Tom Moerenhout and Tomasz Nadrowski on Fixing the Mineral Supply Chain

**Tom Moerenhout** (0:07)
The problem right now that we have is that we're spending public money without actually having first identified and treated, if you wish, the binding constraint on why private capital is not flowing.

**Tomasz Nadrowski** (0:18)
Private capital has failed us, has failed us because it used labor arbitrage and arbitrage and negative externalities by being attracted to the ultimate point of gravity. That of having comparative advantage in certain countries producing different products is basically betting on the fact that one country will produce everything and other countries will produce nothing.

**Bill Loveless** (0:40)
Critical minerals sit at the intersection of energy technology, industrial competitiveness and economic resilience. It is an urgent issue in the United States where the Trump administration has established a $12 billion strategic critical minerals reserve and taken other steps to support mining projects. And more broadly, G7 countries recently agreed to step up coordination to cut their countries' reliance on China for critical minerals. All of these moves are targeted at breaking China's stronghold on the sector, which it built over decades as the US largely turned away from securing a critical mineral supply chain. And it's not just about supply dominance. China is also using its strengths in the sector as a geopolitical weapon. Yet questions remain over whether either US investments to date or international agreements are stoking the level of private investment needed to compete with China. So what financial models could provide effective blueprints for quickly scaling mineral supply? Which countries are pursuing the most promising approaches? And looking beyond investments, what policy tools could help the US and its allies grow a resilient critical minerals supply chain?
This is Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University. I'm Bill Loveless.
Today on the show, Tom Moerenhout and Thomas Nadrowski. Tom Moerenhout leads the Critical Minerals Initiative here at the Center on Global Energy Policy and is a professor at Columbia University School of International and Public Affairs. Recently, he and other scholars at the Center contributed to a new World Economic Forum report called Making Critical Minerals Bankable, Policy Tools to Unlock Investment.
Thomas Nadrowski is the co-founder and portfolio manager at Amvest Terraden, where he invests in exploration, development, and mining companies that are focused on strategic minerals. He has 25 years of mining sector investment experience. He is also the author of the recently published book, Mineral War, China's Quest for Weapons of Mass Destruction.
We talked about what led to China's dominance and then weaponization of the critical mineral supply chain. We examined the critical minerals investments model that the US government is pursuing. And we discussed what it really takes to build mineral supply chains as strategic infrastructure. Here's our conversation. Tom Moerenhout, Thomas Nadrowski, welcome to Columbia Energy Exchange.

**Tom Moerenhout** (3:21)
Thank you for having us.

**Tomasz Nadrowski** (3:22)
It's a pleasure to be here.

**Bill Loveless** (3:23)
Well, I look forward to the conversation. It seems hardly a day goes by when we don't see critical minerals once an obscure aspect of materials science in the news. Governments and industries in the United States and elsewhere are trying their dandas to unlock resilient mineral supplies, but finding the right financial instruments difficult to achieve.
Thomas, as I say, everyone agrees that critical minerals are strategic. So why are we seeing underinvestment?

**Tomasz Nadrowski** (3:58)
It takes years to invest in minerals and see a result. So if we're starting now, we'll see results maybe in 10 or 15 or 16 or 17 years depending on the nature of the deposit and the nature of the processing stage after that. We stepped into this problem during the years of relative underinvestment in mining in general in the West. You may recall that in the first decade of the century, went through a super cycle, was driven mostly by quite impressive growth of the Chinese economy and urbanization, and most miners were working to send their product to China.
At that time, many mining companies just over-invested. There was a massive inflationary wave towards the end of that period. So between the Great Financial Crisis in 2011, and subsequently companies pulled back from that growth mode very strongly and focused on very few very predictable sectors, say copper or iron ore, something like that, not those smaller markets. So that's one kind of a cyclical reason for that, why by the end of the second decade, we realized that suddenly we don't have enough investment in the West. The second part of the story is structural, because many of these critical minerals are really small markets and they don't necessarily appear geologically as separate targets of a mining project. They are associated by mineralogy with those major metals.