The United States should better secure key industrial resources, including through subsidies where necessary, in case an adversary like communist China attempts to weaponize them against us. And we must stop subsidizing China’s key industries, including electric vehicles (EVs) and solar panels, from which it draws the economic strength to fund its military.
Gallium and germanium are used in a wide variety of critical electronic products and components necessary for national security, including computer chips, radar, missile systems, and NASA space rovers. They are also used in solar panels and EVs.
While the United States has the raw materials to make these two metals, building refinement capacity could take years. Neither do many of our allies make them. Allied supply chains, and ours, are being disrupted because China suddenly decided to suspend U.S. access.
Despite months of the U.S. supply of gallium and germanium restricted by the Chinese Communist Party (CCP), the U.S. government has done little to secure additional refining capacity. This is left to private companies, which typically only consider short-term profits in their investment calculus rather than longer-term national security issues. They are, therefore, ill-equipped and unincentivized to take the risks entailed in the significant additional investment necessary for gallium and germanium refining, especially considering that after making the investment, China could suddenly reverse its export bans and again dump cheap supply of the two metals into American markets.
Nyrstar is a Dutch company, but that doesn’t matter. What matters from a national security perspective is that Nyrstar is from a country that is part of the U.S. alliance system. It wants to produce gallium and germanium in the United States, which would make it a fully secure part of the U.S. national security supply chain.
However, the U.S. government is not facilitating Nystar’s investment in new refining capacity, which will cost an estimated $190 million over two years. Despite the obvious national security benefits, there has been no guarantee of federal or state subsidies.
The United States could guarantee purchases of the elements over a certain number of years as one approach to decreasing Nyrstar’s risks to the point of making the new capacity profitable. Or, it could directly subsidize the company’s investment costs to reach a minimum level of expected profitability.
Gallium and germanium refinement would support “a couple dozen” more jobs, according to The Wall Street Journal, along with more production of zinc, which is so unprofitable at current rates that Nyrstar had to close down Tennessee production in October. The economy of Tennessee would benefit from the greater predictability and volume of combined zinc, gallium, and germanium production, so the state should pitch in.
Texas and Wyoming are good candidates for federal and state subsidies for mining rare earth elements (REE). The CCP has tried to get a monopoly on REE refinement and could use export controls to tie U.S. national security industries in knots, as it attempted with an REE export ban on Japan in 2010. According to the Journal, the U.S. Geological Survey deems 50 minerals as “‘critical,’ meaning they are essential to the economic or national security of the U.S. and have a supply chain vulnerable to disruption.” All 50 are good candidates for U.S. national security subsidies.
Loopholes in Buy American laws and China tariffs are subsidizing our adversaries or letting them off easy to the tune of billions of dollars of lost tax revenues, when we can’t even subsidize companies that solve U.S. national security problems and provide jobs to Americans in Tennessee, Texas, and Wyoming. That money instead goes to fund companies in China that pay taxes that the CCP uses to build nuclear weapons aimed at the United States and our allies. That must change.
