Strategic Material-U.S. Vulnerability
AUTHOR Major Gilda a. Jackson, USMC
CSC 1988
SUBJECT AREA National Military Strategy
EXECUTIVE SUMMARY
TITLE: Strategic Materials- U.S. Vulnerability
I. Purpose: To focus on the importance of strategic
minerals as a vital component of the United States' national
security, economic stability, and technological
competitiveness.
II. Problem: U.S. reliance on foreign-supplied strategic
minerals, such as manganese, cobalt, chromium and platinum
group metals, is unacceptably high. The disruption in
supply of these foreign-supplied critical strategic
materials makes the U.S. vulnerable.
III. DATA: The United States is dependent on imports of
some one-hundred critical minerals. The world's supply of
these minerals is found largely in South Africa and the
Soviet Union. The U.S. imports 98 percent of its cobalt and
82 percent of its chromium. Major uses for these imports
range from jet engines to computer chips. Hence, the
strategic importance to the U.S. defense system, economy and
technology.
IV. CONCLUSION: The United States must place greater
emphasis on reducing its import vulnerability in non-fuel
materials and, in particular, critical strategic minerals.
V. RECOMMENDATIONS: Over-reliance on foreign-supplied
strategic minerals can be reduced to some extent by taking
appropriate action to: (1) identify domestic reserves and
resources; (2) properly maintain the stockpile through
regularly-updated risk assessments; (3) research the
possible substitution of more readily available minerals;
(4) increase supply through recycling scrap materials; and
(5) form cartels targeted at those minerals that are
designated high-risk items.
STRATEGIC MATERIALS-U.S. VULNERABILITY
Outline
Thesis statement: The United States must place greater
emphasis on reducing its import vulnerability in non-fuel
materials and, in particular, critical strategic minerals.
I. Introduction
II. Dependency
A. How dependent is the U.S. on imports
B. Generally accepted strategic materials
C. The world supplier of strategic materials
III. Soviet Threat
A. The Soviet aim to control the treasure houses
B. The Soviet Union's forward maritime defense
strategy
C. Increased surrogate activity
IV. Principle Issues
A. U.S. foreign policy
B. Resource war
C. Maritime capabilities
D. Airlift capabilities
V. Strategies to Reduce Dependency
A. Stockpiling
B. Conservation
C. Substitution
D. Cartels
E. Seabed mining
VI. Conclusion
STRATEGIC MATERIALS-U.S. VULNERABILITY
Introduction
The United States has a stable economy, bountiful
agricultural production, and a complex internal
transportation system. These foundations permit full
exploitation of technological advances in industry, science,
and commerce, and as a result, most Americans believe that
the United States is a wealthy nation. Prior to the Arab oil
embargoes of the 1970's, few Americans had ever realized that
the U.S. could be dependent on any foreign nation, or that
any such dependency could possibly disrupt the way Americans
do business. When the price of petroleum products
quadrupled, the fact that the United States imported oil at
all finally struck home. America at one time had been the
world's leading producer and major oil exporter. Something
had gone wrong!
Now, in response to the 1973/8 oil embargoes, this country
is becoming less dependent on foreign oil imports. The
United States may never achieve total fuel-energy
independence. However, enough progress has been made to
ensure that a disruption in the flow of foreign-supplied oil
will never again so affect the American public as it did in
the 1978 oil crisis.
Although our oil status is moving in the right direction,
the reliance on foreign sources for a number of important,
non-fuel minerals, considered by some less important, is
cause for alarm. Here dependency makes the U.S. commercial,
industrial and defense structures vulnerable, with
potentially very damaging effects. Not well publicized is
the vulnerability of the U.S. defense system, which results
almost exclusively from the vulnerability of the industrial
base that supports the current, tremendous weapon
modernization. The U.S. military is better equipped to meet
the threat than ever before but still has attainable goals to
meet. More sophisticated weapons and advanced component
system are at the heart of most newly-developed weapon and
support systems. Surprisingly many of these systems require
large amounts of some rather valuable, critical, strategic
minerals.
Strategic minerals are often defined as minerals required
to supply the military, industrial, and essential civilian
needs of a country during a national emergency, and not found
in or produced by that country in sufficient quantities to
meet its need. In today's world any interruptions in the
flow of these minerals will affect not only our national
security, but also our economic stability and technological
competitiveness. Therefore, the United States must place
greater emphasis on reducing its import vulnerability in non-
fuel materials and, in particular, critical strategic
minerals.
Dependency
Just how dependent is the United States on foreign-
supplied minerals? The United States depends on imports of
about one-hundred minerals, sixty-seven of which are used in
the manufacture of defense-related equipment. The remainder
are used by the private sector in medicine, scientific
research, space exploration, and household service products.
