Insiders liken it to a “panic button.” And for more than 80 years, the primary job of the National Defense Stockpile has been to keep the US military supplied with essential raw materials and protect against supply shocks.
So when China surprised the markets by restricting exports of two niche industrial metals last year, top-level officials in the Pentagon-controlled agency—and the White House—faced an uncomfortable reality: Its panic button no longer worked. The realization triggered a different kind of alarm in Washington.
In the first of a three-part series based on more than 40 interviews with industry executives, officials and politicians, Bloomberg has looked at Western efforts to create an alternative, China-free, global metals supply chain. The US in particular has been a hive of activity.
“This is the next chapter in the discussion about how the US can create its own security of supply,” says Todd Malan, chief external affairs officer at Talon Metals Corp., which is developing a nickel, copper and cobalt mine in Minnesota with help from the US Energy and Defense departments. “In these markets you could see the US government making a really big impact if it emerges as a strategic buyer.
“If somebody wants to purchase the cobalt from us—if the government wants to support the price, or if a customer like an automaker wants to provide some kind of pricing floor—that could also work,” says Crocker, who adds that in Washington, stockpiling is “certainly being spoken about much more seriously than it has been in the past.”
Officials from the DLA soon began turning up at niche mining conferences and making discreet enquiries about buying large volumes of cobalt. It sparked speculation among traders that the Pentagon was set to become a major strategic buyer once more. Simultaneously, State Department officials have traveled across South America, Africa and Southeast Asia trying to build diplomatic relations with nations rich in critical minerals, say industry executives familiar with the trips.
Any agreement to buy or sell the projects or the materials they produce may require the US to allow some kind of workaround, so companies aren’t engaging with a sanctioned individual, according to people with knowledge of the talks. The possibility that Gertler, who’s denied any wrongdoing, might profit from the very deals that led to him being sanctioned has already been condemned by Congolese and international anti-corruption groups.
“We offered it to the market for sale, and only Chinese companies showed up,” Adkerson adds. “There was no possibility of the US government stepping up.”