Breaking China's Chokehold on Critical Mineral Supply Chains

1[House Hearing, 119 Congress]2[From the U.S. Government Publishing Office]34                     BREAKING CHINA'S CHOKE HOLD ON5                     CRITICAL MINERAL SUPPLY CHAINS6=======================================================================78                                HEARING910                                 OF THE1112                 SUBCOMMITTEE ON EAST ASIA AND PACIFIC1314                               BEFORE THE1516                      COMMITTEE ON FOREIGN AFFAIRS17                     U.S. HOUSE OF REPRESENTATIVES1819                    ONE HUNDRED NINETEENTH CONGRESS2021                             FIRST SESSION2223                               __________2425                             July 15, 20252627                               __________2829                           Serial No. 119-273031                               __________3233        Printed for the use of the Committee on Foreign Affairs3435[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]3637Available: http://www.foreignaffairs.house.gov, http://docs.house.gov,38                       or http://www.govinfo.gov3940                               __________4142                   U.S. GOVERNMENT PUBLISHING OFFICE4361-691PDF                 WASHINGTON : 202644=======================================================================4546                      COMMITTEE ON FOREIGN AFFAIRS4748                    BRIAN J. MAST, Florida, Chairman49MICHAEL T. McCAUL, Texas             GREGORY W. MEEKS, New York,50CHRISTOPHER H. SMITH, New Jersey         Ranking Member51JOE WILSON, South Carolina           BRAD SHERMAN, California52SCOTT PERRY, Pennsylvania            GERALD E. CONNOLLY, Virginia53DARRELL ISSA, California             WILLIAM R. KEATING, Massachusetts54TIM BURCHETT, Tennessee              AMI BERA, California55MARK E. GREEN, Tennessee             JOAQUIN CASTRO, Texas56ANDY BARR, Kentucky                  DINA TITUS, Nevada57RONNY JACKSON, Texas                 TED LIEU, California58YOUNG KIM, California                SARA JACOBS, California59MARIA ELVIRA SALAZAR, Florida        SHEILA CHERFILUS-McCORMICK,60BILL HUIZENGA, Michigan                  Florida61AUMUA AMATA COLEMAN RADEWAGEN,       GREG STANTON, Arizona62    American Samoa                   JARED MOSKOWITZ, Florida63WARREN DAVIDSON, Ohio                JONATHAN L. JACKSON, Illinois64JAMES R. BAIRD, Indiana              SYDNEY KAMLAGER-DOVE, California65THOMAS H. KEAN, JR, New Jersey       JIM COSTA, California66MICHAEL LAWLER, New York             GABE AMO, Rhode Island67CORY MILLS, Florida                  KWEISI MFUME, Maryland68KEITH SELF, Texas                    PRAMILA JAYAPAL, Washington69RYAN K. ZINKE, Montana               GEORGE LATIMER, New York70JAMES C. MOYLAN, Guam                JOHNNY OLSZEWSKI Jr, Maryland71ANNA PAULINA LUNA, Florida           JULIE JOHNSON, Texas72JEFFERSON SHREVE, Indiana            SARAH McBRIDE, Delaware73SHERI BIGGS, South Carolina          BRADLEY SCOTT SCHNEIDER, Illinois74MICHAEL BAUMGARTNER, Washington      MADELEINE DEAN, Pennsylvania75RYAN MACKENZIE, Pennsylvania7677              James Langenderfer, Majority Staff Director78                 Sajit Gandhi, Minority Staff Director79                                 ------8081                 SUBCOMMITTEE ON EAST ASIA AND PACIFIC8283                    YOUNG KIM, California, Chairwoman84MICHAEL T. McCAUL, Texas             AMI BERA, California, Ranking85ANDY BARR, Kentucky                      Member86AUMUA AMATA COLEMAN RADEWAGEN,       BRAD SHERMAN, California87    American Samoa                   JOAQUIN CASTRO, Texas88RYAN ZINKE, Montana                  JARED MOSKOWITZ, Florida89JAMES MOYLAN, Guam                   GABE AMO, Rhode Island90SHERI BIGGS, South Carolina          JOHNNY OLSZEWSKI, Maryland91RYAN MACKENZIE, Pennsylvania9293                 Tom Hill, Subcommittee Staff Director9495                         C  O  N  T  E  N  T  S9697                              ----------9899                            REPRESENTATIVES100101                                                                   Page102Opening Statement of Chairwoman Young Kim........................     1103Opening Statement of Ranking Member Ami Bera.....................     2104105                               WITNESSES106107Statement of the Hon. Frank Fannon, Managing Director, Fannon108  Global Advisors................................................     4109  Prepared Statement.............................................     6110Statement of the Hon. Joseph Manchin, Former U.S. Senator for111  West Virginia..................................................    14112  Prepared Statement.............................................    16113Statement of the Hon. Jose W. Fernandez, Former Under Secretary114  for Economic Growth, Energy and the Environment, U.S.115  Department of State............................................    23116  Prepared Statement.............................................    26117118                                APPENDIX119120Hearing Notice...................................................    58121Hearing Minutes..................................................    60122Hearing Attendance...............................................    61123124                        Questions for the Record125126Question submitted to Jose W. Fernandez from Rep. Gabe Amo.......    62127128     BREAKING CHINA'S CHOKE HOLD ON CRITICAL MINERAL SUPPLY CHAINS129130                              ----------131132                         Tuesday, July 15, 2025133134                  House of Representatives,135             Subcommittee on East Asia and Pacific,136                              Committee on Foreign Affairs,137                                                    Washington, DC.138139    The subcommittee met, pursuant to notice, at 10 a.m., in140room 2172, Rayburn House Office Building, Hon. Young Kim (chair141of the subcommittee) presiding.142    Mrs. Kim. Representative Troy Downing be allowed to sit on143this dais and participate in today's hearing.144    Without objection, so ordered.145    The Committee on East Asia and the Pacific will come to146order. This hearing aims to explore strategies for the United147States to reduce global dependence on the People's Republic of148China for critical minerals by partnering with the private149sector and allied nations.150    Let me now recognize myself for an opening statement. I151think we're still in morning so good morning and welcome to152East Asia and the Pacific Subcommittee's hearing titled153``Breaking China's Choke Hold on Critical Mineral Supply154Chains.''155156           OPENING STATEMENT OF CHAIRWOMAN YOUNG KIM157158    I want to thank our witnesses for joining us this morning.159    Critical minerals--lithium, cobalt, rare earth elements,160and others are the building blocks of modern technology161powering electric vehicles, microchips and advanced defense162systems.163    Global demand for these minerals is surging with lithium164demand alone growing nearly 30 percent annually from 2021 to1652024, driven by rising electric vehicle battery production.166    Yet, the People's Republic of China, or PRC, controls 92167percent of global rare earth element processing and dominates168the manufacturing of battery and magnet components.169    This choke hold, reinforced by China's tens of billions in170global mining investments and tactics like price manipulation171and export restrictions, poses a direct threat to the United172States and our allies.173    While the U.S. possesses significant mineral resources,174domestic production alone cannot meet the speed or scale of175this demand. The U.S. manufacturing operation costs increased176significant in the region, increasing the regional bureau. It177will take decades to permit natural mining in America.178    Moreover, the Federal Government lacks the financial179capacity to fully subsidize the level of investment needed to180drive large-scale private sector investment--expansion of181domestic production.182    Relying solely on domestic solutions is insufficient,183therefore, so we need a bold global strategy to secure184resilient, diversified supply chains free from Chinese control.185    The current geopolitical landscape offers an opportune186window to act. The recent developments such as President187Trump's critical minerals agreement with Ukraine and the U.S.-188facilitated peace deal in the Democratic Republic of Congo open189new opportunities to access vital resources.190    We have also seen coordination like the recently announced191Quad critical minerals initiative underscore the importance of192critical minerals through broader regional engagement.193    As the administration renegotiates trade relationships, we194can strengthen partnerships with our allies to build non-195Chinese supply, chains enhancing both economic and national196security.197    So today's hearing we will explore these challenges and198opportunities. We will examine how to build a proactive global199strategy to establish supply chains free from Chinese200dominance.201    So our goal today is very clear, to ensure the United202States and its allies have secure, reliable access to the203critical minerals that will define the future of technology and204security.205    I look forward to a productive discussion, and now let me206now recognize the ranking member from California,207Representative Bera, for his opening statement.208209          OPENING STATEMENT OF RANKING MEMBER AMI BERA210211    Mr. Bera. Thank you, Madam Chairwoman and, obviously, this212is an incredibly important hearing. Your testimony could be my213testimony and that demonstrates the bipartisan nature of214creating redundant supplies of critical minerals and rare earth215elements, weaning ourselves off of the choke hold that China216currently has where we watch them use their current export217restrictions on rare earths in retaliation to some of the trade218negotiations that President Trump is leading.219    We can't be dependent on that and, again, so with that I220certainly thank you for this important hearing.221    Creating and building a diversified, resilient, secure,222critical mineral supply chain is crucial to our national223security.224    That's why landmark legislation like the Inflation225Reduction Act in which Senator Manchin played a key role led to226historic investments to support a domestic critical mineral227supply chains and started to diversify us away from foreign228entities of concern.229    Unfortunately, in the Big Beautiful Bill some of these230demand incentives with regards to electric vehicles, battery231manufacturing, et cetera, potentially are going to be232undermined and that's something that, you know, certainly as we233look at implementation of this bill I think we ought to234continue to build those demand signals.235    Also, while domestic production of critical minerals is236crucial for the United States' security we can't do it alone if237we want to shift away from reliance with China.238    That's why our subcommittee is going to play an important239role to make sure the State Department, the Development Finance240Corporation, and other national security agencies have the241tools they need to build resilient global supply chains.242    I have, in the prior administration, worked closely with243the State Department, worked closely with Under Secretary244Fernandez to build those strong international partnerships on245supply chain resilience both bilaterally and through246multilaterally initiatives including the Mineral Security247Partnership.248    The MSP brings together 14 partner countries including249Australia, India, Japan, South Korea, and the United Kingdom as250well as the European Union to strengthen critical mineral251supply chains.252    The MSP finance network convenes development finance253institutions like the DFC and its equivalents in the MSP254partner nations to leverage private sector investment for255critical mineral projects, focusing on minerals that are most256relevant for advanced technologies, defense, energy and257industrial processes.258    It is a positive sign that our ally South Korea has now259succeeded the United States as chair of the MSP. That said, we260have got to continue to work with the State Department and261continue its robust leadership in the MSP to ensure that MSP262projects are meeting our national security goals.263    That's why today I have introduced the bipartisan Mineral264Security Partnership Authorization Act with my colleague265Chairwoman Kim and Representative Moylan to authorize the State266Department to lead the U.S. participation in the MSP.267    As our committee works to pass bills including268reauthorizations of the Development Finance Corporation and269State Department, it is critical that we work in a bipartisan270nature to ensure that we have a clear international strategy271for securing a critical mineral supply chains.272    The MSP is central to the State Department's role in this273strategy and I look forward to hearing our witnesses'274suggestions on how we can strengthen the MSP to be more275expansive.276    With that, I look forward to hearing the testimony from the277witnesses and I will yield back.278    Mrs. Kim. Thank you. Other members of the committee are279reminded that opening statements may be submitted for the280record.281    We are pleased to now have a distinguished panel of282witnesses before us today on this very important topic and I283would love to introduce them.284    The Honorable Frank Fannon, the managing director of Fannon285Global Advisories. Thank you for joining us.286    The Honorable Joseph Manchin, former U.S. senator of West287Virginia. Thank you for joining us.288    The Honorable Jose Fernandez, former under secretary for289economic growth, energy, and the environment--the E family at290the Department of State. Thank you for joining us.291    This committee recognizes the importance of the issues292before us and is grateful to have all of you here to speak with293us today.294    Your full statements will be made part of the record and295I'll ask each of you to keep your spoken remarks to 5 minutes296in