Breaking Dependency on China, Russia Requires Political Sacrifice: Mining CEO

By Petr Svab
Petr Svab
Petr Svab
Petr Svab is a reporter covering New York. Previously, he covered national topics including politics, economy, education, and law enforcement.
March 15, 2023Updated: March 16, 2023

America is currently in no position to shake dependency on China and Russia for key minerals needed to manufacture much of the technology powering modern civilization, the chief executive of a global mining company said. The push to rapidly reduce carbon emissions further complicates the situation as it requires even more of those minerals, he told The Epoch Times.

Epoch Times Photo
Lewis Black, chief executive of Almonty Industries. (Almonty Industries)

“We are placing more and more demand on the strategic metals of which the only real purveyors … are the very countries you want to diversify away from,” said Lewis Black, chief executive of Almonty Industries, one of the few significant tungsten producers outside China.

To resolve the issue, the country would have to make some uncomfortable and politically perilous decisions, he argued.

The United States used to be a mining powerhouse. In the early 1980s, there were nearly a thousand metal mines across the country. In rare earth minerals, which are a crucial component of electronics, the United States had a near-monopoly.

Times have long changed though. The number of metal mines has dropped by over 70 percent since the 1980s even as demand kept increasing. Rare earth minerals production, meanwhile, has almost entirely shifted overseas.

The core reasons for the mining downfall have been not so much economic as political, Black suggested.

Epoch Times Photo
Former US President Jimmy Carter and Chinese leader Deng Xiaoping confer 29 June 1987 in Beijing, after signing an agreement between China and Global 2000. (JOHN GIANNINI/AFP via Getty Images)

Buying Market Share

The issue stretches back to China’s policy of “opening up” its economy in the late 1970s. Decimated by Mao Zedong’s Cultural Revolution that left perhaps up to 2 million dead and industry in shambles, the new leader of the communist regime, Deng Xiaoping, spearheaded a plan to salvage the party’s grip on power with foreign money. Under the slogan of “reform and opening up,” he presented an enticing deal—Western companies would pour money into China, and in exchange, the regime would provide near-enslaved Chinese workers and the country’s vast natural resources.

Chinese mining companies, though outdated, were offering raw materials so cheap, it seemed to the West like a giveaway.

“We thought we were getting a deal of the century,” Black commented.

And it wasn’t just the price. China’s state-subsidized companies were willing to provide anything at any time.

“You offered an irresistible package to your customers—the customers being the West—you allowed customers to run very low inventories because you always would carry stock,” he said.

But there was more to the tradeoff.

For one thing, the investments were not conditioned on political reform. China was expected to loosen economically, but the Chinese Communist Party (CCP) was free to keep tightening the screws on the populace. Even as peaceful demonstrations heralded the Soviet Union’s collapse, the CCP massacred China’s protest movement with tanks and machine guns. Experts on communist subversion warned that under the smiles of CCP foreign delegations, the nature of the party hadn’t changed—it still considered the United States an enemy.

In addition, by rooting supply chains in China the regime gained an invaluable asset.

“They bought market share,” Black pointed out.

Epoch Times Photo
Steelworks of Benxi on April 6, 1972. (-/XINHUA/AFP via Getty Images)

Missed Opportunity

There was an opportunity, back in the 1980s, for the government to step in, Black noted.

It would have required the government to recognize that wholesale switching to a foreign materials supply would decimate domestic production and—the foreign source being an adversary to boot—it would have national security implications down the road.

Such a realization could have led to the expansion and modernization of domestic mining. But it appears it never clicked in the right places.

“For some reason we seem to assume, whether it be through our own arrogance, vanity, or stupidity, that this supply-customer relationship would always be the fact that I’m the customer and I’m always right,” Black commented.

“And I think what we’re seeing now, which has become much more prevalent, is that you’re right until I say you’re not.”

He sees the reason in the political unpalatability of mining.

Even in the 1980s, when the environmentalist movement was still young, “there was nothing desirable politically” to support mining, he said.

“Mines were a 50s legacy. They never really drag themselves out of the 50s. They were often environmentally problematic. They were normally poorly run. They were inherently dangerous. There was no news that was going to come out of this sector that was going to help you in your pursuit of staying in power.”

The problem was thus left to metastasize.

China has not only consolidated itself as a source of raw materials but gradually also materials further down the supply stream. With much of Western know-how bought or stolen, China now competes in advanced industries, producing marketable cars, computers, and other precision products.

“They control the entire supply chain, from start to the finish,” Black said.

In some areas, there’s little competition left. China produces about 70 percent of rare earth minerals, 80 percent of cobalt, and over 84 percent of tungsten.

“You’ve been shopping in the same place for almost a generation and there’s nowhere else to go to shop. And you’ve built entire economies on the back of this shop,” Black said.

Epoch Times Photo
Bulldozer scoops soil containing various rare earth to be loaded on to a ship at a port in Lianyungang, Jiangsu Province, China, on Sept. 5, 2010. (STR/AFP/Getty Images)

Price of Dependency

The Ukraine war gave the West a small taste of its dependency, he argued.

Despite the slew of sanctions imposed on Russia, the mineral sector was generally spared.

“We’ve not restricted access to Russian raw materials at all,” Black said.

Seeing the limited effect of the sanctions may embolden China.

“What happens, just theoretically, if China decides that today is Taiwan day? What are we really going to do?” he said.

“From an economic point of view, if we can’t lose access to Russian raw materials, how on earth are we going to deal with China?”

There have been some efforts to shake the dependency, but it’s a long, rocky road.

“We’re trying to make up for 30 years here of looking the other way and it’s not going to happen overnight,” he said.

