Washington

A bipartisan group of US lawmakers has introduced a bill in the Senate to strengthen domestic and allied supply chains for critical minerals to counter China's monopoly over global markets.

The Securing Essential and Critical US Resources and Elements (SECURE) Minerals Act, introduced last week by Republican Senator Todd Young of Indiana and Democratic Senator Jeanne Shaheen of New Hampshire, aims at reducing US dependence on China by supporting domestic production, stabilising markets and encouraging long-term investment through policy-backed mechanisms.

The SECURE Act envisages the establishment of a Strategic Resilience Reserve (SRR) in an independent government corporation, run by a seven-member board appointed by the President and confirmed by the Senate.

The SRR would focus on supporting the critical minerals market, including through stable prices, domestic and allied production (including recycling), stockpiles, competitive markets and supply chain work, with minerals where the US is reliant on China, the bill said.

"China's global dominance of critical minerals supply chains gives it significant leverage and leaves the US vulnerable to economic coercion. This bipartisan legislation is a historic investment in making the US economy more resilient and supporting good-paying jobs in key sectors like aerospace, autos and technology,” Senator Shaheen said in a press release.

Delivering much-needed stability to the market, providing targeted investments and stockpiling key inputs will help insulate the US from foreign threats and will provide a significant, and cost-effective, boost to the American economy, he said.

“For years, China has leveraged its dominance of critical minerals by manipulating global markets and supply chains. Our bill would counter China's ongoing coercion and ensure the United States has a secure and accessible supply of the minerals that power our defence systems and high-tech industries," said Senator Young.

The SRR is a much-needed, aggressive step to protect the US' national and economic security, he said.

According to the mining.com website, a global source for insights into the mining and metals industry, China currently controls over 60 per cent of the world's mined rare earths and about 90 per cent of their processing. The country also holds a major share of the refined production of lithium, graphite and cobalt, all minerals key to electrification, clean energy and defence.

For lithium, China has created a huge glut that has driven down prices globally, rendering many projects in the West unprofitable. In the rare earth sector, it deployed export curbs that have also resulted in high prices.

The proposed legislation asserted that producers of critical minerals and materials in the US often face artificially low prices set by supply chains controlled by China, discouraging private investment in domestic extraction and processing.

"The lack of transparent, competitive, and market-driven pricing mechanisms for critical minerals and materials outside of the People's Republic of China compounds market problems, creating systemic risk and limiting the viability of an independent supply chain for critical minerals and materials in the US," it said.

Underlining that the US is "vulnerable" to supply disruptions, geopolitical tensions, and economic manipulation by countries that dominate the market, specifically China, the bill said that America must ensure that a stable and secure supply chain of essential resources is available to its domestic innovation and manufacturing ecosystems.

"The United States, not communist China, should be leading the way in critical minerals," said Democratic Senator Catherine Cortez Masto, who cosponsored the bill in the Senate along with his Republican colleague Mike Rounds.

The bill has drawn backing from a wide range of industry groups, policy organisations, academic institutions and companies, including the Alliance for Automotive Innovation, the American Critical Minerals Association (ACMA), Arizona State University, Bipartisan Policy Centre Action and the Breakthrough Institute.

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John Bozzella, President and CEO of the Alliance for Automotive Innovation, said reliable access to critical minerals is key to a competitive US auto industry, noting that the legislation could help “lessen reliance on China while strengthening American innovation, manufacturing, jobs and national security”.

ACMA Executive Director Sarah Venuto described the bill as a “meaningful step in countering China's monopoly over global markets,” saying it would help derisk investments, improve price transparency and provide long-term predictability for US producers, processors and consumers.