order to allow time for member questions.297    I now recognize Mr. Fannon for your opening statement.298299                   STATEMENT OF FRANK FANNON300301    Mr. Fannon. Thank you, Subcommittee Chair Kim and Ranking302Member Bera, for the opportunity to speak on one of the most303pressing national security challenges of our time.304    China has been waging what I have termed a quiet war305against the United States for years. This is not a war fought306with missiles and bullets but one waged with minerals and307refineries.308    The Chinese Communist Party has systematically weaponized309its control over critical mineral supply chains as part of a310broader strategy to displace the United States as the world's311indispensable power.312    U.S. intelligence agencies have confirmed that communist313China is an existential threat for many years, yet Washington314has been reluctant to take the necessary and sometimes315difficult actions.316    Unlike the West, Beijing does not subscribe to definition317of war as simply acts of force but instead follows Sun Tzu's318guidance that supreme excellence consists in breaking the319enemy's resistance without fighting and recommends first320attacking this strategy.321    Wars are fought with industrial capacity in the supply322chains to fuel it. The CCP seeks to win its war by depriving323the United States the means to ever wage a kinetic one.324    China controls most of the critical minerals that underpin325defense and weapon systems, energy technologies, and the326building blocks for the modern economy.327    Although America has a significant resource endowment, the328U.S. is 100 percent import reliant on nearly a quarter of the32950 critical minerals and over 50 percent reliant on 29 of them.330    The United States must take bold actions rather than spend331time increasing awareness of the problem. President Trump's332executive orders signal a meaningful shift toward action.333    With that in mind, I'd like to touch on a few of the334recommendations from my written testimony.335    First, the United States should be clear that it is focused336on critical minerals for national and economic security. By337adopting security as America's organizing principle the U.S.338can take the appropriate countermeasures.339    Further, this clear goal will signal to partners,340governments, resource-rich nations, and investors that America341is serious and committed to mineral security.342    Next, the U.S. must right size, modernize, and use its343international finance tools. China has deployed more than a344trillion dollars in Belt and Road Initiatives including in345critical minerals and in 2023 increased mining and metals346focused investments 158 percent over 22 levels.347    The United States should not try to emulate the Chinese348state-led model. Instead, should leverage its comparative349advantage, the American private sector. This requires an350appropriate Federal financing partner on the other side and the351DFC and EXIM Bank are those partners.352    For the U.S. Government the DFC and EXIM can advance353America's foreign policy. From the business lens they are354sources of catalytic capital and, importantly, a means to355derisk investment opportunities in emerging markets.356    Congress should significantly increase the DFC's funding357and fix the scoring problem that treats equity investments as358grants.359    The EXIM should be more nimble, lower domestic content360requirements, and have greater risk tolerance. The DFC and EXIM361should prioritize partnerships with American investors and362companies and disqualify partners--parties with substantial363Chinese ownership interests.364    This approach is consistent with the important365strengthening of the foreign entity of concern provisions366included in the One Big Beautiful Bill.367    To meet our challenges will require working with partners368and allies, but America's minerals diplomacy should focus on369performance-based partnerships that include objective measures370such as dollars invested and tons of material mined.371    China is the lowest cost producer through State investments372and shirking labor and environmental protections. Congress373should highlight China's unethical inhumane practices.374    By increasing transparency the U.S. and free nations can375impose penalties or establish barriers against unethically376sourced critical minerals and thereby catalyze differential377pricing.378    Breaking China's choke hold requires moving beyond semantic379debates about decoupling versus derisking and adopting a bold380strategy necessary for victory.381    I stand ready to work with this committee and the382administration to assure America wins this quiet war and383secures our critical mineral independence for generations to384come.385    Thank you.386    [The prepared statement of Mr. Fannon follows:]387    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]388389    Mrs. Kim. Thank you, Mr. Fannon.390    I now recognize Mr. Manchin for your opening statement.391392                  STATEMENT OF JOSEPH MANCHIN393394    Mr. Manchin. Chairwoman Kim and Ranking Member Bera, I want395to thank you all and the members of this committee for the396opportunity to share my perspective on this vital and397bipartisan economic and national security issue.398    It's something I put years of work into during my time as399chair and ranking member of the Senate Committee on Energy and400Natural Resources as well as the Senate Armed Services401Committee.402    When I joined the Senate in 2010 China put rare earth403export controls on Japan following a territorial dispute over404islands they claimed ownership of, which should really sound405familiar to all of us.406    From that moment through the Energy Act of 2020, which407created the critical minerals list itself, through my last day408in the Senate I focused on this issue, and while there has been409good legislation there remains much more to be done.410    If I could leave you with one thing today is to impress the411urgent need for us and our allies to have strong, reliable412critical mineral supply chains across the three phases--413extraction, processing and manufacturing--so that no part of414the process is in the hands of an adversary.415    The solution includes the use of our financing tools like416the Development Finance Corporation, the Defense Production417Act, and the Export-Import Bank. We need to reauthorize and418strengthen these key financial tools so that we have a full419toolbox, and given the committee's focus we must keep in mind420that none of this works without diplomatic engagement.421    The Senate department must focus on energy security with422experts who understand the complexity of resource economics and423energy geopolitics with emphasis to prioritize the issue in424country.425    Finally, we need to make sure that this effort is426coordinated so that efforts across so many agencies are427effective and don't work across purposes or waste investments.428    Here's why this matters now more than ever. Just like Putin429weaponized Russia's oil and gas resources to try to scare off430Europe from supporting Ukraine, Xi Jinping and the Chinese431Communist Party are more than willing to use critical minerals432as leverage to put Americans and the free world at risk.433    They have ramped that up in earnest recently by flooding434the market with oversupply, driving prices down and leaving435producers worldwide unable to compete, and then using export436controls once they dominate the market.437    In fact, at the end of 2023 I held a hearing in the wake of438the first round of China's export restrictions on gallium and439germanium, two critical minerals that are needed for440semiconductor fabrication.441    As I feared that export restrictions became a ban in the442late 2024 that, with recent trade disputes, they have gone even443further by cutting off our supplies of rare earths, antimony,444tungsten, and more.445    That is why tariffs are so important. Tariffs are needed to446protect the building blocks of our economy and national447security as well those of our allies from China's market448distortions and economic malfeasance.449    That is what tariffs are for, to protect strategic450industries by penalizing bad actors and keeping the U.S. prices451competitive.452    Even worse than Europe's addiction to Russian gas, which is453about 45 percent of supply in 2021, we are over 90 percent454reliant on China for graphite, gallium, rare earths, over 60455percent reliant germanium, over 70 percent reliant for high-456grade cobalt and nickel, and I could go on and on.457    And China's critical mineral grip extends around the entire458globe. They control mines throughout the world, all of which459feed a processing and manufacturing powerhouse that they460control.461    So just as we cannot solve this problem alone, we are not462in this mess by ourselves either. We must acknowledge that463while we can provide much of the minerals we need domestically,464we don't have the capacity to produce or process every mineral465in the quantities that we need here in the United States in466North America or even in a newly formed AUKUS security467partnership between Australia, the United Kingdom and the U.S.468    Even if capacity weren't an issue we can't afford to spend469a billion dollars per mineral to support domestic suppliers.470Our debt is a national security threat, too, and we must come471to grips with that.472    Permitting reform is essential to fast track domestic473production but we also need to ensure that we are working with474trusted and reliable partners when it comes to overseas mineral475resourcing.476    That means looking first to friends like Canada, Australia,477Japan, and Norway but also building new trusted partners478throughout efforts like the Mineral Security Partnership and479countering China through the energy and mineral diplomacy480efforts under the committee's jurisdiction.481    We must also be extremely cautious of our policies where482the Chinese have a majority of control like the Democratic483Republic of Congo and Indonesia and don't get sucked in when484they have total control either.485    So in closing, the time to solve this issue is now and486Congress has a grave responsibility to step up to the plate. I487look forward to your questions and thank you for asking me to488be here today.489    [The prepared statement of Mr. Manchin follows:]490    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]491492    Mrs. Kim. Thank you, Mr. Manchin.493    And now I recognize Mr. Fernandez for your opening494statement.495496                 STATEMENT OF JOSE W. FERNANDEZ497498    Mr. Fernandez. Thank you. Thank you and good morning.499    Chairwoman Kim, Ranking Member Bera, members of this500committee, thank you for having me here. I'm going to try and501be brief because I very much share what's been said before me.502    Briefly stated, we have a need and we have a problem. The503need is that the world needs exponentially more critical504minerals and rare earths. We need them for just about anything505and everything that we use--data centers, semiconductors,506energy, battery storage, EVs--and these numbers are staggering.507    In the last couple of years the demand for energy battery508storage has doubled. The IEA tells us that by 2050 we'll need50942 times the amount of lithium that we use today. That's the510need.511    The problem is that the PRC controls or owns just about512all, if not--or at least most of these minerals, two-thirds of513the world's lithium and cobalt, 100 percent of the graphite, 19514out of 20 strategic minerals.515    This is a strategy that the PRC has followed now for over516decades. It also involves subsidies. The IEA has estimated that51720 to 40 percent of the cost of a mine in China is subsidized518by the government.519    That is the problem, and as the senator just outlined the520PRC has been willing to exercise its dominance. We saw it even521this year with the seven heavy rare earths.522    When I was in office we helped to deal with the germanium523export controls. We were able to secure 25 percent of the524world's global supply through our allies and partners.525    We have also seen the PRC use predatory pricing. That's526what a monopolist does. It uses its power in order to drive527down the competition.528    So what have they done? They have flooded the market. The529price of cobalt, the price of lithium, has gone down 75, 80530percent. The price of cobalt today is lower than the price in5312017. That is part of the strategy.532    But there's a bright side. There's a bright side, and that533is that we are pushing on an open door. When we started working534on the Mineral Security Partnership and I went to our allies535and partners they shared the same concerns. They actually were536looking to do something about their diversification of critical537minerals.538    They saw the same need, and when we proposed the MSP539concept they bought it immediately. They wanted U.S.540leadership. That's our partners and allies.541    Producing countries want our investments. We don't bribe.542We follow the law. We don't bring in our workers.543    So we created the Mineral Security Partnership based on the544premise that no country can solve this problem alone. We had545four lines of effort. We shared information with our partners546because if we couldn't put together the deal for a mine perhaps547other countries could.548    We did what private equity and banks do which is we finance549together in order to derisk and minimize the risk. We included550recycling projects because we are told that 30 percent of the551world's need could be could be met in the next 10, 20 years by552recycling.553    And last, we had to make a better offer and our offer was554we would adhere to high ESG principles because we could not win555a race to the bottom and so we had to change the terms of the556debate.557    We were successful. We were a deal shop; we were not a talk558shop. We had over 30 projects that we supported in our 2 years.559Thirteen of those are public.560    We actually had countries come to me and say, Jose, if our561companies invest in a mining deal in country X we're going to562get