35 Minerals Absolutely Critical to U.S. National Security
Draft list released by feds on Feb 16th, 2018
The Chart of the Week is a weekly Visual Capitalist feature on Fridays.
What do cobalt, uranium, helium, titanium, and fluorspar have in common?
According to the U.S. government, these are all minerals that are deemed critical to both the economic and national security of the country.
The draft list of 35 critical minerals was released on February 16, 2018 as the result of President Trump’s Executive Order 13817, which asked the U.S. Department of the Interior and the Secretary of Defense to publish a list of mineral commodities that are vital to U.S. interests.
Under the Executive Order, a critical mineral is defined as:
A non-fuel mineral or mineral material essential to the economic and national security of the United States, the supply chain of which is vulnerable to disruption…
The list includes minerals that are important for defense, economic, and industrial purposes – and it keys in especially on minerals that are not produced in substantial quantities domestically.
Why These Critical Minerals?
We sorted the list based on some of the key uses of these minerals.
Of course, some of these minerals could belong in multiple categories: for example, vanadium is used as a steel and titanium alloy strengthener, but also in rechargeable vanadium flow batteries.
That said, the important commonality to note for all of these minerals is their crucial link to the U.S. economy and national security.
Preparing for the Worst-Case Scenario
Imagine the hypothetical impact of a lack of uranium for nuclear plants, a hampered ability to create high-strength steel and superalloys for the U.S. military, or if U.S. auto manufacturers had limited access to aluminum, steel, PGMs, and battery metals.
The challenge, as U.S. federal authorities realize, is that many of these raw materials are produced in limited amounts domestically. In fact, according to the USGS, the country sources at least 31 of the aforementioned materials chiefly through imports.
While it is unlikely that these supply chains would ever be disrupted, it’s never a bad idea to prepare for the worst-case scenario.
Visualizing China’s Dominance in Clean Energy Metals
Despite being the world’s biggest carbon emitter, China is also a key producer of most of the critical minerals for the green revolution.
Visualizing China’s Dominance in Clean Energy Metals
Renewable sources of energy are expected to replace fossil fuels over the coming decades, and this large-scale transition will have a downstream effect on the demand of raw materials. More green energy means more wind turbines, solar panels, and batteries needed, and more clean energy metals necessary to build these technologies.
This visualization, based on data from the International Energy Agency (IEA), illustrates where the extraction and processing of key metals for the green revolution take place.
It shows that despite being the world’s biggest carbon polluter, China is also the largest producer of most of the world’s critical minerals for the green revolution.
Where Clean Energy Metals are Produced
China produces 60% of all rare earth elements used as components in high technology devices, including smartphones and computers.
The country also has a 13% share of the lithium production market, which is still dominated by Australia (52%) and Chile (22%). The highly reactive element is key to producing rechargeable batteries for mobile phones, laptops, and electric vehicles.
But even more than extraction, China is the dominant economy when it comes to processing operations. The country’s share of refining is around 35% for nickel, 58% for lithium, 65% for cobalt, and 87% for rare earth elements.
Despite being the largest economy in the world, the U.S. does not appear among the largest producers of any of the metals listed. To shorten the gap, the Biden administration recently launched an executive order to review the American strategy for critical and strategic materials.
It’s also worth noting that Russia also does not appear among the top producers when it comes to clean energy metals, despite being one of the world’s leading producers of minerals like copper, iron, and palladium.
Low Regulation in the Clean Metal Supply Chain
While China leads all countries in terms of cobalt processing, the metal itself is primarily extracted in the Democratic Republic of Congo (DRC). Still, Chinese interests own 15 of the 17 industrial cobalt operations in the DRC, according to a data analysis by The New York Times and Benchmark Mineral Intelligence.
Unfortunately, the DRC’s cobalt production has been criticized due to reports of corruption and lack of regulation.
Part of the Congolese cobalt comes from artisanal mines with low regulation. Of the 255,000 Congolese artisanal miners, an estimated 40,000 are children, some as young as six years old.
The Rise of Clean Energy Metals
The necessary shift from fossil fuels to renewable energy opens up interesting questions about how geopolitics, and these supply chains, will be affected.
In the race to secure raw materials needed for the green revolution, new world powers could emerge as demand for clean energy metals grows.
