In Response to the People's Republic of China's Dominance in the Industry, Senate Intel Chair and Vice Chair Lead Colleagues in Push to Support Critical Mineral Projects

Letter

Dear Mr. Hochstein,

We write to highlight the urgent need to secure our supply chains of critical mineral resources
essential for national and economic security, and to urge specific action by the White House to
reduce U.S. reliance on supplies of these minerals under the control of our adversaries.

As the Biden administration has confirmed, critical minerals are essential components
underpinning U.S. critical infrastructure and military systems, from cars, to our grid, to weapons
and defenses. Demand for critical minerals is growing exponentially, yet the U.S. substantially
lags behind its adversaries in securing critical mineral supply chains. In fact, in many cases
China controls nearly 100 percent of the end-to-end supply chain, and is actively seeking to
maintain and increase its control of these resources around the globe.

The U.S. must support public and private efforts to reduce our critical minerals dependency on
China, which has demonstrated its willingness to block our access to such minerals. China's
announced controls on the export of graphite in October 2023, following its export restrictions
on germanium and gallium in July 2023, underscores the need for diverse and reliable supply
sources led by the U.S. and our allies.

On October 18, a bipartisan group of Senators convened key industry, investors, and government
officials to discuss how the U.S. can better support public and private investment in and
operation of critical mineral projects at home and abroad. The U.S. Development Finance
Corporation (DFC), the Export-Import Bank of the United States (EXIM), the U.S. Trade and
Development Agency (USTDA), State Department's Minerals Security Partnership (MSP),
Industrial Base Policy at the Department of Defense (DoD), and the Department of Energy's
Loan Program Office (LPO), among others, are, encouragingly, making positive steps to build
additional capacity to support U.S. and allied industry in the competition for mineral resources.
However, the U.S. remains far behind China's efforts in this space. The roundtable raised three
substantial issues, in particular:

First, while certain agencies are providing important tools to support key critical minerals
projects, we want to ensure agencies are coordinating internally across the government, and
externally with the private sector. China provides substantial support to its state-owned
companies and nominally private firms through financial assistance and heavy diplomatic
engagement to secure foreign projects. China is known for engaging in a range of unfair tactics,
including influencing local officials to maintain control of resources. The U.S. must have strong
coordination both internally and with the private sector to help ensure U.S. companies can
effectively compete against our adversaries. Specifically:

 Internally, relevant programs -- such as DFC, EXIM, USTDA, MSP, DoD, and DOE LPO
-- should coordinate on applications for critical minerals projects, including on conducting
due diligence of private sector vetting, to avoid unnecessary redundancies and delays.
Relevant agencies should also establish and collaborate on best practices. This should
include coordination with U.S. Executive Directors at multilateral development banks
(MDB), so that U.S. taxpayer-funded initiatives at MDBs do not compete with U.S.
agencies.
 Externally, agencies should ensure the private sector has access to the information needed
to access U.S. investment tools. Currently, many private sector companies do not have an
understanding of what government tools currently exist, or who to contact across the
government for financial or diplomatic help engaging in projects abroad. While
individual agencies have held roadshows to communicate their services to private
companies, more can be done to communicate the broad array of support the U.S.
government can provide. There is not, for example, a public facing coordinator for
private sector companies attempting to secure U.S. investment tools, or attempting to
navigate foreign local governments and processes. Indeed, many U.S. companies admit
they currently cold call embassies abroad when bidding for projects, and as a result often
lose out to Chinese projects, backed by the Chinese government.

Second, the current U.S. government toolkit lacks many of the tools our allies and adversaries
possess in providing the type of financial support needed for critical mineral projects. For
example, unlike many of our allies and our adversaries, the U.S. lacks funding or debt for the
sourcing and production of strategic commodities, or sufficient equity investment for projects in
riskier jurisdictions. U.S. companies already are hesitant to invest in critical mineral markets, in
part due to China's ability to create volatile markets through manipulative trade practices. To
ensure our private sector can invest and operate in critical mineral projects, the U.S. must
consider additional tools for its financial agencies.

Third, the U.S. government must focus on investing in processing, refining, and metallurgical
capacity in the U.S. and allied countries to circumvent China's industrial infrastructure, which it
uses as a pinch point to control the global market. China has gained control over much of the
global supply chains and market for critical minerals by heavily subsidizing its heavy industry,
serving as one of few locations where raw materials can be processed into value-added products
and components. Standing up value-added industrial capacity in the U.S. and friendly
jurisdictions will provide a clear alternative option for raw material producers to enter into
offtake agreements with U.S.-aligned interests, as well as for end users to source reliable
volumes of finished goods. Focusing the efforts of the U.S. government, in coordination with our
allies, upon standing up processing, refining, and metallurgical capacity must be a priority if we
are going to succeed in reducing our reliance on China for critical minerals.

To address these challenges, we respectfully request that the Administration establish a
coordinating mechanism or comprehensive policy to:

1. Require relevant U.S. government agencies to coordinate, share information, and
synchronize processes when evaluating private sector critical minerals projects to prevent
duplication of work and ensure companies are receiving the best possible information;
2. Ensure the private sector has access to and information on all relevant U.S. government
tools at their disposal, including financial and diplomatic; and
3. Identify existing gaps and potential flexibilities in existing U.S. financial tools needed to
support investment in and operation of critical minerals projects.

We respectfully request that you brief the relevant committees of jurisdiction on the
Administration's efforts to address these issues within 60 days, including identifying any
statutory changes needed to provide additional tools to government agencies to support private
sector investment in critical mineral projects.

We stand ready to assist in this effort. The work to diversify our critical mineral supply chains is
urgent, and we look forward to working with you on this important challenge.

Sincerely,

Source