screwed. But if the U.S. comes they won't mess with us.563    So some of what we did was diplomatic support. We also were564able to work with our colleagues at the DFC, at EXIM Bank, at565USTDA in order to finance together, and we were just getting566started.567    I am very happy to see the--your proposed MSP authorization568bill. I welcome it. It incorporates the lessons of the MSP. It569gives it the tools for success.570    It's a partnership with partner countries that tries to571galvanize the private sector and that is our best weapon. That572is our secret weapon, our private sector as well as our allies.573    I've made three suggestions in my testimony that I hope we574can discuss today. I think we're going to need more funding. If575you look at what France, Germany, Australia, Japan, Korea, and576others have done, all of those have billion-dollar investment577funds in order to derisk and do early stage investing.578    They also--I've also proposed that we not ignore recycling579and, last, that we create an emergency response team in order580to address the continued weaponization by the PRC.581    But, again, I very much welcome your proposed bill and I582hope we can discuss it later this morning.583    Thank you, and I look forward to your questions.584    [The prepared statement of Mr. Fernandez follows:]585   [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]586587    Mrs. Kim.Thank you to all of our witnesses for your588wonderful opening statements, and we'll go into member589questioning and I recognize myself to first ask questions.590    And I want to pick up on what Mr. Fernandez said about the591Chinese predatory tactics. So let me talk about how the592significant challenge we face today is China's ability to flood593global markets with low cost criminal--I mean, yes, criminal--594critical minerals leveraging state-backed subsidies, for595example, nickel prices that have fallen 75 percent in the last596several years because of the Chinese oversupply.597    So let me ask this question to Senator Manchin. Why does598China's choke hold on critical minerals threaten the U.S.599economic competitiveness and national security, and if you can600talk about to what extent can domestic production reduce this601dependence and why is international engagement still essential?602    Mr. Manchin. When you look at what we're dealing with and603look in history, the 20th century--beginning in the 20th604century the United States became a powerhouse because of our605energy.606    Back then, it was relied upon on coal. Made the steel. We607did an awful lot of things and we basically pulled ourselves608out of poverty, became an industrial leader. That was necessary609for us to have reliable, dependable, affordable energy.610    Today, critical minerals is the same as that energy was611needed back in the 20th century. So in the 21st century the new612boom is going to be basically critical minerals.613    Well, everything that we do depends on the superconductors614and the magnets and all the different things and special alloys615and steels that we use.616    Those are building blocks. Where I think that we made a617mistake that we should have trade agreements and we should have618basically penalties with tariffs in order to protect our619building blocks. That's it.620    Everything else should be used as an incentive to do trade,621but protecting, basically, protecting our allies and countries622across the world that we can rely on and we have a chain of623allies that we can depend on.624    We have Canada, tremendous cache of rare earth minerals;625Australia, tremendous cache; the United States, possibility of626a tremendous cache. We weren't allowed to mine and process. And627then you have Japan and South Korea able to do refining.628    We have a building block right there that we could start629and get in the game very quickly. You got to let the private630sector in. We can't take this debt on--continue to take all631these debts on and the risk.632    Those are the things, and what happens if you let China633control that it will be no different than what Putin tried to634do with oil and gas and our allies. Same thing. So you've got635to have independence.636    Mrs. Kim.From that and then ask Mr. Fannon similar637questions, too.638    Given China's capacity to undercut the competitors, what639policies can we consider to shield domestic and allied mineral640producers from predatory pricing tactics?641    Mr. Fannon. Thank you for the question. I think this is642key. What I don't think we can do is rely on traditional,643conventional norms and practices because China rejects them.644    We talked--the senator spoke about the rare earth dispute645in 2010 and the response from the United States at the time,646along with Europe and Japan, was to initiate a WTO action647against China.648    It took 2 years for that to be concluded and it found what649we knew, China was cheating, but in that interim China dumped650material onto the market and killed the economic basis for that651company so they went out of business.652    So what we have to do is a new way of thinking about these653things. In terms of what the steps we should pursue one of654those would be--and the senator mentioned tariffs--I think655targeted tariffs is exactly the right approach.656    China, according to the International Energy Agency,657recently concluded that China's cost of capital is 50 percent658less than anywhere else in the world to do a mining project.659That's very hard to compete with.660    Second, the issues on how they do their business it's very661opaque. We don't know how they do their business. It's hard to662see. What we know is that they violate environmental and human663rights all the time and actually last year the Department of664Labor issued a report underscoring that.665    I think a higher degree of scrutiny is important. It could666create differential pricing. We always talk about having a667green premium because there will be a commodity produced in a668way with lower carbon, but industry is reluctant to pay more669for it if they're competing against a commodity at a lower670cost.671    Rather than ask U.S. industry and U.S. companies to pay672more we should try to level the playing field. I think the673administration is keen to do that by making the cost of the--674increasing the cost on the Chinese side.675    At the same time, we have a pacing challenge. The senator676noted the amazing resource abundance in America. It takes a677long time to develop a mine.678    We have to go where the rocks are and where there's679political will to develop them. So it'll be a combination of680domestic side, market interventions on pricing, but also to681create a favorable environment to develop mines in some of682these resource rich jurisdictions and the mobilization of683entities like the DFC.684    Mrs. Kim.Thank you. I have a lot of questions to ask you685so, hopefully, we'll have a second chance to come around686questioning. But for now, I'm going to turn it over to my687ranking member to ask questions.688    Mr. Bera. Thank you, Madam Chairwoman. And, again,689listening to each of the witnesses you couldn't tell who were690the Republican witnesses or who were the Democratic witnesses,691which, again, just emphasizes why this is a nonpartisan issue692and it's in our national security interest. So we should693certainly approach it from that perspective.694    Under Secretary Fernandez, we worked pretty closely on the695Mineral Security Partnership and, again, I think it is the696right strategy, working with countries that share our values,697take a free market approach, and obviously are--have directly698felt the impact of economic coercion from the Chinese which,699again, I think we're very afraid of.700    I'm going to ask you about--you made three recommendations701that we should be thinking about and one that I've thought a702lot about but I don't think we talk as much about is the703recycling component of it.704    And if you want to expand on that and how you would think705about it as we think about authorizations, investments, and706recycling. I think you mentioned up to 30 percent of our supply707could come from recycling.708    Mr. Fernandez. Thank you for your question.709    This is not my number. This is the IEA saying that in a few710years 30 percent of our minerals could come from recycled711batteries.712    Right now we don't have enough batteries to recycle but in713a few years we will, and that's huge. I mean, we heard before714that it takes 10, 15, sometimes 20 years for a mine to come on715stream. It's much quicker to do a recycling project.716    The issue has been that there is not enough feed stock in717order to feed recycling right now but so we need to put718together incentives. We need to put together mandates in order719to make sure that that feedstock exists.720    But right now there are companies. The MSP funded and721supported a project in the U.K. a recycling project that the EU722has also supported. There are opportunities right now and it's723yet another opportunity for our private sector to get involved724because there's money to be made here.725    Mr. Bera. Right.726    Senator Manchin, you talked about the various tools that we727have available, whether that's the DFC, EXIM Bank, the Defense728Production Act. Do you want to elaborate a little bit more on729that?730    And, you know, I think one thing as we--this committee goes731through the reauthorization process for DFC what are some732fundamental changes other than we do think we need to increase733the limits?734    Mr. Manchin. Representative Bera, the question you've asked735is a good question because basically what we have is a critical736situation in our country right today.737    National defense authorization would be the way to go right738now because you can accelerate whether it be permitting that739you needed for these projects. Permitting is something we have740worked on very, very diligently.741    We made some inroads but not enough. In order to do that,742to get into the rare earth minerals that we have in our743country, I have always said this. You can't ask other countries744to do what you won't do for yourself.745    If we have a cache of rare earth minerals we should be able746to mine them, we should be able to process, and we should747manufacture, and working with our allies around the world we748should do the same.749    You have got to form a bloc, really, and basically national750defense authorization for defense of our country, and this is751what's at stake right now, can we defend ourselves? Can we have752the defense we need?753    Do we have the critical minerals for that, computers and754chips? Do we have it for our economic growth, compete in AI?755All the things we're competing with right now it's a race,756basically, who's going to lead the 21st century and beyond?757    And the United States has been the leader. It's, basically,758leaderships looked upon from the free world and whether we759survive or not.760    So with that, I think it's critical. Use what you have now761but the big elephant in the room right now is national defense762authorization. Allows you to bypass an awful lot of this and763the determination that we have got to have this done as quickly764as possible, and it could be.765    Mr. Bera. Great.766    And, Under Secretary Fernandez, if my colleague from767California Dr. Ruiz was here, he's bent my ear a lot on, you768know, Lithium Valley, the Salton Sea and the possibilities769there, thinking about just the vast supplies of lithium770potentially there, and doing it in an economically responsible771way.772    I know he's talked to you in the past about this. Would you773want to just expand on the potential? That is one of the774poorest counties in California if not the country and, you775know, doing something like that in a responsible way seems776possible.777    Mr. Fernandez. I'm familiar with that project and that's a778project that, like several other projects in the U.S., is quite779promising and I think we need to find ways of supporting it.780    The senator spoke about permitting. Both sides recognize781that this is a problem. We have got to speed that up. We don't782have the luxury of time.783    The other thing on lithium goes to the question that784Chairwoman Kim asked about oversupply. We have--oversupply is a785temporary problem. Our lithium--our demand for lithium keeps786going up year after year, 10, 20 percent over the last 5 years.787    But the prices go down. Why is that? Because of oversupply.788But if you look at the numbers, if you look at the history, in78910 years the world will need more lithium even with the790overabundance that we have today.791    So what we have to do is find ways to help our industries,792to help our companies, survive the next five to 10 years. It's793almost like a boxer hanging on for that round to end so that794they can take a break.795    And so I think we ought to be looking at lithium and we796ought to be looking at the overabundance problem of something797that we're going to need to deal now but that won't be there,798hopefully, if we do our job right in the next 10 years.799    Mr. Bera. Thank you. I yield back.800    Mrs. Kim.All right. I now recognize the gentlelady from801South Carolina Ms. Biggs.802    Ms. Biggs. Thank you, Madam Chairwoman.803    And my first question is for Senator Manchin. Given804President Trump's March the 20th executive order titled805``Immediate Measures to Increase American Mineral Production,''806to what extent can Congress direct the Development Finance807Corporation to use the authorities available under the Defense808Production Act to finance domestic mining projects?809    Mr. Manchin. Anything we do today from the government we810have to consider the debt of the Nation, I think. It is very811important to all of us.812    But with that being said, how do we partner up with private813is what you're asking and we can do that. I think the MP814project that the President just announced is a very good start.815    Basically, it's a company that was kind of toyed with with816the Chinese forever. They really broke the company, put them in817bankruptcy, took over basically their production, and