There are no substitutes for some half-dozen of these one
hundred minerals.
Click here to view image
Four of these imports are generally recognized as critical
strategic minerals: manganese, essential to iron and steel
production; cobalt, a superalloy used in the production of
F/14/15/16 jet engines; chromium, used in the metallurgical,
chemical, and refractory industries; and platinum metal group
(PMGs) minerals, used in the electronic, telecommunication,
and aerospace industries. Of these "Big Four", the United
States is ninety percent dependent on imports (see table 1).
Particularly ironic for the U.S. is the geographic location
of these minerals. South Africa and the Soviet Union are the
world's major suppliers of these minerals. The United States
and the Soviet Union have been adversaries since World War
II, and U.S.-South African relations have been deteriorating
in recent years.
Soviet Threat
Does the Soviet Union pose a mineral threat to the United
States? As U.S. dependence for critical strategic minerals
continues to increase, the capability of the Soviet Union and
its surrogates to disrupt the flow of certain key materials
or to influence a third country's policy increases daily. In
1973, Soviet Party Leader Brezhnev stated that the Soviet aim
is to gain control of the "...two great treasure houses on
which the West depends: the energy treasure house of the
persian Gulf and the mineral treasure house of Central and
Southern Africa." (2:1) This strategy has remained
unchanged, and Soviet leaders following Brezhnev have
remained loyal to the same.
The Soviets have increased their presence in the world in
the past two decades. The Soviet Union has dramatically
increased its deep-water naval capabilities, with the
introduction of the Soviet base at Cam Ranh Bays
Additionally the fishing rights agreement with the Gilbert
Islands in the Pacific suggests that the Soviets are pursuing
a forward maritime defense strategy. This expansion has
frequently been in close proximity to countries that are
U.S. allies or part of our national interest. Also, this
movement has not been without a noticeable relationship to
present sea lines of communication.
Soviet surrogates have also moved into vital areas in close
proximity to U.S. sources of supply for a number of strategic
minerals. The Cubans, for example, are increasingly active
in southern Africa, particularly in the neighboring countries
to the north and northwest of Zaire and Zambia, two of the
world's largest suppliers of cobalt. It is believed that
approximately 40,000 Cuban surrogates are in central and
southern Africa. Their major presence is forces occupying
Angola. The U.S. news media and members of Congress have
hinted that Angola may be edging toward an alignment in
international politics closer to the Russians and further
away from the United States. This move would weaken already
strained trade relationships between the U.S. and southern
African nations. A similar pattern seems to be evolving in
Central America where the Cubans are now assisting the
Sandinistas in Nicaragua and are believed to be in an
advisory capacity in Guatemala, El Salvador, and Panama.
Principal Issues
The policy toward fuel energy changed drastically in
response to the Arab oil embargoes. This country now
stockpiles oil in larger quantities than before. The United
States went to multiple-supply sourcing for oil, reducing its
dependency on Arab-supplied oil. However, the United States
must rely on the strategic materials provided by a small
number of foreign producers, increasing its vulnerability
and, under specific conditions, influencing foreign policy
decisions.
Internal and international condemnation of South Africa's
white minority government and its policy of separate states
for different racial groups has become increasingly vocal
among people opposed to apartheid. Demands from black
African countries and American interest groups for a more
aggressive form of trade sanctions have been stone-walled by
what the U.S. refers to as the "constructive dialogue"
approach. What sanctions have been imposed purposely
excluded strategic minerals, for reasons of national security
and economic stability. Proponents for stronger foreign
policy against South Africa state "that despite
inconvenience, both economic and political, the United States
can distance itself from South Africa without posing a
significant threat to American national interest." (6:1) I
submit to you that this is the wrong attitude or position to
take. Th.e U.S. may, in the short-term, have some limited
capabilities but the long-term prospects are bleak.
Impala Mine Strike: Resource War
This paper will dismiss the notion that for the U.S. there
is no degree of vulnerability. The speed at which a minor
disruption from a major supplier can affect a market was
illustrated as recently as January 1986 when the black work
force at the Impala Platinum Mines, South Africa's largest
producer of platinum group metals, began a strike over pay
and working conditions. There were reports that the company
forced workers to work to keep the mines going but finally
had to give in to demands. The unrest lasted for nearly two
months and is estimated to have cost the company up to a
quarter of the total 1986 platinum market production. The
outcome of this event was a sharp rise in the price of
platinum, for which there are no viable substitutes in the
majority of applications, and for which the U.S. is very
import-dependent (see table 1). The price was driven by the
supply shortfall and the possibility of the strike spreading
to other South African platinum mines. This was a minor
skirmish, but the potential for more prolonged and more
damaging labor unrest in South Africa is very evident. The
1976 civil war in Angola halted the supply of cobalt from
Zaire, which was at that time producing sixty-three percent
of the world's supply of cobalt. The resultant price
increases were three hundred percent and led to a change in
U.S. stockpiling policy for cobalt ore and hoarding of cobalt
by the Soviets.