‘Bite the Bullet’

The most obvious solution would be to boost domestic production. Both Trump and Biden administrations have given the issue some attention, issuing executive orders meant to build a policy framework and support for domestic production.

So far, however, the initiatives tend to be either small or focused on processing and recycling—important components of the industry, but far from sufficient to substantially cut reliance on foreign sources. The government seems far from serious to get mines open.

To Black, it’s obvious why.

“Nobody likes mines. It’s not going to win me any votes. In fact, in many ways it can probably cost me votes,” he opined.

“Once Twitter gets a grab on it, I’m accused of killing children by building a mine, you know, who wants to go there? It’s a landmine,” he said.

Alternatively, mining companies could try to set up shop in countries that are friendly to the United States. But that’s not so easy either.

In established democracies, voter sentiment tends to be just as antagonistic toward mining as in the United States, Black pointed out.

“They have exactly the same problem as you do. It’s an unpalatable scenario.”

Epoch Times Photo
Coal miners at the Harvey Mine in Sycamore, Pa., on April 13, 2017. (Justin Merriman/Getty Images)

Canada, for example, has on paper recognized the need for more mining. But in practice, mining opportunities are constrained because indigenous tribes have the power to block projects affecting their territories based on their own laws. Navigating not just Canada’s own environmental regulations, but also a mix of tribal laws has proven vexing to companies, Black suggested.

Getting a mining permit in Europe borders on impossible.

Portugal and Spain, “traditionally mining-friendly jurisdictions haven’t issued a mining permit in years,” Black said.

“Australia is still a viable democratic option for mines,” he said. But not everything can be sourced there.

Miners could try in less established democracies or even autocracies where the populace has less of a say, but then “we’re going to go further down the declining transparency route,” he noted.

“You find yourself in exactly the same position as you’re in now. Because then you have to do deals in countries that could be your friend or may not in the future.”

The only definitive way to solve the issue is for the politicians to “bite the bullet,” let the mines open, and let the chips fall where they may, he argued.

“It’s not something, on a personal level, we may support, but we know we have to do this for the nation.”

The issue has, to some degree, become bipartisan. Republicans generally favor domestic industrial production and many Democrats have realized in recent years that if they want to build up wind and solar farms as well as millions of electric cars, demand for raw materials would go through the roof.

“The energy transition is going to be expensive, and the mining and metals industry will need to invest U.S.$1.7 trillion over the next 15 years for enough supply of copper, cobalt, nickel, and other critical metals,” said an Ernst and Young Americas report last year.

If that investment doesn’t go to the West, it will likely go, once again, to countries like China and Russia.

“So you are inadvertently increasing their market share and therefore the mountain you have to climb,” Black noted.

Under normal circumstances, the increase in demand would boost prices and this would motivate investors and entrepreneurs to create the supply. But that only works until politics get in the way.

“Ultimately, you’re not going to be looking or investing money to look in countries where you think … you’re always going to have dramas,” he said.

In particular, the cancellation of the Keystone XL pipeline by the Biden administration in 2021 “sent a ripple of terror through the market” in his view.

“The real damage that did—the reputational damage—was it said to the investment community, ‘If you have something that’s funded and permitted and under construction it can still be terminated.’”

Epoch Times Photo
Miles of unused pipe, prepared for the proposed Keystone XL pipeline, sit in a lot outside Gascoyne, N.D., on Oct. 14, 2014. (Andrew Burton/Getty Images)

So far, Black hadn’t seen among politicians the level of urgency necessary to turn the ship.

“They had not reached that point of saying, ‘Well, yeah, this is costing me my seat, but it’s worth it because I’m trying to look past the election cycle,’” he said.

“Until they get to that point, you are going to languish in this void of uncertainty.”

Stockpile Strategy

If the government throws its weight behind mining expansion it doesn’t mean that environmental standards need to be relaxed.

The industry has managed to clean up its operations to an “extraordinary” degree, he said.

“It’s not for the fainthearted. It’s a very burdensome regulatory environment. But I like it because it’s transparent.”

The government could help by guaranteeing bank loans for miners so that they can quickly and easily get financing, he suggested.

“Let the market develop your supply chain through your help.”

Even if that were to happen, however, ditching foreign sources could be perilous.

“How is the person who currently feeds you going to react?” Black asked.

“Because, to be honest, to date, no one’s ever really tested the resolve of China to defend that market share that they fought so hard for and cost them so much to procure in the first place in the 80s,” he said.

China would certainly have the option to push back.

“Do they collapse prices? … Do they restrict supply to certain companies that are looking for diversification?” Black said.

None of his customers would be willing to take that risk, he said.

First, he argued, the government should build a stockpile of key raw materials—12–18 months’ worth.

That would provide the country “a buffer while you resolve your mid- to long-term problem.”

The stockpile could be used as leverage to keep countries like China and Russia in check, he argued.

“It’s amazing how stronger you are perceived by other countries that you are dependent on if your dependency on them is diminished,” Black opined, noting that “you can cut them off for 18 months if they start misbehaving.”

Epoch Times Photo
Smoke billows from a coal powered steel plant in western Pennsylvania, on Aug. 26, 2001. (Spencer Platt/Getty Images)

The stockpile would be pricey, perhaps a few hundred billion dollars, but it doesn’t have to be built up in one go, he said.

It’s also unlikely it could all be sourced from mines with the best workplace and environmental standards.

“Don’t be fussy where it comes from,” Black commented, noting that the same is true for raw materials in products Americans use anyway.

Some private companies are adopting such a policy themselves.

“Some of my customers have reached such levels of concern that they’re actually now holding 12 months of inventory,” he said.

Ultimately, the stockpile’s cost is beside the point in his view.

“It’s an irrelevant amount if it gives you some relief, stops people from doing crazy stuff,” he said.