basically818now we're coming back to where the Federal Government stepped819in to have ownership.820    A company I'm involved with is called Ramaco, just now that821we have announced it mining coal--first coal mine in 70 years822in Wyoming. It has critical minerals in the binding which is a823tremendous opportunity for us to get two for one and that's824going to be something we think is going to be very promising.825    There's others in the United States that we can do but the826Federal Government really has to make--who's going to be the827off take? Is it the Department of Defense? Is it going to be828the private sector and the economy?829    Well, you've got to protect it from the standpoint that830private sector capitalization is going to go where the cheapest831prices are--it's just the way the system works--unless it's832protected by tariffs that does not allow China to dump on us833when you have rare earth, whether it be lithium, granite,834germanium, whatever it may be.835    They can't come in and undercut it to where someone says,836well, in the private sector I'll buy there versus here, and837that's where you offset with your tariffs. That's what we think838the Federal Government can do is they can be the referee.839    They can put the guardrails on that protects us to grow not840just here, with Canada, Australia, some of our leading841partners--Japan--things that they've been able to do.842    So there's an awful lot that we have that people work with843us and be part of--be a partnership versus us trying to do it844by ourself.845    Ms. Biggs. Thank you.846    And the second part what do you feel like are the primary847reasons for DFC's limited success in financing mining and848quarrying projects as evidenced by only a 1.2 percent of its849active projects being in this sector?850    Mr. Manchin. Time. Just time. Permitting. You know, I'll851give you an example. You can start. I'll give you a perfect852example, the Mountain Valley Pipeline, MVP.853    We tried for a long time. It started out as a $3.2 billion854project. Because of litigation and time ended up $8 billion.855Companies won't do that. They just won't unless there's some856certainty, and that's why I encourage all of you, permitting--857we have worked hard over the years, and Congressman Westerman858is a good friend of mine.859    We worked together very closely and we're very--we have a860bill we think is very close to being done. We think you all can861take it across the finish line. It really needs to be done.862    You need to codify that. Even executive orders by the863President with all his good will kind of gets back and forth--864seesaw back and forth in the process of legislation, if you865will.866    But when you codify something it's much more permanent.867That's what I would encourage. And timing is what's killing868everything. They won't go into that unless they know there's869going to be an off take.870    You can't get an off take to finance it unless you know871they're time sensitive. People are not going to invest billions872and billions of dollars knowing they may be strung out seven,87310, 15 years to get something permitted. It has to come to874market quicker than that.875    Ms. Biggs. Thank you so much for your insight.876    And my next question is for Mr. Fannon. A recent report877highlights a critical vulnerability. The U.S. is completely878dependent on imports for 10 essential minerals and over 50879percent reliant on imports for 30 others.880    So these include vital materials like gallium. I think we881have already mentioned a couple--germanium and graphite, which882are crucial for everything from our weapon systems to batteries883and electronics.884    So how important is it that we use supply chain tools885capable of tracking these materials down to the specific bolt886and chip in a system rather than just broad categories, and how887does this level of detail help us pinpoint our vulnerabilities888and precisely what needs fixing to keep our systems889operational?890    Mr. Fannon. Yes, thank you for the question.891    The critical mineral supply chain is remarkably complex and892it is opaque. It is not like--like, oil and gas are--they're893huge commodities. They're liquid. They're widely known. Pricing894is clear.895    When it comes to some of these critical minerals how you do896you even realize price discovery? What is the price and how--897who's exerting that pricing power? It's very difficult even to898understand that, much less the provenance of some of these899things.900    Some of the minerals--these minor but critically important901minerals are actually produced alongside other commodities. The902issue, germanium--the lack of that, there are defense primes903who are in really dire straits because they can't source it.904    Where do they get it? This is an enormous problem. The905challenge we have is also where within the U.S. Government906should that kind of tracking sit. We have--because the907administration--successful administration, the bipartisan issue908of this has elevated the awareness of critical minerals.909    One of the issues now is we have about 15 Federal agencies910asserting some kind of involvement. Well, how are we going to911lead that?912    How are we going to coordinate that? I think the913President's designation of the National Energy Dominance914Council is a good start to help coordinate that and, perhaps,915could start that tracking process for those minerals to916understand where are they, where are they coming from, and how917do we get more of them.918    Ms. Biggs. Thank you. And I'm sorry, my time has expired. I919yield back.920    Mrs. Kim. Well, thank you.921    Let me now recognize the gentleman from Maryland Mr.922Olszewski.923    Mr. Olszewski. Thank you, Madam Chair. Thank you, Ranking924Member Bera, and thank you to all of our witnesses today. I925appreciate the focus of this hearing and there's, clearly, no926question that the PRC's control of much of the critical mineral927supply chain makes us more vulnerable.928    And I want to echo Ranking Member Bera's comments about how929I really appreciate the ways in which this has become and930remains a bipartisan concern because it is a serious concern931that our largest global competitor supplies more than 50932percent of demand for 24 critical minerals including more than93390 percent of those rare earth elements as discussed.934    So I think we all agree that the U.S. needs to do more to935do this and I want to thank our witnesses for providing some936suggestions in this space.937    But I also don't want this Congress or this administration938to focus so heavily just on competition that we also lose sight939and disregard the very real labor and human rights abuses that940we know are happening that are so prevalent across the mineral941supply chain, primarily in artisanal and small-scale mines that942operate informally and that are least regulated by governments.943    For example, reports suggest that major Chinese critical944mineral producers use forced labor programs in the Uighur945region. Across the DRC there are as many as 40,000 child946laborers in its cobalt mines.947    And so, sadly, while I applaud some of the actions taken by948the administration in this space, some of the tools that are949really important in addressing these concerns have actually950been taken away by this administration.951    Just two quick examples. Many of the grant programs within952the Department of Labor's Bureau of International Labor Affairs953has been cut.954    We know these are programs that have played a critical role955in addressing forced labor and human trafficking across the956world. This administration has also paused enforcement of the957Foreign Corrupt Practices Act, which has helped expose958corruption in business practices.959    So I'm a member that believes we need all of the tools at960our disposal to strengthen access to critical minerals but I961also believe that goes hand in glove with our responsibility to962ensure this is a sector that drives equitable growth, supports963local communities, and is not built on the back of exploiting964laborers and especially not exploiting children.965    So as our President ushers in a more transactional foreign966policy I want to make sure that our investments are also967staying aligned with our values.968    I'll start with you, Mr. Fernandez, in terms of questions.969How do we strike that balance? How do we ensure that U.S.970efforts to diversify our critical mineral supply chains don't971come at the expense of human rights and transparency?972    Mr. Fernandez. Thank you for your question.973    Look, there is no--there's no conflict here. Good business974practices, responsible business practices, are our calling975card. If you talk to African leaders they want alternatives.976They want alternatives to the PRC.977    We're not forcing them to do that. We're basically--they978are basically saying to us, we want what they call979beneficiation. They want value added investments, not just980mining. They're looking for good labor practices. They complain981that the PRC brings their own workers and takes the minerals982back home.983    So they want those kinds of--those kinds of practices. It984is our calling card. I've had African leaders get up and give985me a hug when I talk to them about what we'd like to do for986communities.987    There are lots of projects around the world that simply988don't see the light of day because communities oppose them.989They oppose them because of what you mentioned.990    So I don't see a conflict here. In fact, I see it as a991business opportunity. I see it as part of what--our offer. Why992is our offer better?993    Because we will not engage in the race to the bottom. We994will not win a race to the bottom. We will engage in the race995to the top. And if we do that I'll take my chances.996    Mr. Olszewski. Yes, good opportunity to both advance997American interests but also do the right thing for humanity.998    I think I'll have time for one more question so I'll turn999to workforce. We know that over half of the U.S. mining1000workforce, about 220,000 people, is projected to retire in the1001next 5 years.1002    As we think about domestic production we should be1003concerned about that. We also know the number of mining and1004mineral engineering programs in the U.S. has dropped from 25 in10051982 to 15 in 2023, a very stark contrast to China which1006actually has seen an increase in terms of their engineering1007programs.1008    Senator Manchin, I know this is an issue you led on in the1009Senate quite a bit. How do you think we should address the1010critical talent gap so that Congress is doing all that we can1011to ensure that we're building a workforce to address the need?1012    Mr. Manchin. Well, we would encourage you all to pass the1013Mining Schools Act that we sent over and I think you all took1014it under consideration and maybe ran out of time.1015    That's an easy one to pick up and run with right now, which1016puts us back into the game as far as educating the workforce1017we're going to need for the future.1018    If I can just say something about what you said before. The1019bottom line is supply and demand. There's a tremendous demand1020for the products that China is supplying. People really, when1021push comes to shove, they don't worry a whole lot.1022    They just want that product and they're paying prices for1023it, and humans are paying a price--a horrific price. Until we1024get into the game with our allies in the free world you're not1025going to offset that.1026    We have to give an alternative and then protect it with,1027basically, tariffs so they can't come in and destroy our1028markets. Then you can put that.1029    But also we have so many restrictions and obligations that1030we put on businesses doing business within our sphere of the1031free world that it makes it more difficult, time consuming, and1032costly. That's what we have to protect to be more efficient.1033    But the bottom line is supply and demand is what drives it1034all. But the act that we have--I think you all have that--that1035we're happy to reintroduce it if I can't get some of our1036friends to hand it right back to you all.1037    Mr. Olszewski. Appreciate that. Sounds like we have to get1038to work. I know I'm over time. So with that, Madam Chair, I1039yield back. Thank you all.1040    Mrs. Kim.I now recognize the gentleman from Pennsylvania1041Mr. Mackenzie.1042    Mr. Mackenzie. Thank you, Madam Chair, and thank you to all1043of our panelists for being here today. Very important topic1044about critical minerals, their importance for Americans'1045safety, security, economic prosperity, and also the challenge1046that we face with China and their control over key parts of the1047supply chain. So thank you all for being here.1048    My first question is how is China currently leveraging its1049control over the supply chain against us and our allies? Is it1050mostly focused on economic control or is there also a national1051security element that they are laying a trap for us?1052    And I'll go to any of the panelists who want to start.1053    Mr. Manchin. Well, I mean, they started a long time ago.1054This is back in the 1990's when they saw something that they1055thought they could control and get involved with and they're1056doing the jobs that nobody else wanted to do.1057    The refining they do is basically extremely harmful to the1058environment to a certain extent that we wouldn't accept that at1059all. With that being said, they don't have anybody to answer1060to.1061    You know, their form of government basically allows them to1062do as they wish and they've been able to basically capture a1063market.1064    Says, listen, you send all your product to us. They go over1065and do the mining--send their people over to do the mining.1066Send it back to China to do the processing and refining. No one1067else is willing to do it.1068    And there is ways to do that. You know, there's technology1069that can do it much cleaner, much more safer for the1070environment and for the workers. But they dominated that market1071and had a 20-year start on all of us.1072    So how do you get that? You can't say, well, we