Do the U.S. and its allies have the resources to forcibly
obtain and transport strategic minerals? Consider the
January 1986 Impala Platinum Mines' strike as a prototype for
a crisis during which the supply of PMG's is cut off.
Feeling the effect of the cut-off, the United States and its
allies decide to take military action to obtain badly needed
materials from South Africa. The United States and its
allies depend on sea and air lanes . While sea and air lanes
are essential in peacetime for trade, they are critical in
war. Recent U.S. conflicts have relied on extensive use of
sea and air lanes for deploying armed forces and striking a
military target, e.g., the landing on Grenada and the Libyan
air strike.
During a protracted conflict could the U.S. Navy keep the
sea lanes open for commercial shipping? I think not; a
bigger Navy and a bigger U.S. flag merchant fleet both would
be needed. Of the seventy-two raw materials vital to U.S.
industry and defense and those of its allies, the U.S.
Commerce Department states "that fully 69 must be imported by
the sea." (9:42) Additionally the bulk of these raw materials
now imported by the United States is carried by foreign-
flagged ships. If the U.S. had to rely on its own Navy
alone in a time of crisis, it would be hard to meet defense
and civilian requirements. The Navy, now facing the
possibility of limited growth, is not capable of fighting a
sea battle, while at the same time keeping NATO commitments
and protecting the civilian container ships loaded with
critical strategic minerals.
Click here to view image
Should the U.S., in the event of a crisis in South Africa,
mount a sealift effort, the now forward-deployed Soviet Navy
would be in a good position to interdict the flow of
strategic supplies over the thousands of miles of open ocean
that would have to be traveled before the minerals could be
offloaded in the U.S. or other countries. The thousands of
miles of open sea are not as open as one might be led to
believe. The tactician looking at the world's geography
would note that the routes that ships must take are dictated
by a number of choke points: the Panama Canal, Cape Horn, the
Straits of Gibraltar, the Cape of Good Hope, the Suez Canal,
the Gulf of Aden, the Straits of Hormuz, and the Straits of
Malacca (figure 1). A hostile power controlling any of
these points could seriously affect our peacetime trade, as
demonstrated by the present activities in the Straits of
Hormuz, and most definitely our wartime deployment
capabilities.
If the Navy is not an option, the U.S. could turn to
airlift. Strategic airlift would most likely not be able to
lift much. Many air routes are less restricted by geography
(figure 1) than are sea routes; however, they are constrained
by our flight restrictions and the need for intermediate
stopping points. As an example the U.S. would not have been
able to make the Libyan bombing raid if it had not been for
the fly-over rights and refueling stop in the U.K. Also, it
was noted that France did not allow U.S. "war" planes to fly
through French air space.
The airlift of millions of tons of critical PMGs would
require a large number of planes. A rough estimate leads me
to believe that it would take all of America's and NATO's
strategic airlift assets to carry a small percentage of the
tonnage. The operation would require a well-thought-out plan
that involved both naval and air assets, which, even if
successful, might only yield a fraction of the strategic
materials required to compensate for a long-term disruption
in flow of materials.
Strategies to Reduce Dependency
The preceding was a simple example designed to show the
many issues involved in the problem of U.S. import
vulnerability. Securing supplies from producer countries
could be done by long-term contractual agreements supported
by diplomatic and financial policies, with the threat of
military intervention as a last resort. Over-reliance on
foreign-supplied strategic minerals can be reduced to some
extent by taking appropriate action to: (1) identify domestic
reserves and resources; (2) properly maintain the stockpile
through regularly-updated risk assessments; (3) research the
possible substitution of more readily available minerals; (4)
increase supply through recycling scrap materials; and (5)
form cartels targeted at those minerals that are designated
high-risk items.
Stockpiling is an effective way to cushion dislocation
caused by supply cutoff s and to provide for the defense
requirements of a protracted conflict. The concept of
stockpiling started in 1939, although it was not until the
end of the Korean War that any supplies were actually placed
in the stockpile. Currently there are some one hundred
minerals in the stockpile which is maintained at a three-year
level.
The defense strategic stockpile is the main U.S. security
safety net. The President has authority to draw metals from
the strategic inventory if they are needed for national
defense. The stockpile would help the U.S. defense
industrial base endure a short break in supply flow.
