US to counter China’s “dominance” of rare earth minerals
Image description: Black and gold computer processor against a black background. Image by Pete Linforth / Pixabay
The Trump administration is drafting an executive order to enable the stockpiling of deep-sea metals to counter China’s dominance in battery minerals and rare earth supply chains, the Financial Times reported on Saturday, citing people familiar with the matter.
The Financial Times’ sources claim these nodules contain essential elements such as nickel, cobalt, copper, manganese, and traces of rare earth minerals, crucial to clean energy technology, military hardware, and electronics. After the Financial Times report, MP Materials (NYSE:MP) surged +14.3% pre-market Monday.
This new stockpile would join existing U.S. reserves of oil and critical metals, in hopes it would bolster supply security in case of a future conflict that might constrain imports from China. The initiative reflects a broader Trump-era effort to achieve mineral self-sufficiency. Previous measures have included pressuring Ukraine into a minerals deal, suggesting the annexation of resource-rich territories such as Greenland and Canada, and incentivising domestic extraction. Key Republicans have supported the move, with last year’s defence budget bill mandating a feasibility study into the nodules’ potential for defence applications.
US absence from international seabed mining negotiations
Recent International Seabed Authority (ISA) talks did not result in approval for mining in international waters, with many countries advocating a moratorium due to environmental concerns and doubts about competing with China’s extensive mineral supply chain. Portugal made history just last month by becoming the first country to pass into law a moratorium on deep-sea mining in effect for the next 25 years.
However, the US has been noticeably absent from international seabed mining negotiations and has not ratified the UN Convention on the Law of the Sea, which a Canadian mining company, The Metals Company, has been using to its advantage. As the US is not a signatory to the relevant treaty, the company is seeking permits for seabed mining through its US subsidiary in an attempt to bypass the ISA’s authority, which was met with widespread international condemnation.
Significant financial risks of deep-sea mining
Earlier this month Norwegian deep sea mining company, Loke Marine Minerals, owner of UK deep sea mining company, UK Seabed Resources (UKSR), declared bankruptcy. Another deep sea mining company, Impossible Metals, were also reportedly having to postpone plans for mining tests due to funding issues.
However, Chinese analysts believe the US plan to stockpile deep-sea minerals to “counter China’s dominance” appears “panicked,” as the move will not only disrupt global supply chains but also face unrealistic economic and logistical challenges. The Chinese foreign ministry said that under international law, the seabed and its resources “are the common heritage of mankind” and cautioned the US to abide by this.
A new study by researchers from the University of British Columbia and the Dona Bertarelli Philanthropy further confirms deep-sea mining (DSM) not only poses significant environmental, social, and economic risks that may have far-reaching implications for coastal communities and Small Island Developing States (SIDS), but it is also likely to negatively affect the business community, including insurers and investors.