On the campaign trail, Brazil’s newly elected President Jair Bolsonaro loved to talk about a particular vision for shoring up his country’s struggling economy: “Niobium Valley.” Brazil is the main supplier of niobium to the entire global economy, as Bolsonaro frequently reminded his audiences, sometimes while waving around a little chunk of the nondescript gray metal that he kept in his carry-on luggage for just such occasions. He even made a 20-minute YouTube video about it.
If you care about the future of your smartphone, you might want to pay attention to what President-elect Bolsonaro does next with his country’s niobium riches.
That’s because niobium is one of a host of minerals that are pivotal for powering our modern lives—and modern militaries, as well. Today, the global economy depends on a veritable periodic table of once-unfamiliar metals for the function of all things high tech, from your smartphone to orthopedic implants to precision guided missiles. As a recent piece in the Proceedings of the National Academies of Sciences suggested, the world has entered a new resource-centric era: farewell to the Bronze Age and even the Age of Oil, and welcome to the Critical Mineral Age.
Because of this, these materials may well be at the heart of what the Pentagon recently dubbed “the competitive space” in its 2018 National Defense Strategy. According to the strategy, the primary threat to U.S. national security today is no longer global terrorism but “long-term strategic competition,” particularly with China. At this point, the great power rivalry between the U.S. and China is more of a tepid struggle than a cold war—but the contest for resources, trade partners, and other strategic advantages is clearly heating up.
The Pentagon’s 2018 strategy doesn’t explicitly mention niobium, or any other specific critical mineral, as part of the “competitive space,” but maybe it should have. This mineral is, after all, a shining example of how access to the materials that enable our high-tech world may translate to geopolitical hot spots.
First, it helps to understand the hype about the minerals themselves. In the case of niobium, this mineral has many desirable properties, and its versatility has made it an important element across high-tech modern life. It can be blended with other metals to make them stronger, lighter, and more resilient. Oil and gas pipelines, bridges, and automobiles, for example, may use niobium-steel alloys. It’s hypoallergenic and doesn’t react with human tissue, which has given rise to its use in everything from jewelry to pacemakers and replacement knees. Because it’s also conductive and heat-resistant, niobium is in batteries, semiconductors, and MRIs.
While there’s no question niobium is useful stuff, the reason it has pride of place in the competitive space has more to do with Brazil’s corner on the market. Brazil has the world’s largest reserves of niobium, more than 10 times as much as the next producer, Canada. According to the U.S. Geological Survey, Brazil today accounts for 90 percent of all global niobium production, mostly from a single mine. In other words, that dream of Niobium Valley is not unrealistic.
China—that great power competitor delineated in the U.S. National Defense Strategy—is taking no chances when it comes to Brazil’s niobium. First, and most directly, China acquired a 15 percent stake in Brazil’s Companhia Brasileira de Metalurgia e Mineração, the world’s top niobium mine. More indirectly, but also important, the Chinese are cultivating a diversified relationship with the South American powerhouse, including $22 billion in various kinds of aid and $68 billion worth of bilateral trade, making the Asian giant Brazil’s top trading partner. The Chinese government is making a range of soft power investments, as well, such as 10 cultural and language “Confucius Institutes.”
Not everyone in Brazil is enthusiastic about the Chinese presence, however. Indeed, on the campaign trail, President-elect Bolsonaro decried China as a predatory foreign power “buying Brazil” and defied the “one China” policy by visiting Taiwan, making him the first Brazilian presidential candidate to do so since the 1970s. Yet, despite all this showmanship, Bolsonaro may find it difficult to go much beyond anti-China rhetoric, given how thoroughly intertwined China is with Brazil’s economy.
This is not just about Brazil, however. According to the PNAS piece, in addition to Brazil and its niobium, there are four other countries that both China and the United States depend on for specific, important minerals. Those countries, in turn, dominate the global trade in that specific, important mineral. The list includes Chile for lithium, the Democratic Republic of Congo for cobalt, Rwanda for tantalum, and South Africa for platinum. China has already made significant inroads in relations with all of these countries, including aid, trade, and investment.
There’s another reason, beyond its strategic investments in key countries, that China is ahead in the competitive space when it comes to critical minerals. As the PNAS article highlighted, the United States relies heavily on foreign sources for an additional 13 other metals it needs to stay ahead in the information age, while China only has to rely heavily on five foreign sources right now. Even more to the point, China is the dominant global producer of nine of those 13 metals the United States is import dependent on (thanks to China’s mix of geological good fortune, low-cost production, and lax environmental regulations). That’s right: The United States overwhelmingly depends on China for some of its Critical Mineral Age resources.
What does this all mean for the United States’ economic and national security? It’s not necessarily a catastrophe. The United States remains very competitive around the world, including as Brazil’s second-largest trading partner. U.S. companies are highly skilled at doing business with Brazil and other countries that produce critical minerals, and that means China, too. As long as there is a functioning global market, they’ll be able to keep competing for supplies. The Chinese, for that matter, still need foreign buyers for the minerals they mine at home, though the government is looking to develop more domestic demand from its own manufacturing industry. Plus, for some minerals, the U.S. can look to alternative potential producers or mineral substitutes, though these usually don’t come at comparable prices or performance.
On the other hand, China isn’t just sitting back and letting the invisible hand steer its future. The country has pursued a systematic, long-term strategy of securing key resources, and there have been clear signals that China is willing to use its resources as geopolitical leverage in the future, much the way the United States bends global markets through sanctions, tariffs, and preferential trade agreements. In 2010, for example, China blocked exports of rare-earth elements to Japan to pressure the nation over a maritime dispute—a big deal when you consider China controls almost 95 percent of the trade in these materials. The move temporarily drove up market prices for rare-earth elements and slammed the Japanese economy, which depends on them for a variety of industrial purposes, including for manufacturing components of electric cars. Despite the name, however, these materials are not truly “rare” and other producers did jump in when prices shot up. At the same time, this incident showed that market corrections can’t always happen quickly, given the long lead times involved in opening new mines and refineries.
In some cases, China’s strategy means hedging its bets against such market manipulations and corrections, such as by buying mines in other countries, in addition to investing more in domestic production. This has included a private Chinese company buying a nonvoting minority interest in the only (but currently bankrupt) rare earths mine in the United States in 2017. Testifying before Congress later that year, then–CIA Director Mike Pompeo said that U.S. foreign dependence on rare earths was “a very real concern.” With the looming threat of closure of the Australian-owned rare earths production plant in Malaysia, China may well consolidate its monopoly on the production and supply of these resources just as the trade war with the United States threatens to escalate (or maybe not, given the news from the latest G-20 meeting).
In contrast, the United States—and other global economies—lack a concerted strategy to ensure an open market for these and other critical minerals. This, in part, reflects a long-standing, if somewhat outmoded, aversion in the United States to governmental industrial base policy, namely anything that might dictate to or interfere with private industry. That may be a luxury of a bygone industrial era. A good step in a more modern direction is the recent Department of Defense report on the U.S. defense industrial base, which acknowledged the importance of critical materials to national defense and economic security and the growing risks of China dominating the supply chains for them.
The country still needs a more comprehensive strategy, however: one that looks not just at the defense sector, but across the economy, and one that engages the private sector and diplomatic and cultural tools of engagement with key producers. It’s the kind of contemporary strategic thinking it will take if America is serious about playing to win in the competitive space.