Like all government programs the stockpile is subject to
political, economic and budgetary pressures. Although not
designed to be used to regulate the prices on the metal
market, the stockpile has been sold at the metal exchange
market or withdrawn from the market to accomplish this very
thing. The trade demand for these strategic materials is
high. The stockpile has also been used by the
administrations to try to help balance the budget or offset
the national deficit. Policy management of the stockpile has
been seriously short-sighted. Since the formation of the
stockpile, it has been misused by every government agency
that has had any part in management responsibilities.
However, steps to move the management from its present
controlling agency, Federal Emergency Management Agency, to
the Defense Department are a start toward ensuring that the
stockpile remains an insurance policy against the threat and
not just a commodity account used to offset the national
deficit or to be used as an extra fund to solve other
budgetary problems.
Conservation, in the form of reduced consumption of
strategic materials, recycling, and design changes where
applicable, provides another alternative. Conservation is an
effort that includes not only the defense industries but also
requires the help of commercial industries that provide goods
and services to the public. Public awareness and a full-
scale conservation program have not been engaged since the
tin drives to support the war effort of WW II.
The strategic minerals recycling industry is a new one.
The recovery of chromium from steel making, industrial and
chemical waste has been on the rise. But the most successful
campaign has been in the recovery of platinum from catalytic
converters for scrapped automobiles. The platinum metals
removed from automobiles could be bought by the defense and
electronics industries. In extremis, catalytic converters on
still-operational automobiles could be removed, scrapped, and
the PMG's salvaged, and all future production of automobiles
would be sans converter.
Cartels strong enough to affect the price of minerals may
cause a demand vs. supply model. In order for a cartel to
obtain monopoly profits, it must control a large proportion
(more than 51%) of the world's output and restrict output, in
a situation where both demand and supplies from other
sources are relatively inelastic. Thus since the U.S. does
not have such control, it alone cannot possibly form a
cartel.
The U.S. government and its allies could form a cartel,
with the U.S. providing the mining technology (not just
equipment, but know-how) to allied countries. This joint
venture would increase the output of materials and, with
government supports, the enforcement of the cartel's output
and sales quotas is more likely to work.
Finding substitutes for some strategic minerals in short
supply could take years, because the motivation of both
government and commercial sources seems related to three
basic situations: (1) the change in technology, (2) the price
of materials in the market place, and (3) the ability to
obtain the required amount from other countries (imports) at
less than the cost to produce in the United States.
The price of cobalt in 1978 rose to a high of $48.00 per
pound. The price of cobalt is now around $25.00 per pound,
but growing tension in the countries that surround the
cobalt-producing country of Zaire has caused U.S.
manufacturers to look for a less expensive and more abundant
material.
The aerospace industry's use of cobalt for superalloys in
jet engines has been regarded as unavoidable. The F-14/15/16
jets frequently used the superalloy in engine blades.
However, R&D programs to reduce the needed amount of cobalt
have met with success. An upgraded version of the F-15/16
military aircraft engine will use a nickel-aluminum-
molybdenum alloy containing no cobalt. Machine tools and
construction machinery also contain cobalt, and it is
expected that new this tri-metal alloy will replace most of
the cobalt in these items.
Substitution and recycling are on the rise in the United
States. Many metallurgists, employed in prIvate industry,
have created new alloys and discovered uses for them. As a
result, the mining industry is getting a new lease on life,
as many mines are beginning to reopen to provide a number of
materials used in these new alloys. This revitalization is
due to changes in prices and technology resulting in more
productive research and development by both government and
private industry.
There is the possibility of mining the sea bottom for
nodules containing critical minerals such as manganese and
cobalt. In 1983 President Reagan signed a bill declaring the
coastal waters around the Unites States to be "exclusive
economic zones" (EEZs) . Federal and state agencies have been
busy mapping the EEZs and granting industrial rights for
exploration for critical minerals. The seabed mining of
cobalt and manganese is possible, but current market prices
make it economically unfeasible. Those industries that posses
seabed mining capabilities are unwilling to commit to mining
without long-term government price guarantees and subsidies.
Conclusion
As can be seen from the preceding, the overall strategic
mineral problem is extremely complex and has many interesting
economic, political, and security implications. The
maintenance of an adequate supply of critical minerals and
metals involves private industry, numerous government
agencies, and other powers - not all favorable to the United
States. For example, South Africa is in no danger of running
out of strategic minerals but may not always be willing to
share.
The national security aspects of the mineral problem lie in
the fact that, in the time of war, the United States will
need these minerals as the basic building blocks for the
aircraft, missiles, and other ordnance and equipment items
needed by its armed forces. Defense implications are
paramount in the minds of those who are in the war fighting
profession.
More people are becoming aware of the mineral problem. The
executive and legislative branches of our government have
studied the problem and realize that we are vulnerable. One
potentially positive result could be the development of a
long-term national strategic mineral policy.
BIBLIOGRAPHY
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