can't sit1073back and just accept what it is. We can get into the game very1074quickly. I think President Trump is in Pennsylvania today in1075your beautiful State right next door to my State and,1076hopefully, energy is going to be the topic of what they talk1077about today.1078    And I think you're going to find some private sector1079willing to jump into the market now to accelerate that with the1080help of the government.1081    Mr. Mackenzie. Mr. Fernandez?1082    Mr. Fernandez. Congressman, they're using it right now with1083seven heavy rare earth materials. It's being used as we speak.1084But it's more than that. It's not just the exercise of that1085dominance. It's the threat of that dominance.1086    There are many countries out there that will tell you, we1087do not want to do certain things because the PRC will take--1088will retaliate. And so just that threat sometimes is enough to1089change behavior among our allies and partners. So it's got to1090go beyond the actual public bans--export bans and export1091restrictions.1092    Mr. Mackenzie. Mr. Fannon?1093    Mr. Fannon. Yes, I just would just add to that the IEA did1094a did a N1 analysis to look at what are--what's the1095availability of global supplies if you take out China, and it's1096only about 35 percent for a lot of these minerals--35 to 501097percent of available global supplies as of right now.1098    That changes the entire psychology of when countries1099interact with one another. They don't want to offend the1100supplier. So, like, Germany for years claimed that Russia was a1101reliable gas supplier until they weren't.1102    It's the same. It changes--why were they unable to do it?1103Just because so much of their economy was linked to having1104cheap gas to fuel their manufacturing base. The same now that,1105like, in German--Russia gas now we're America critical minerals1106with China.1107    We need to reverse that. I think we have the ability to do1108it as has been discussed. We just have to move forward and1109execute quickly.1110    Mr. Mackenzie. Well, I appreciate all of your comments,1111clearly, a recognition of the problem that we're facing with1112China's control of the supply chain so--and the way that1113they're using it and leveraging it against us.1114    We have heard some great suggestions about improving1115permitting, increasing partnerships with our allies. My1116question is there has been some discussion around one component1117of a solution being that the U.S. establish a strategic1118minerals reserve or a critical minerals reserve.1119    I would love to hear any of your thoughts on that as1120something that we could do to address this challenge.1121    Mr. Manchin. Up to about 20, 30 years ago we used to have1122critical mineral reserves. You can go around the country and1123find different deposits of it and that was eliminated after the1124cold war.1125    Thought it wasn't needed anymore, which is a bad mistake.1126You know, I guess everyone's at fault of that but never thought1127it was needed. But that was changed--changed everything.1128    So that would be something that we should do but we have1129got to get to production first. Look at what we did with LNG.1130We were able to do something with LNGs quicker than anything1131that's ever been done, ever thought we could do, and now we1132replaced most of Russia's oil and gas that was going into our1133allies and U.K. and all that, you know, with what we were able1134to do because we were able to put that into the market. We1135could do the same here if we work collaboration.1136    Mr. Fannon. Yes, I think it's a crucial issue. We have a1137national defense stockpile that exists but it's remarkably1138underfunded. There's very little in it.1139    The other thing I think it's important to distinguish is,1140you know, we talk about the defense industrial base. I think1141that's a bit of a misnomer. It's just the industrial base. If1142things get hot all of our companies will throw in and be1143involved in an effort.1144    What I think we have to think about is broader. The defense1145uses on an annualized basis about 500 tons of rare earth a1146year. The U.S. economy as a whole is 10,000 tons. We do have a1147stockpile that's for the U.S. economy when it comes to oil, the1148Strategic Petroleum Reserve.1149    The question is do we consider that for the broad1150industrial base for the U.S. economy and then how do you do it.1151It's very, very challenging and I think that as Congress1152considers this and the administration, it's critical to talk to1153the private sector who are experts in this.1154    Also, we're in a how do you fund it, how do you fill it,1155when we're so deficient currently. We're going to have to meet1156our needs and then start, not dissimilar to the question of1157recycling.1158    We need to first have a foundation from which to recycle.1159We first need to have a foundation of resiliency from which to1160build a reserve.1161    Thanks.1162    Mr. Mackenzie. Thank you all. I think it is an important1163conversation that we have, going forward, and appreciate your1164input today.1165    Thank you.1166    Mrs. Kim. Thank you.1167    Let me now recognize the representative from Florida1168Moskowitz since he was here first, with all due respect.1169    Mr. Moskowitz. Thank you, Madam Chairwoman.1170    Senator, good to see you again.1171    Mr. Manchin. Good to see you.1172    Mr. Moskowitz. So some really good questions on this. I1173want to spend my 5 minutes with trying to break this down for1174the American people because being the emergency management1175director during COVID in Florida I saw how the lack of1176manufacturing in this country, the reliance on China, was a1177major detriment in a pandemic.1178    I can't imagine, God forbid, we got into a war in the near1179future, the surprise that the American people would have of the1180things that we, A, don't make here anymore, or B, rely on other1181folks to supply us supplies that could be cutoff.1182    How do we educate the American people? Like, I got to be1183honest, when I started learning about antimony I was, like, is1184that adamantium in ``Wolverine?'' Like, I had no idea. I had no1185idea what it was and then I realized, oh, this is a real1186problem.1187    China has us and they know it and, you know, so what I want1188to spend some time with you guys is how do we tell the American1189people, like, this is kind of wrapped up in the tariff issue1190with China.1191    China is controlling exports--threatening to control1192exports and our U.S. military literally relies on this stuff1193for some of the most critical weapons that we make.1194    And so China has such a huge advantage and I want to talk1195about the stockpile because that was another lesson we learned1196during COVID, right?1197    We went to the cupboard and the cupboards were bare, right?1198That was what we heard. But it was true. It was true. The1199National Strategic Stockpile was empty.1200    Now, they put $2 billion to build a stockpile but that's1201not going to be enough. So I kind of want to open it up. How do1202we educate the American people on the national security risk1203and why this is so important?1204    Senator, I'll give you the first bite at that.1205    Mr. Manchin. Well, thank you so much, and, you know, I1206would just take off of that. If history--knowing our history if1207you want to read one book that tells you how we became the1208superpower of the world, how we won World War II, how we were1209able to be the armament of the world, we supplied the arms that1210were needed around the world--we outproduced everybody--read1211``Freedom's Forge'' if you want to read one book that tells you1212exactly who we became and how we became who we are today.1213    That would put everything in perspective what we need to do1214now because we're way behind the curve and you went--and1215eloquently went into that. If we don't get back to producing,1216you know--well, you can go back to NAFTA and blame NAFTA. You1217can blame USMC.1218    You can blame anything you want. You can blame 1990's,1219allowing China in the WTO, everything that we allowed to happen1220thinking that we could open up after the wall fell, you know.1221    Mr. Moskowitz. No, and that's exactly right. Like, we could1222go back and----1223    Mr. Manchin. We have been lulled to sleep. That's all.1224    Mr. Moskowitz. We could figure out how we got here.1225    Mr. Manchin. Yes.1226    Mr. Moskowitz. But how do we--the American people have a1227lot going on. There's a lot of incoming, a lot of----1228    Mr. Manchin. We have got to produce.1229    Mr. Moskowitz. A lot of distractions. In the rare earth1230space, especially in antimony, which I want to focus on, how do1231we cut through to the American people to make them understand1232how--what a dangerous situation, quite frankly, we find1233ourselves in in this rare earth space.1234    I supported when the President wanted to sign a deal with1235Ukraine on rare earth minerals. Most Americans were probably1236thinking to themself why are we even talking--why is that part1237of the equation, right?1238    And so we're going to have to--we're never going to1239manufacture this stuff here, you know, with all the1240environmental rules, or even if we try it's going to be such a1241small amount.1242    We're going to have to depend on allies to do that. And1243even if we can find the rare earth we don't have the experience1244to manufacture it. I mean, the Chinese it's literally a closely1245guarded secret.1246    They got specific people with the specific techniques1247that's been passed down through generations of people and they1248are not letting those people leave to go other places to show1249you how you refine this stuff.1250    How do we explain this to the American people?1251    Mr. Fannon. Yes, I think it's--I guess it's really a1252political question because how do you--what I think you're1253asking, Congressman, is how do you get the American people to1254buy in so that they are able to--because it's going to cost1255more eventually to do things in a way that----1256    Mr. Moskowitz. Yes, that's right.1257    Mr. Fannon [continuing]. as we discussed does not offend1258human rights and the environment.1259    Mr. Moskowitz. But that's exactly right. I mean, like,1260look, the White House I've seen them working on this but they1261got to work on the communications piece of this to look the1262American people in the face and say, you want to know why the1263cost of military weapons are going up?1264    Here is why we have to spend more money. You want to know1265why we're doing these tariffs with China? Here is why.1266    Mr. Fernandez, I want to give you a chance before I run out1267of time.1268    Mr. Fernandez. Look, I think we need a little bit of1269humility. It took us a long time to get--to dig this hole and1270we are in a hole. I think you go--you take some examples. Two1271years ago the PRC imposed restrictions on germanium.1272    I had never heard of germanium but turns out germanium is1273needed for semiconductors. At that point we had a problem. We1274literally spoke to a hundred countries and said, do you have1275any extra germanium you can sell to the world?1276    We actually found some through the MSP, 25 percent of the1277world's supply we were able to have. It was just hanging around1278in a country that we'd never heard of.1279    And so I think you've got to go example by example and do1280the same thing we did with--during COVID which is, you know, we1281have a problem that we didn't have active ingredients in that1282supply chain, as you know.1283    But you've got to go--you've got to take a couple of1284examples and say, we have got a problem. And it took us a while1285to get here. It'll take us a while to dig out of this hole.1286    Mrs. Kim. The gentleman's time is up. Great question. Great1287answers. I wish we just had more time.1288    Now let me recognize the gentleman from Guam Mr. Moylan.1289    Mr. Moylan. Thank you, Madam Chair, for setting this timely1290topic especially. Two weeks ago, the Quad 4 Ministers met in1291Washington, DC, and announced the launch of a major new1292initiative, and as they clearly stated reliance on any one1293country for processing and refining critical minerals further1294harms our economic and national security.1295    Given this understanding, we need to strengthen both our1296domestic efforts and international cooperation to build more1297resilient and diversified critical mineral supply chains.1298    As part of the domestic efforts our vast offshore sea bed1299areas has significant potential to boost the supply of critical1300minerals. The Bureau of Ocean Energy Management says the1301Pacific Outer Continental Shelf, including the surrounding area1302of Guam, contains four different mineral deposit types, and if1303we can successfully utilize these resources on a commercial1304scale it will greatly enhance our supply chain resilience and1305national security.1306    I hope this effort will be carried out in a matter of1307respect both local--to local stakeholders and the environment.1308Another important aspect of the international cooperation to1309counter China's dominance in critical minerals, China's abrupt1310restriction of critical material exports caused major1311disruption in global automotive industry and posed serious1312threats to defense equipment suppliers.1313    However, we cannot leave these challenges solely to the1314private entities because, as we know, China employs nonmarket1315practices such as large-scale subsidies and it's extremely1316difficult for private actors to compete on their own.1317    Securing stable and reliable supply chains is an urgent1318issue not only for the U.S. but also international communities.1319So we need to develop a shared strategy and framework among1320like minded countries to build alternative and resilient supply1321chains.1322    So, Mr. Fannon, you have great experience being the first1323Assistant Secretary of State Energy Resources and do you1324believe that the State Department needs additional authorities1325to develop international cooperation and support of private1326sector investment in foreign