In a House Foreign Affairs Committee hearing on Tuesday, Rep. James Moylan (R-GU) asked experts about how the U.S. can use its natural mineral deposits to weaken China's hold on the mineral market.
00:00Time's up. Great question, great answers. I wish we just had more time, but now let me recognize the gentleman from Guam, Mr. Moylan.
00:08Thank you, Madam Chair, for setting this timely topic, especially two weeks ago, the Quad Four Minister met in Washington, D.C., and announced the launch of a major new initiative.
00:18And as they clearly stated, reliance on any one country for processing and refining critical minerals further harms our economic and national security.
00:27Given this understanding, we need to strengthen both our domestic efforts and international cooperation to build more resilient and diversified critical mineral supply chains.
00:38So as part of the domestic efforts, our vast offshore seabed areas has significant potential to boost the supply of critical minerals.
00:46The Bureau of Ocean Energy Management says the Pacific Outer Continental Shelf, including the surrounding area of Guam, contains four different mineral deposit types.
00:58And if we can successfully utilize these resources on a commercial scale, it will greatly enhance our supply chain resilience and national security.
01:07I hope this effort will be carried out in a manner of respect both local to local stakeholders and the environment.
01:14Another important aspect of the international cooperation to counter China's dominance in critical minerals, China's abrupt restriction of critical material exports caused major disruption in global automotive industry and posed serious threats to defense equipment suppliers.
01:31However, we cannot leave these challenges solely to the private entities because, as we know, China employs non-market practices such as large-scale subsidies.
01:40And it's extremely difficult for private actors to compete on their own.
01:45Securing stable and reliable supply chains is an urgent issue, not only for the U.S., but also international communities.
01:51So we need to develop a shared strategy and framework among like-minded countries to build alternative and resilient supply chains.
02:00So, Mr. Fallon, you have great experience being the first Assistant Secretary of State Energy Resources.
02:06And do you believe that the State Department needs additional authorities to develop international cooperation and support of private sector investment in foreign countries?
02:17Thank you, Congressman, for the question.
02:19I would say that I think believe the State Department has considerable authorities.
02:23What I think what would be useful is to increase the authorities of sister agencies, the International Development Finance Corporation, over which the Secretary of State serves as chairman.
02:36The DFC also is an entity that by its mandate is supposed to integrate America's foreign policy as part of their investment thesis.
02:44So I think that working with the State Department and the body of the chair could empower the DFC to do more, and that has a significant role for Congress in the reauthorization, to empower them to do more, increasing the investment limits, and also to allow for greater equity to be invested.
03:10I think that will â this capital from the DFC is catalytic in the sense that it unlocks other investors.
03:18As Jose was speaking, other countries want the U.S. investor there, but how do we get them there?
03:23How do we â how do we crowdsource additional co-investors?
03:27And this is a critically important tool.
03:32Senator, of course, we know that China controls over roughly 90 percent.
03:37And you were talking about this question earlier as well, of all our critical minerals.
03:44But yet, we have all these minerals spread across the U.S., Australia, and parts of East Asia, and beyond.
03:49So in your view, what's the most significant factor that enabled China to dominate the market?
03:54And what's the most urgent action that we and our partners should take to counter it?
04:00I think, first of all, I want to thank you and the wonderful people, your beautiful island of Guam.
04:04I've stopped there many times, and I just have the most respect for the strategic position that you have for our great country in the Pacific Rim.
04:12Next of all, I think â I really, truly believe the Defense Production Act, if we announced the Defense Production Act is what we're going to use in order to have the defense of our country and our economy and all of our allies,
04:24would give us the catalyst that's going to be needed for the development of the finance corporation to show how determined we are to make sure that we're up and running as quickly as humanly possible,
04:36be able to extract and assist all of our friends around the world and the free world, if you will, to contribute towards this.
04:43It's going to be a total all-in effort.
04:45It's not just one of us can do it.
04:47We cannot get up to speed quickly by ourself without you and all of our friends around the world.
04:53That's what we have to rely on.
04:54And that's really how we can protect your markets also with the trade, if you will, tariffs protecting so China doesn't come in and distort your markets that they've tried to do.
05:05We've watched how they've been very aggressive in that part of the world, and we're determined basically to defend and help you.
05:11I would say one more thing, too.
05:13Is there some way that, when you think about it, if it wasn't for the ore that China gets from Australia right now, what kind of a crimp would that put?
05:21What kind of a bind would they be on if we were able to, all the free world, consume Australia's ore so they wouldn't have to go to China for that market?
05:29That might be things we could do to really put a pinch on them, too.
