the Aley project is one of the largest undeveloped niobium deposits in the world. If developed, it could produce 10 per cent of global niobium demand, McDonald said.
Taseko has estimated the capital costs of building the mine at $800 million. But building it would require an offtake partner.
“One of the challenges that you have is, because the markets for these projects are quite small, the price can be easily influenced by state-owned companies in Asia or elsewhere,” McDonald said. “And you’ve seen that across the country with rare earth developments, where the projects have started up and then they’ve had to shut down because the price has been crashed.
“Tungsten is another example across Canada where that’s happened, and even nickel. Right now we’re seeing lot of nickel projects that are kind of stalled out because China has made all these investments in Indonesia and has crashed the price.”
What is needed to develop projects like Aley is bilateral cooperation between the U.S. and Canada, McDonald said. Stable markets need to be created to provide the right investment climate to build specialized critical minerals mines.
One way to create such markets is stockpiling, McDonald said.
“You’ve got, in the U.S., the U.S. National Defence stockpile that has historically purchased and held niobium, because when you get into a conflict, you need niobium. Where are you going to get it quickly if you’ve only got three mines? Stockpiling can help secure supply chain, and it can also be a customer for a new mine.”
The recent Center for Strategic and International Studies report also suggests Canada needs a financing instrument for defense-critical minerals, similar to the American Defense Protection Act.
Five critical minerals projects in Canada have received approximately US$63.4 million under the act, according to the report. The Canadian government also invested around US$35.9 million in matching funds.
“These are encouraging developments but a far cry from the funding needed if North America hopes to reorient vital supply chains away from adversaries. Furthermore, with the Trump administration focused on bolstering the U.S. domestic minerals supply, the onus will likely shift to Canada to take the lead on investing in its mining sector development.”
