Having been one of those who advocated for years for the need for a public-private sector mobilization of financial resources to develop a critical minerals/materials industry in the US, I’m encouraged by recent developments. Collectively, across government agencies and including private commitments like that of JP Morgan, among others, there appear to be over $2 trillion nominally available for building a critical materials infrastructure in the US, ranging from primary mining and recycling to processing, magnets, semiconductors, and AI data centers.
But is there a recipe for success?
What I mean by this is that we need to spend our money wisely and with forethought. This level of funding is unlikely to be seen again and, therefore, is a unique opportunity, especially when coupled with regulatory reform, to accelerate and ensure the transformation of the American economy and America’s national security for decades to come.
China just completed and issued its 15th Five-Year Plan. These plans have been the foundation of much of China’s success, as they provide a clear and comprehensive blueprint for the government – and private sector – to follow. Priorities are identified and funded. The economy is viewed holistically, even as each Plan targets specific areas of improvement in individual segments. Most importantly, there is political cohesion behind the Plan. Whether everyone achieved their personal objective or not, everyone rallies behind the final version.
Of course, America essentially is a free market economy, not a directed system – but we’ve used that as an excuse for our failures for too long.
What then must we do at this turning point in time? Some initial thoughts would include, inter alia:
First and foremost, stop the short-sighted partisan bickering which is undercutting America’s institutional foundations, gutting our capabilities, and destroying our global positioning. If this is war, albeit an economic one, then for heaven’s sake, let’s pull together as we have in the past to emerge victorious. Our enemies only rejoice when we turn on each other.
Identify and use the expertise available to us to envision the structure we need. Rather than randomly placing processing facilities in States that offer the most compelling incentives, decide where the mining is taking place, or through which ports imported feedstock will flow, and develop the shortest possible supply chains – keeping in mind that the shortest and most secure supply chain always will be mined and made in America.
Realistically acknowledge infrastructure issues. Don’t put high energy use projects like AI data centers in areas already having problems with the electrical grid – unless those data centers will be independently powered by their own networks so as not to further strain the creaky energy façade in the US. Likewise, keep water in mind. Don’t put water-hungry semiconductor factories in deserts, unless those are accompanied by plans to pipe water in from elsewhere (desalination plants perhaps?). Take the necessary supporting infrastructure into account when pricing projects, otherwise, those projects won’t be sustainable. This is where the bundles of financing come into play. The combination of government and private sector could, for instance, see the government providing the right-of-way for water pipelines while the private sector funds the plants.
Congress needs to work on the necessary legislative changes to codify some of the executive orders issued by the White House. Doing so removes the current risk faced by companies in taking advantage of the existing lexicons and enables planning for the future.
Avoid the temptation to ‘fund today.’ If all or most of the resources go to the same 5-6 companies already in or near production, we are not building an enduring industrial structure for the future. Today’s prospective junior miners and experimental technologies are tomorrow’s strong national network, regardless of whether that is gratifying the current political timetable.
Perhaps most importantly, make this industrial plan a platform for success that both parties can back across regime changes. American might has been shackled by two things: quarterly reports and election cycles. It didn’t use to be that way and we do need to harken back to a time when politicians served the nation’s good not their life-long sinecures, and when CEO success involved more than just increasing shareholder profits every quarter.
Can we do these things? Sure we can, as long as we’re willing to put in the hard work and stop blaming others for our failures.
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