U.S. Needs Industrial Policy for Critical Minerals.

• Author: Wischer, Gregory D.

The United States needs a secure supply of critical minerals to protect its national security. Minerals like cobalt, gallium and rare earths are vital elements in superalloys, semiconductors and permanent magnets. These components, in turn, are essential for advanced technologies such as jet engines, quantum computing and military radars.

In short, critical minerals form the foundation of America's digital economy and modern military.

However, the United States relies heavily on critical mineral supply chains controlled by China. For example, according to the U.S. Geological Survey, the United States produces zero percent of the world's refined cobalt while China produces 72 percent; the United States produces zero percent of the world's gallium while China produces 98 percent; and the United States produces zero percent of the world's refined rare earths while China produces 85 percent. The list continues.

The United States lacks a secure supply of critical minerals, relying dangerously on its top geopolitical adversary. The government, so far, has pursued piecemeal actions that have insufficiently incentivized domestic mining and refining of critical minerals. Moving forward, the government needs a comprehensive industrial policy that allows U.S. companies to maximally mine the nation's critical minerals and make America domestically self-sufficient in refining critical minerals.

"Industrial policy" refers to "policies that stimulate specific economic activities and promote structural change," as defined by Harvard economics professor Dani Rodrik in his article "Industrial Policy: Don't Ask Why, Ask How."

The White House has indeed tried to grow U.S. capacity for mining and refining critical minerals. The effort began most vigorously in the previous administration when President Donald Trump invoked the Defense Production Act to make purchases and purchase commitments for samarium cobalt magnets.

Trump then signed Executive Order 13953, which ordered agencies to bolster domestic mining and refining capacity, as well as accelerate federal permitting for critical mineral projects.

Most notably, the Trump administration's Department of Energy issued a rule making critical mineral projects eligible for the Advanced Technology Vehicle Manufacturing Direct Loan Program and Title XVII Innovative Energy (Section 1703) Loan Guarantee Program. This updated rule unlocked substantial loans for domestic critical mineral projects. Currently, the vehicle manufacturing program has $55.1 billion available in loan authority, and the Title XVII program has $42.5 billion available in loan authority.

The Biden...