countries?1327    Mr. Fannon. Thank you, Congressman, for the question.1328    I would say that I think--believe the State Department has1329considerable authorities. What I think what would be useful is1330to increase the authorities of sister agencies, the1331International Development Finance Corporation, over which the1332Secretary of State serves as the chairman.1333    The DFC also is an entity that by its mandate is supposed1334to integrate America's foreign policy as part of their1335investment thesis. So I think that working with the State1336Department and that--the body of the chair could--to empower1337the DFC to do more and that has a significant role for Congress1338in the reauthorization to empower them to do more, increasing1339the investment limits and also to allow for greater equity to1340be invested.1341    I think that will--this capital from the DFC is catalytic1342in the sense that it unlocks other investors. As Jose was1343speaking, other countries want a U.S. investor there but how do1344we get them there?1345    How do we crowd source additional co-investors? And this is1346a critically important tool.1347    Thank you.1348    Mr. Moylan. Thank you.1349    Senator, of course, we know China controls over, roughly,135090 percent and you were talking about this question earlier as1351well of all our critical minerals, but yet we have all these1352minerals spread across the U.S., Australia, and parts of East1353Asia and beyond.1354    So in your view what's the most significant factor that1355enabled China to dominate the market and what's the most urgent1356action that we and our partners should take to counter it?1357    Mr. Manchin. I think, first of all, I want to thank you and1358your wonderful people, your beautiful island of Guam. I've1359slept there many times and just have the most respect for the1360strategic position that you have for our great country in the1361Pacific Rim.1362    Next of all, I think I really, truly believe the Defense1363Production Act--if we announced the Defense Production Act is1364what we're going to use in order to have the defense of our1365country and our economy and all of our allies it would give us1366the catalyst that's going to be needed for the Development1367Finance Corporation to show how determined we are to make sure1368that we're up and running as quickly as humanly possible, be1369able to extract and assist all of our friends around the world1370in the free world, if you will, to contribute toward this.1371    It's going to be a total all in effort. It's not just one1372of us can do it. We cannot get up to speed quickly by ourselves1373without you and all of our friends around the world.1374    That's what we have to rely on and that's really how we can1375protect your markets also with the trade, if you will, tariffs1376protecting so China doesn't come in and distort your markets1377that they've tried to do.1378    We have watched how they've been very aggressive in that1379part of the world, and we're determined basically to defend and1380help you.1381    I would say one more thing, too. Is there some way that--1382when you think about if it wasn't for the ore that China gets1383from Australia right now what kind of a crimp would that put?1384    What kind of a buy would they be on if we were able to--all1385the free world--consume Australia's ore so they wouldn't have1386to go to China for that market? That might be things we could1387do to really put a pinch on them, too.1388    Mr. Moylan. Thank you. Thank you, you all.1389    Thank you, Madam Chair. I yield back.1390    Mrs. Kim.Thank you. I now recognize the representative from1391Rhode Island Mr. Amo.1392    Mr. Amo. Thank you, Chairwoman Kim, and thank you to our1393witnesses for being here including the distinguished former1394senator. It's an honor to be with you.1395    For those watching at home, critical minerals and their1396supply chains are, like the name suggests, critical to our1397national security and American domestic manufacturing1398industries. From cell phones to solar panels to our most1399sensitive defense technologies, we rely on critical minerals1400every day.1401    But as you know, China is the dominant processor of 19 of1402the 20 minerals the International Energy Agency considers key1403minerals and China has 70 percent of the global processing1404capabilities for these minerals.1405    Through export controls the CCP wields access to these1406minerals to advance their global policy goals like a guillotine1407over everyone's head.1408    In December 2024, China banned the export of gallium,1409germanium, and antimony to the U.S. In February 2025 China1410further restricted exports of tungsten, tellurium, bismuth,1411indium, and other minerals, and in April 2025 China cracked1412down on the exports of seven heavy rare earth and magnets1413derived from them: dysprosium, gadolinium, lutetium, samarium,1414scandium, terbium, and so on.1415    And now, you know, the fact of the matter is most1416Americans, the folks that we're talking to at home, have not1417heard these names since studying the periodic table and even1418then I'm not sure they stored them to memory in their high1419school science classes.1420    But it's important to break this down for the American1421people. It's critical because of the semiconductor,1422telecommunication, defense, and renewable energy industries.1423People around the country need to know this critical impact.1424    Thankfully, President Biden understood the importance of1425securing our critical mineral supply chains. Under his1426leadership the State Department worked with the Development1427Finance Corporation and our allies to ensure that American1428businesses were shielded from the CCP's market pressures.1429    In 2022 we established the Mineral Security Partnership,1430the State Department program that was dedicated to accelerating1431the development of diverse critical mineral supply chains free1432from China's control.1433    But we have a challenge at hand because the Trump1434administration has gone forward with reductions in force that1435can have an impact that undermines all of these efforts, this1436awareness that we do have in a bipartisan way to have access to1437critical minerals.1438    And we saw just last Friday the State Department lose1439through their reduction in force and firing of 1,300 employees1440as a part of a plan to shrink that workforce in a way that is1441not thoughtful, and instead of working to secure our critical1442mineral supply chains Trump is firing experts and causing those1443remaining to be distracted by fear for their jobs instead of1444focusing on American interests, and it is a real distraction.1445    So, Under Secretary Fernandez, you know, I'd love to hear1446from you how these reductions in force harm State's work with1447other Federal agencies like the DFC to help American businesses1448secure our supply chains and what should we be doing to work1449with DFC to continue to play a supporting role in securing1450critical mineral supply chains?1451    Mr. Fernandez. Thank you for your question.1452    We could talk for a long time about this and I'll be brief.1453    This has got to be a bipartisan issue because it's a1454bipartisan problem. It's also an international problem. Our1455allies and partners understand that this is a problem, which is1456why we need a strategy.1457    Part of that strategy has to be--has to include the DFC.1458The DFC was a very good partner in the Mineral Security1459Partnership. Why? Because funding is often the problem that we1460all need to crack.1461    There are a number of changes in the DFC authorization1462that, in my eyes, would help the equity scoring, for example.1463They have--there's a penalty for investing in equity.1464    The number of countries, the types of countries they can1465finance projects in upper middle income countries are a1466problem. Argentina and Chile have the world's largest deposits1467of lithium and, yet, the DFC can't work in those two countries.1468    And so we have got to find a strategy that turns the DFC1469loose, that allows us to use all of the tools at our disposal,1470EXIM Bank and TBA as well, and I think that's what the MSP did1471and, frankly, we had very good cooperation from the DFC.1472    Mr. Amo. Thank you. My time has expired so I'll yield back.1473    Mrs. Kim. I now recognize the gentleman from Kentucky Mr.1474Barr for 5 minutes.1475    Mr. Barr. Thank you all. Thanks to our witnesses. Senator,1476good to see you again----1477    Mr. Manchin. You, too.1478    Mr. Barr [continuing]. my neighbor from West Virginia and I1479want to talk about West Virginia and Kentucky coal in a minute.1480But let's just frame the problem.1481    Today, China accounts for 70 percent of global rare earth1482element mining, 92 percent of rare earth refining, and 901483percent of rare earth magnet production.1484    It controls 99 percent of global gallium refining, which is1485a key material for advanced microelectronics used in U.S.1486defense systems, and this is a real concern because, as you1487know, in April China imposed export restrictions on seven of 171488rare earths, many of which--many of which are essential for1489U.S. defense platforms such as the F-35 fighter which contains1490920-plus pounds of rare earths per unit, Tomahawk cruise1491missiles, and joint direct attack munition smart bombs.1492    U.S. defense firms such as Raytheon, Honeywell, Lockheed1493Martin face supply delays, rising costs, and potential1494production halts. So breaking China's choke hold on these1495critical mineral supply chains will require more domestic1496production.1497    Senator Manchin, you know this well. The Department of1498Energy estimates that recoverable coal, coal ash, and coal1499waste in the United States contains between 11 and 17 million1500metric tons of rare earth elements.1501    U.S. consumption last year was just 8,800 metric tons. So1502we're talking about a domestic resource of rare earths that1503contains over a thousand times our annual demand for rare1504earths.1505    Given that scale, Senator Manchin, wouldn't it be a1506strategic failure not to include coal-based mineral recovery1507from West Virginia, Kentucky, Wyoming, Pennsylvania, across1508this great fruited plain as a core pillar of our national1509critical mineral policy?1510    Mr. Manchin. Well, thank you, and I think both of our1511respective states, both of our universities, are working very1512closely on this now as far as extraction from our waste--from1513our coal finds--things of that sort, and also water coming from1514coal mines.1515    All that stuff can be turned into a tremendous value for1516our country and we're looking at that too and the cost of that1517versus with some new mining. I just said earlier that I'm1518involved with a company called Ramaco, basically, who's coal1519mining.1520    They're going to open a new coal mine in Wyoming, first one1521in 70 years, and with that in the bindings, as people know1522layers between the coal, there's an awful lot of critical1523minerals in that, too, which is a great opportunity for us.1524    So I think in all of this we have to do everything that we1525can. The bottom line is is that we can't make it more difficult1526for companies in the U.S. through the permitting constraints1527that happen for us to do what we need to do.1528    If we can get that accelerated that's going to help us1529tremendously on that and I think there's a lot of inroads being1530made.1531    Mr. Barr. Yes, and I've introduced a bill that would help1532my constituent company you referred to, Ramaco, expedite the1533permitting there. I know you were a real leader in reforming1534Federal permitting laws but there--in the Senate but we--1535there's more work to be done there.1536    I do have a bill called the RESCUE Act which I would1537share--I would urge my colleagues to support which would use1538that Fast-41 streamlining process for--streamline permitting1539for rare earth extraction from coal. I think that's important.1540    But also, Senator Manchin, speak to the potential of using1541the Defense Production Act. I don't know if you've thought1542about that--the Defense Production Act--to cut through all this1543red tape to allow for coal mining or extraction of rare earths1544from coal.1545    Mr. Manchin. I definitely have been speaking about defense1546production. I think it's the one tool that shows the urgency1547that we have in our country to defend ourselves and be able to1548help our allies.1549    The other thing is the permitting process. Congressman1550Westerman and I worked very, very hard and very close and got1551very close last year, right down to the final bell when the1552bell rang.1553    There's a piece of legislation I think that you all could1554take and run with very quickly. We passed it in the Senate. It1555came out of our committee basically 15 to four the first time,1556a bipartisan overhaul working with Senator John Barrasso, our1557Republican and Democrat colleagues seeing the need for this.1558    Hopefully, you all can take it and make some changes if you1559need, whatever would be helpful.1560    Judicial reform was the big thing in permitting. The courts1561will hold you up no matter what you try to do. The courts can1562hold you up for infinity and just wear you out price wise.1563    Mr. Barr. That's why we might need to cut through that with1564the Defense Production Act.1565    Mr. Manchin. Well, I hope you can.1566    Mr. Barr. Thank you for your leadership on that.1567    Mr. Fannon, let me just ask you real quick. You answered1568Mr. Moylan's question well on the potency of DFC in alternative1569critical mineral supply chains.1570    What about the Office of Strategic Capital at the1571Department of Defense also supplementing the catalytic1572opportunities for supply chain resiliency outside of the United1573States?1574    Mr. Fannon. I think it's an incredible tool that hasn't1575really been utilized yet. I think it's time to get that tool1576out of the toolbox and start using it.1577    I would also say one of the--the construct of the OSC is1578only--it's only debt. It only provides debt. I think that we1579talked about fixing the equity fix