For now, China has the lead.
The Periodic Table of Commodity Returns (2012-2021)
Energy fuels led the way as commodity prices surged in 2021, with only precious metals providing negative returns.
The Periodic Table of Commodity Returns (2022 Edition)
For investors, 2021 was a year in which nearly every asset class finished in the green, with commodities providing some of the best returns.
The S&P Goldman Sachs Commodity Index (GSCI) was the third best-performing asset class in 2021, returning 37.1% and beating out real estate and all major equity indices.
This graphic from U.S. Global Investors tracks individual commodity returns over the past decade, ranking them based on their individual performance each year.
Commodity Prices Surge in 2021
After a strong performance from commodities (metals especially) in the year prior, 2021 was all about energy commodities.
The top three performers for 2021 were energy fuels, with coal providing the single best annual return of any commodity over the past 10 years at 160.6%. According to U.S. Global Investors, coal was also the least volatile commodity of 2021, meaning investors had a smooth ride as the fossil fuel surged in price.
Source: U.S. Global Investors
The only commodities in the red this year were precious metals, which failed to stay positive despite rising inflation across goods and asset prices. Gold and silver had returns of -3.6% and -11.7% respectively, with platinum returning -9.6% and palladium, the worst performing commodity of 2021, at -22.2%.
Aside from the precious metals, every other commodity managed double-digit positive returns, with four commodities (crude oil, coal, aluminum, and wheat) having their best single-year performances of the past decade.
Energy Commodities Outperform as the World Reopens
The partial resumption of travel and the reopening of businesses in 2021 were both powerful catalysts that fueled the price rise of energy commodities.
After crude oil’s dip into negative prices in April 2020, black gold had a strong comeback in 2021 as it returned 55.01% while being the most volatile commodity of the year.
Natural gas prices also rose significantly (46.91%), with the UK and Europe’s natural gas prices rising even more as supply constraints came up against the winter demand surge.
Despite being the second worst performer of 2020 with the clean energy transition on the horizon, coal was 2021’s best commodity.
High electricity demand saw coal return in style, especially in China which accounts for one-third of global coal consumption.
Base Metals Beat out Precious Metals
2021 was a tale of two metals, as precious metals and base metals had opposing returns.
Copper, nickel, zinc, aluminum, and lead, all essential for the clean energy transition, kept up last year’s positive returns as the EV batteries and renewable energy technologies caught investors’ attention.
Demand for these energy metals looks set to continue in 2022, with Tesla having already signed a $1.5 billion deal for 75,000 tonnes of nickel with Talon Metals.
On the other end of the spectrum, precious metals simply sunk like a rock last year.
Investors turned to equities, real estate, and even cryptocurrencies to preserve and grow their investments, rather than the traditionally favorable gold (-3.64%) and silver (-11.72%). Platinum and palladium also lagged behind other commodities, only returning -9.64% and -22.21% respectively.
Grains Bring Steady Gains
In a year of over and underperformers, grains kept up their steady track record and notched their fifth year in a row of positive returns.
Both corn and wheat provided double-digit returns, with corn reaching eight-year highs and wheat reaching prices not seen in over nine years. Overall, these two grains followed 2021’s trend of increasing food prices, as the UN Food and Agriculture Organization’s food price index reached a 10-year high, rising by 17.8% over the course of the year.
As inflation across commodities, assets, and consumer goods surged in 2021, investors will now be keeping a sharp eye for a pullback in 2022. We’ll have to wait and see whether or not the Fed’s plans to increase rates and taper asset purchases will manage to provide price stability in commodities.
Misc2 weeks ago
From Greek to Latin: Visualizing the Evolution of the Alphabet
Markets3 weeks ago
Prediction Consensus: What the Experts See Coming in 2022
Best of4 weeks ago
Our Top 21 Visualizations of 2021
Technology1 week ago
The 20 Internet Giants That Rule the Web
Technology3 weeks ago
Companies Gone Public in 2021: Visualizing IPO Valuations
Misc4 weeks ago
Mapped: Top Trending Searches of 2021 in Every U.S. State
Green4 weeks ago
Mapped: 30 Years of Deforestation and Forest Growth, by Country
Markets3 weeks ago
How Every Asset Class, Currency, and S&P 500 Sector Performed in 2021