This piece was originally published by the Oxford Diplomatic Society.
In the coming decades, critical mineral insecurity will prompt seismic realignments of global supply chains. Initially prompted by the military concerns over sensitive materials, commercial interests may soon follow a pattern of forming more resilient supply chains for the materials that enable essential and experimental technologies. No longer content to rely on its competitors like China, which accounts for 60% of production and 85% of critical mineral refining, the U.S. will turn to its allies and partners as new sources of essential materials.
But just as importantly, America will have to examine its domestic capacity to meet mineral needs. From lithium extraction in Arkansas to new antimony mining in Idaho, that process is already underway. The regulations that lawmakers and policymakers implement today will play an outsized role in the critical mineral landscape of tomorrow. Getting mining and refining policy right now could mean the difference between a fortified supply chain or continued vulnerability into the future.
The Treasury Department’srecent adjustments to the 45X tax credit are an example of forward-looking policy that brings the U.S. closer to critical mineral security. Established as part of the 2022 Inflation Reduction Act, the section 45X Advanced Manufacturing Production Credit (AMPC) offers up to 10% of production costs for manufacturers who create and sell certain products up until 2029. While the exact value available can depend on the size, volume, or capacity of a qualifying product, the credit has indisputable value for domestic producers either as a direct payment or as a transferable tax credit. The passage of the IRA was followed by $126 billion in private sector announcements and commitments: $77 billion for batteries, $26 billion for solar and wind-related projects, but only $6 billion for critical minerals.