in the DFC.1580    I would propose, respectfully, that you consider OSC have1581some equity authority as well. It makes all the sense in the1582world.1583    There is a huge level of dry powder there and also they1584need help getting that organization up and running and really1585moving forward. But it's an amazing tool that needs to be used.1586    Thank you.1587    Mr. Barr. Thank you for your time. I yield back.1588    Mrs. Kim. Thank you.1589    I now recognize the gentleman from Montana Mr. Downing for15905 minutes of questioning.1591    Mr. Downing. Thank you, Madam Chair, and thank you for1592allowing me to waive into this hearing on such an important1593topic, and thank you for the--to the witnesses for being here.1594    In my home district I've got central and eastern Montana.1595You know, we have seen firsthand the ability of American1596adversaries to dominate and manipulate critical minerals1597markets.1598    You know, the Stillwater Mine in Stillwater County,1599Montana, is the United States' only platinum and palladium mine1600and has been the victim of deliberate market manipulation by1601Russia.1602    Russia's dumping of cheap minerals into the international1603market forced the Sibanye-Stillwater--he owners of the mine to1604scale back its operations and lay off 700 well-paid workers at1605the end of last year. Obviously, it's had an incredible impact1606on my district in those counties.1607    So China employs similar manipulative tactics to an even1608greater degree in order to promote dependence and freeze out1609competition.1610    So I'm going to start with Mr. Fannon. In your testimony1611you discuss how China will eagerly manipulate the global1612critical minerals market by restricting supplies on one hand1613and dumping them later to kill off growing competition.1614    Can you elaborate on the degree to which global market1615manipulation is part of China's overall critical mineral1616strategy?1617    Mr. Fannon. Yes, thank you for the question. This is a play1618book that they have used and deployed multiple times, really,1619since 2010 when they first banned the export of rare earths.1620    At the time, President Obama initiated a WTO challenge1621against China. It took years for that case to go through the1622WTO process. In the interim period China dumped material onto1623the market, crashed prices, and sent the one company--rare1624earth company into bankruptcy.1625    A few years ago, China--Xi Jinping said he didn't like the1626way cobalt was being priced and announced he was going to look1627into that.1628    The one cobalt mine in the development project in the State1629of Idaho that was starting to ramp up the U.S. Government was1630an investor in announced that they were going into care and1631maintenance because the prices crashed.1632    Just the signal that China has, because it's not just that1633they're the biggest producer. It's also important to recognize1634they're also the largest purchaser.1635    Mr. Downing. Right.1636    Mr. Fannon. So they're working it on both sides of the1637ledger, which gives them massive, massive pricing power and it1638goes back to this price discovery challenge we have with China.1639    Mr. Downing. Thank you.1640    With regard to combating Russian dumping, I introduced the1641Stop Russian Market Manipulation Act. It's a bill to ban the1642importation of platinum and palladium from Russia.1643    And I'll go to the whole panel on this one. What steps can1644Congress take in order to combat similar efforts by Chinese1645producers to dominate the international market and crush1646American competition?1647    Mr. Manchin. So trade and tariffs are the thing I think1648which--it's your tool and the tool we have in our great1649country, basically.1650    Tariffs should be used as an incentive and a protection,1651protection, basically, of your building blocks and we talked1652about this earlier. The building blocks--we have to have what1653you're producing in Montana. We have to have that. The free1654world has to have that.1655    But unless you're protected against the unfair practices of1656China and countries of concern, whether it be Russia, China,1657North Korea, Iran, they're never going to have our interests.1658They're never going to have our view.1659    And with that you have to protect against them coming in1660and distorting our markets. That's where the tariffs can be1661used to protect building blocks.1662    Mr. Downing. Thank you. Any further comments?1663    Mr. Fannon?1664    Mr. Fannon. Yes, I would just--I would just say I would1665look to--we could shift the presumption. I think Congress1666already made a pretty important passed legislation in the1667Uyghur Forced Labor Prevention Act, which created a presumption1668that if material--something's being produced in Xinjiang region1669it was presumed to be tainted and it requires Chinese suppliers1670to disclose where they're--their methods.1671    I think we could apply that thinking into the critical1672minerals debate. You don't have to do anything, just ask them1673to start to disclose.1674    U.S. mining companies are remarkably transparent and they1675disclose all this stuff all the time in response to government,1676in response to the NGO community, and other interested1677stakeholders. Why aren't we asking the Chinese to do the same1678thing?1679    Thank you.1680    Mr. Downing. Thank you. Mr. Fernandez?1681    Mr. Fernandez. Thank you.1682    As I mentioned earlier, this is what a monopolist does. It1683floods the market. It cuts out the competitors. It's not just1684only in Montana but Australian mines have closed. Mines1685throughout the world have closed because of Chinese oversupply.1686    I think tariffs are a tool. I would caution the overuse of1687tariffs. If we don't have the minerals in our country to1688replace those then it doesn't do us any good. But in the case1689of minerals that we do have I think tariffs are one of the1690tools that we have in our toolbox.1691    Mr. Downing. Well, thank you. I've got a lot more but,1692unfortunately, I've run out of time.1693    So Madam Chair, I yield.1694    Mrs. Kim.Thank you. We have some time for a second round of1695questioning if the witnesses are OK to stay with us a little1696longer.1697    Great. So let me first start with followup questions from1698what we were discussing earlier regarding the use of the1699Defense Production Act.1700    I know, Senator, you just mentioned that you had1701legislation in the Senate. I would love to take a look at it1702because I also serve on the House Financial Services Committee1703Subcommittee on National Security and Illicit Finance and we1704are trying to work for a modernized DPA.1705    So your input today as well as giving us some suggestions1706and recommendations on that regard is greatly appreciated.1707    So if you want to just talk about that, just quickly.1708    Mr. Manchin. Well, Madam Chair, first of all, I have two1709other articles I'd like to present for the consideration of the1710committee which gives a breakdown on the background of critical1711minerals and mineral sectors, and also the partners' critical1712minerals supply chain by country, the largest producers outside1713of China so we know we can get these two things. I think they'd1714be helpful.1715    We'll share also with you, as we talked about, the1716workforce, what we have done in that, and also the comparison1717we have done with some other bills.1718    Happy to share all that with you. I'll make sure that Peter1719back here gets it to you, OK, to----1720    Mrs. Kim.Thank you very much. Thank you.1721    And then as we are talking about breaking the chokehold on1722China's dominance on critical minerals, rare earth elements,1723mining, producing, manufacturing, we just recently saw the1724announcement coming from the administration that the Defense1725Department will be the largest shareholder of our--probably the1726biggest rare earth producer, MP Materials.1727    So I just wanted you to comment on that a little bit1728because we also saw this morning Amazon--no, Apple, its big1729investment in the field as well.1730    So can you, Mr. Fannon, talk about what we can learn from1731this deal?1732    Mr. Fannon. Yes, thank you. I would say that this deal is1733absolutely transformative in terms of the boldness and the1734scope, given that it's not just an investment but also over1735time off take and also price security, I would say.1736    The Apple point is--I saw that announcement too where Apple1737is going to invest as well because they want these magnets,1738which is critical to their business. And so what I think that1739the lesson here is there's a role for the U.S. Government as an1740investor in these projects, first, whether in the United States1741or internationally.1742    But also the lesson is that if there's an alternative1743supply chain then U.S. companies will source from it. The move1744by the Defense Department is answering the chicken or egg1745problem, I would say, and so now we see a major investor coming1746in.1747    I think that this is a model, whether it's the Defense1748Department, the DFC, any other variety of other investors from1749the U.S. side. But it's that derisking where you'll see those1750off takes and other co-investments. And so I think it's1751absolutely transformative.1752    Thank you.1753    Mr. Manchin. Madam Chair, if I could say one thing.1754    Mrs. Kim. Yes, go ahead.1755    Mr. Manchin. I think basically with the Federal Government,1756as you saw, made the announcement last week into MP which is1757what it's about, when you see an off take coming to the Federal1758Government guaranteed by we're going to be needing this product1759and we're only going to buy it from an American producer1760changed the whole dynamic and that allowed Apple and other1761people with large sums of money that can invest, knowing it's1762going to be protected and basically used within our own system.1763    Mrs. Kim. Got it.1764    Well, we also, I mean, we--go ahead. Sorry about that, Mr.1765Fernandez.1766    Mr. Fernandez. Just quickly.1767    There are a couple of successful examples of the DPA being1768used in Canada for critical minerals and that was done during1769the Biden administration. I would suggest you look at that.1770Those were successful.1771    Also, the--one of the beauties of the--of a deal with MP is1772that it actually--in the past what we have done is we1773privatized the gains and socialized the losses.1774    What this does is it actually makes the U.S. Government a1775partner in the success and I would--and I would look at that as1776an example, going forward. It's not going to replace the1777private sector but it certainly can be an early stage investor.1778    Mrs. Kim. Sure. Well, thank you so much, all of you, for1779that.1780    Again, during our discussion we also talked about the role1781of DFC playing a bigger role in this space. So our subcommittee1782is also charged with reauthorizing DFC this--before this fall1783and we hope to do this soon.1784    So we are looking at equity fix. We are also looking at1785expanding the countries that we can utilize our DFC in.1786    So if you can talk about how that can be important tool,1787going forward. Obviously, domestic production is critically1788needed. We all established that. But we also need to work with1789our allies and partners in the region.1790    So how can this be a critical tool in our also diplomatic1791toolkit? Go ahead, Mr. Fernandez.1792    Mr. Fernandez. If I may.1793    I've already talked about the need to fix the equity issue1794and also the need to expand the number of countries. Another--1795something we did as part of the Mineral Security Partnership is1796we created a finance network and it is--so I would urge the DFC1797as well as EXIM and others to spend more time with their--with1798their counterparts in other countries.1799    Why? Sometimes they can band together to derisk some of1800these projects but also just by sharing projects. There may be1801a project that the DFC is not interested in and you'd be1802surprised how often they wouldn't talk to their counterparts1803because they might be competitors.1804    And so I would urge more involvement in terms of just1805exchanging projects, which is what the private sector does1806often.1807    Mrs. Kim. I know my time is up and I want to turn it over1808to my ranking member to ask more questions but, hopefully, we1809can continue that conversation about some of the projects that1810our private sector can be encouraged and enticed to invest in1811utilizing our tools like DFC and so forth.1812    Go ahead.1813    Mr. Manchin. Madam Chair, one final thing.1814    Access to capital is the mother's milk of production.1815Without capital they can't produce or they won't come to1816fruition.1817    So that's what--access to capital in every way, shape and1818form is going to make the difference whether we produce in time1819or we don't.1820    Mrs. Kim. Thank you.1821    Ranking Member?1822    Mr. Bera. And just for those watching at home, antimony is1823atomic number 51 on the periodic table with a symbol of SB.1824Just in case I ever make it on ``Jeopardy'' that's important1825information.1826    I'm old enough to remember the energy crisis of the 1970's,1827just the long lines of folks waiting to fill up their cars with1828gasoline, and we responded as a Nation, right?1829    We created the Strategic Petroleum Reserve, which has been1830used now over the last few decades to smooth out markets to1831address this.1832    You know, we're doing the same in APIs. You know,1833Representative Moskowitz talked about COVID and, you know, we1834realized very quickly our pharmaceutical industry was overly1835dependent in this case, again, on the PRC for those APIs.1836    We do have a national defense stockpile for rare earths and1837critical minerals that, again, has been alluded to. It's1838woefully inadequate at this juncture. Again, I'm not a1839complicated person but if prices are at historic lows it would1840seem to me that now would be the time for us to actually be1841gobbling up that market and creating that national stockpile.1842    Maybe, Under Secretary Fernandez, you were in