In a House Foreign Affairs Committee hearing on Tuesday, Rep. Young Kim (R-CA) asked Former Senator Joe Manchin about ways the U.S. can decrease its dependency on Chinese minerals.
00:27For example, nickel prices have fallen 75% in the last several years because of the Chinese oversupply.
00:36So let me ask this question to Senator Munchen.
00:39Why does China's chokehold on critical minerals threaten the U.S. economic competitiveness and national security?
00:46And if you can talk about to what extent can domestic production reduce this dependence,
00:53and why is international engagement still essential?
00:57When you look at what we're dealing with and look in history, the 20th century, beginning of the 20th century,
01:04the United States became a powerhouse because of our energy.
01:07Back then it was light of bond on coal, made the steel.
01:10We did an awful lot of things, and we basically pulled ourselves out of poverty, became an industrial leader.
01:15That was necessary for us to have reliable, dependable, affordable energy.
01:19Today, critical minerals is the same as that energy was needed back in the 20th century.
01:24So in the 21st century, the new boom is going to be basically critical minerals.
01:29Well, everything that we do depends on the superconductors and the magnets and all the different things
01:34and special alloys and steels that we use.
01:37Those are building blocks where I think that we've made a mistake, that we should have trade agreements,
01:43and we should have basically penalties with tariffs in order to protect our building blocks.
01:49That's it.
01:50Everything else should be used as an incentive to do trade.
01:52But protecting basically our allies and countries across the world that we can rely on,
01:57and we have a chain of allies that we can depend on, you have Canada, tremendous cachet of rare earth minerals.
02:06Australia, tremendous cachet.
02:08United States, possibility of a tremendous cachet.
02:11We weren't allowed to mine and process.
02:14And then you have Japan and South Korea able to do refining.
02:18We have a building block right there that we could start and get in the game very quickly.
02:22You've got to let the private sector in.
02:23We can't take this debt on, continue to take all these debts on and the risk.
02:27Those are the things.
02:28And what happens, if you let China control that, it'll be no different than what Putin tried to do with oil and gas and our allies.
02:37Same thing.
02:38So you've got to have independence.
02:39And then ask Mr. Fenn and similar questions, too.
02:43Given China's capacity to undercut the competitors, what policies can we consider to shield domestic and allied mineral producers from predatory pricing tactics?
02:56Yeah, thank you for the question.
02:58I think this is key.
03:02What I don't think we can do is rely on traditional, conventional norms and practices because China rejects them.
03:10We talked, Senator spoke about the rare earth dispute in 2010.
03:14And the response from the United States at the time, along with Europe and Japan, was to initiate a WTO action against China.
03:24It took two years for that to be concluded, and it found what we knew.
03:28China was cheating.
03:29But in that interim, China dumped material onto the market and killed the economic basis for that company.
03:36So they went out of business.
03:40So what we have to do is a new way of thinking about these things.
03:43In terms of what the steps we should pursue, one of those would be, and Senator mentioned tariffs, I think target tariffs is exactly the right approach.
03:53China, according to the International Energy Agency, recently concluded that China's cost of capital is 50% less than anywhere else in the world to do a mining project.
04:01That's very hard to compete with.
04:03Second, the issues on how they do their business.
04:06It's very opaque.
04:06We don't know how they do their business.
04:09It's hard to see.
04:10What we know is that they violate environmental and human rights all the time.
04:14And actually, last year, the Department of Labor issued a report underscoring that.
04:19I think a higher degree of scrutiny is important.
04:22It could create differential pricing.
04:24We always talk about having a green premium because there will be a commodity produced in a way with lower carbon.
04:31But industry is reluctant to pay more for it.
04:34If they're competing against a commodity at a lower cost, rather than ask U.S. industry and U.S. companies to pay more, we should try to level the playing field.
04:45I think the administration is keen to do that by making the costs, increasing the costs on the Chinese side.
04:50At the same time, we have a pacing challenge.
04:53Senator noted the amazing resource abundance in America.
04:58It takes a long time to develop a mine.
05:00We have to go where the rocks are and where there's political will to develop them.
05:02So it will be a combination of domestic side, market interventions on pricing, but also to create a favorable environment to develop mines in some of these resource-rich jurisdictions and the mobilization of entities like the DFC.
05:21I have a lot of questions to ask you.
05:23So hopefully, we'll have a second chance to come around questioning.
05:28But for now, I'm going to turn it over to my ranking member to ask questions.