an1843administration and, again, it doesn't seem like rocket science.1844And then maybe Senator Manchin, since you're a fellow1845legislator, why is it that we seem to be lethargic in terms of1846recognize--we know the risk.1847    It's not a partisan issue. What's holding us back from1848actually very intentionally going in and creating the1849stockpile?1850    Mr. Fernandez. Well, I remember talking about it. Frankly,1851there was a lot of talk but not a lot of action. The funding is1852an issue and also I think we have been slow to realize the1853vulnerability.1854    But I do think your suggestion that we consider it is one1855that the time is now because, you know, when you're as far1856behind as we are you need all hands on deck.1857    You need everyone on board, and unless we move quickly,1858unless we do what, for example, the senator just mentioned in1859terms of permitting, takes us 10 to 20 years to build a mine.1860    We can't continue operating that way. So it's all of the1861above and all hands on deck.1862    Mr. Manchin. I think timing--I think, Congressman Bera,1863timing is the thing and uncertainty is the cost that no one can1864factor in.1865    Those are the two things that really--permitting, like you1866said, from that standpoint the people jumping in, a lot of1867people litigation--they know they're going through litigation.1868You know, we're a litigious type of mentality, good in certain1869areas for protection but also overdone in so many areas that1870stymies it.1871    Mr. Bera. Yes. So there's nothing that prevents us from1872doing both of these things, right? Because we can build the1873stockpile immediately if we were to appropriate the right1874resources and funds, which it sounds like we really ought to1875do, and then opening the mines.1876    Doing the permitting reform will take a little bit longer1877but, you know, earlier in this Congress in a bipartisan way we1878passed the Fix Our Forests Act.1879    Now, not necessarily the same thing but it was bipartisan.1880You know, a lot of us as Democrats got tired of watching our1881forests burn, certainly in California. It has NEPA reforms in1882there, et cetera.1883    So we can do permitting reforms. You know, again, might be1884easier under a Republican administration.1885    Mr. Manchin. We have the urgency now that we had with that,1886right now.1887    Mr. Bera. Absolutely. Again, what I would urge my1888Republican colleagues to do is now is the time. I'm not asking1889to meet at the 50-yard line.1890    We're not--we don't have the White House. We don't have the1891majorities in the Senate or the House. But don't take us to the1892end zone. Like, we can meet at the 35-yard line. We can do this1893if we're willing to negotiate.1894    And, Senator Manchin, you did lead some of these efforts in1895the Senate. So maybe that is the starting point.1896    Mr. Manchin. We have got some--yes, we have some good--1897we're going to share that with you all what we had done and1898what we have come close to doing.1899    Mr. Bera. Yes, and we ought to do it.1900    Mr. Fannon, do you want to add anything on the petroleum1901reserves or the defense stockpile or permitting reform?1902    Mr. Fannon. Yes, I think the--I think it's important to1903acknowledge the administration has started to talk about1904permitting reform. It has some executive orders to try to1905shorten some of these time horizons.1906    I think the point about--you made about the forests is a1907good one. You decided to pass this legislation and move this1908bill--bipartisan bill because you saw a crisis, and the crisis1909was real. It was material. It was--you know, the smoke was1910around your house. People acted.1911    I think we need to--this goes back to an earlier comment.1912This is a political problem. How do we create that sense of1913urgency with the American people that the smoke is around the1914house to create that move and I think once you do that then1915we'll see some action. I think we're starting that now.1916    Mr. Bera. Right. Thank you. I yield back.1917    Mr. Moylan.1918    [Presiding.] Thank you.1919    The chair now recognizes Representative Sherman from1920California for 5 minutes.1921    Mr. Sherman. China controls most of this market. Is that1922because China is uniquely blessed by ores of all these rare1923earth minerals or is that just because China decades ago1924decided to do the mining, which is difficult, and the1925processing, which I believe is even more difficult?1926    I'll ask any of the witnesses.1927    Mr. Manchin. Let me just say, if I can, very quickly1928everything you just said was correct. They did something nobody1929else wanted to do, and if you won't do it in your own backyard1930don't expect someone else to do it.1931    China took--filled the void and they saw it back when we1932got into the WTO in the 1990's and they went afterward and they1933captured some markets and basically hold it hostage and they've1934done it extremely, extremely efficient.1935    Mr. Sherman. But it's--but other countries in the world1936have the ore deposits and could have done it. China did it.1937    Mr. Manchin. China put the resources to it.1938    Mr. Sherman. Got you.1939    Mr. Manchin. They put the money to it.1940    Mr. Sherman. There are those who advocate us--that America1941should have a strategic crypto currency.1942    What? I guess one of our witnesses needed to leave.1943    A crypto currency reserve, which seems bizarre. I've never1944heard of a short of crypto currency. As a matter of fact, if1945you want to get some Mongoose Coin or some Skibidi Toilet Coin1946that's available to you right away as are all the currencies.1947    Do we have a rare earth minerals strategic reserve of any1948significance?1949    Mr. Fannon. We have a defense reserve which is woefully1950underfunded and not terribly well stocked wherein there's some1951critical minerals I don't have insight into what the volume is.1952    Mr. Sherman. And that's not designed to support our1953economy. That's just designed to allow us to make weapons that1954we might not otherwise----1955    Mr. Fannon. It's still for defense.1956    Mr. Sherman. And I'd point out we have a Strategic1957Petroleum Reserve that we should be refilling now because oil1958is under $70 in both administrations. Particularly the prior1959ones said that they would refill the reserve when oil went1960below $70 and that hasn't been done. But we continue to hold1961over $10 billion worth of crypto currency for reasons I have1962yet to figure out.1963    China wants us to give them--sell them the most advanced1964chips. Nvidia is apparently going to be allowed to do that. To1965what extent did they get that incredible concession from us1966because otherwise they wouldn't sell us the rare earth1967minerals?1968    Was that their big--their big stick?1969    Mr. Fernandez. I'm not going to--I have no inside1970information on that one but I will say that its dominance--1971China's dominance of critical minerals is a weapon and they1972weaponize it and they're good at it.1973    Mr. Sherman. What other countries are moving toward1974developing rare earth minerals in a major way?1975    Mr. Fannon. Other--Australia is a big--is very much in the1976game. The Japanese are one of the leaders in some of the1977refining and magnet production as well.1978    There's actually joint development programs with those1979three countries already in a company or two. But those would1980be----1981    Mr. Sherman. Now, China has lower labor costs than us and1982most of those other countries. Is a low labor cost critically1983important to being able to be competitive in this business?1984    Mr. Fannon. I think when we talked about the rare earths1985it's more than just the labor. It's also the cost of the1986capital to run the plants, and I think someone has already1987alluded to the way in which they do it is a manner that would1988be objectionable in the United States or in most other Western1989countries.1990    Mr. Sherman. What would be objectionable in the----1991    Mr. Fannon. The way in the way in which they refine the1992rare earths. It's toxic.1993    Mr. Sherman. Oh, you're talking about the local1994environmental impact?1995    Mr. Fannon. Correct. Correct.1996    Mr. Sherman. If you spend a bit more money can you refine1997these minerals and still meet the community standards we expect1998in America?1999    Mr. Fannon. For sure, yes. That's--I think the announcement2000that was talked about earlier MP--the MP announcement--that's2001what they're seeking to do. There are other companies that are2002doing it as well.2003    Mr. Sherman. Thank you.2004    Mr. Fernandez. Of course we can. I mean, it's--it goes back2005to capital and the fact that the PRC has not--doesn't have the2006same standards that we do--environmental standards, labor2007standards.2008    But that's an opportunity. That's why countries follow our2009record.2010    Mr. Sherman. We certainly have capital. Much of it we bring2011in from China.2012    And I'm going to yield back 10 seconds.2013    Mr. Manchin. If I can just say one thing to you.2014    Mr. Sherman. Yes, go ahead.2015    Mr. Manchin. As far as you have the United States, you have2016Canada, and you have Australia, three main caches of where we2017know we have critical minerals we all need, then you have the2018ability of Japan to do the refining and South Korea is coming2019on strong, too.2020    So these are all allies of ours in the free world. It's2021something we should be building an alliance with.2022    Mr. Sherman. Thank you.2023    Mr. Moylan. Thank you.2024    The chair now recognizes Rep. Bera.2025    Mr. Bera. I just want to ask a quick followup question.2026    Absolutely, we can do this. You know, we have talked to the2027Australians a lot about it. We recognize that our price point,2028you know, given the environmental standards and everything2029else, is going to be a little bit higher than where China is.2030    We also recognize that China--you know, Under Secretary2031Fernandez, you've talked about the monopolistic power. I think2032what I worry a little bit about is, you know, this is2033tangential but shareholder activism, right?2034    There's tremendous pressure on boardrooms and companies for2035earnings--quarterly earnings--and it's proven extremely2036difficult for us to move some of our companies that even know2037the vulnerabilities because there is going to be a short-term2038cost here that will impact their quarterly earnings.2039    And we don't have to get into it but I'd just put that one2040out there. That is something that we actually have to also2041think about is the long-term investments that, you know, give2042them long-term profitability as opposed to really the short-2043term investments that drive some of these decisions to continue2044staying invested in China or making further investments in2045China even when they know the long-term vulnerabilities are2046there.2047    So I don't--do you want to talk about that?2048    Mr. Manchin. It's become the American way, which is not2049beneficial for us right now. Basically, everything is return on2050investment.2051    Shareholders demand. It makes very, very bad decisions and2052the bottom line is pay me now or pay me later, and right now2053we're paying the price.2054    And if we don't get in the game pretty quick and we don't2055look past the bottom line right now, if we'd have done that2056during World War II we'd have never won it and we're in that2057same situation right now.2058    It's a life or death matter for the 21st century, our2059children and grandchildren. So we're either going to get2060involved, commit ourselves to making us independent and making2061our supply chain intertwined. If not, God help us.2062    Mr. Fernandez. But it's also, I think, a role that2063government should play, and you're right that there is a short-2064term view. But that's where government support can become2065involved to encourage a longer-term view.2066    If you start from the premise that by 2035, according to2067most experts lithium prices will recover then you're looking at2068a short-term problem and then you need to find a way for--to2069help our companies and our partner countries' companies2070survive.2071    And so that's an opportunity and--but you're right, we do2072have a--if we just let the market run the show the PRC will2073dominate. We have got to find a way of changing that debate.2074    Mr. Fannon. Yes, I would just say that the shareholder2075issue is--of course, plays both ways. It's also one of the2076reasons why it's--some of the--why the mining industry in the2077United States in particular has--and a lot of other places has2078died down and why the best in class miners are reluctant to go2079to many emerging markets because of--there's a fear of2080shareholder activism.2081    There's a fear of going into certain countries because2082there's a perceived--there's a perceived view that political2083risk. There may have been a history.2084    Maybe it's there. But they don't go there and so what--that2085simply leaves those emerging markets susceptible to Chinese2086opaque practices, which is one of the reasons why we're where2087we are.2088    So I think--I think it goes back to the earlier discussion2089about getting the American people to understand where things2090come from and how and differentiate those.2091    Mr. Moylan. OK. With that, I thank the witnesses for their2092valuable testimony and the members for their questions.2093    The members of this subcommittee may have some additional2094questions for the witnesses and we ask you to respond to these2095in writing.2096    Pursuant to committee rules, all members may have 5 days to2097submit statements, questions, and extraneous materials for the2098record, subject to the length and limitations.2099    So without objection, the committee stands adjourned.2100    [Whereupon, at 11:47 a.m., the committee was adjourned.]21012102                                APPENDIX21032104                              ----------21052106               Material Submitted for the Hearing Record2107[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]21082109                                 [all]