Materiel for Minerals: How the U.S. Can Leverage Security Assistance to Secure Supply Chains 

This report is part of the larger compendium “Future-Proofing U.S. Technology: Strategic Priorities Amid Chinese Tech Advancement.”

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Executive Summary

The Defense Department’s 2023 National Defense Industrial Strategy (NDIS) prioritizes resilient supply chains, including those for critical minerals. Mineral consumption directed by the DoD will likely increase as efforts to build more naval vessels, munitions, and uncrewed aerial vehicles continue. However, limited U.S. mining and refining production capacity has led to heavy reliance on imports, particularly from China, to meet demand. The 2024 NDIS Implementation Plan recommends stockpiling and investment in mineral projects. This report proposes a new approach for securing critical mineral supply chains: materiel-for-minerals, or M4M deals.  

Materiel for Minerals (M4M) 

The DoD could seek offtake agreements for uncontracted mineral production in nonallied countries. It could seek right-of-first-refusal (ROFR) offtake agreements, giving it the right to buy a certain volume of minerals at market prices. The DoD could exercise its right to offtake following supply cutoffs – such as when China imposes mineral export bans – and then sell the minerals at the same prices to U.S. defense firms responsible for high-priority defense programs facing mineral shortages, and hence, delays.  

To secure these ROFR offtake agreements, the DoD could condition U.S. security assistance, military cooperation, and foreign military sales (FMS) to mineral-rich countries on securing ROFR offtake agreements. Importantly, many governments in countries that possess minerals lacking in the United States and allied countries seek U.S. defense materiel, and many of these same governments are shareholders in mineral projects in their countries. In exchange for FMS deals and other forms of security assistance, the DoD can require ROFR offtake agreements for specific volumes of existing mineral production. M4M deals would provide the DoD, and, thus, the defense industrial base with access to additional mineral supplies in the event of significant mineral demand or limited supplies.  

Policy Recommendations  

1. The White House should update its Conventional Arms Transfer policy to emphasize that one of the policy’s objectives is to strengthen the defense industrial base’s supply chains, including for critical minerals.  
2. State Department leadership should direct its chiefs of mission and their requisite country teams to prepare Integrated Country Strategies that explicitly include M4M deals.  
3. DoD’s Manufacturing Capability Expansion & Investment Prioritization office should develop a list of target minerals and corresponding target countries for M4M deals.  
4. State Department leadership should assign responsibilities for drafting preliminary M4M deals to the economic sections and Offices of Defense Cooperation at U.S. embassies.  
5. The Defense Security Cooperation Agency should issue a policy memo on minerals, noting that letters of request for FMS deals can be denied due to concerns about the mineral supply chains of the U.S. defense industrial base.  

U.S. Air Force Lt Col Jahara ‘FRANKY’ Matisek is a Senior Pilot that has a Ph.D. in Political Science from Northwestern University. He is currently a Military Professor at the U.S. Naval War College, Fellow at The Payne Institute for Public Policy, and will be assigned next to the J3 at NORTHCOM. Lt Col Matisek was previously an Associate Professor at the U.S. Air Force Academy, and is the most published active-duty officer, with 2 books and over 100 articles in peer-reviewed journals and policy relevant outlets on warfare, strategy, and security assistance. 

Morgan D. Bazilian is director of the Payne Institute and professor of public policy at the Colorado School of Mines. Previously, he was lead energy specialist at the World Bank. He has over two decades of experience in energy security, natural resources, national security, energy poverty, and international affairs. He holds a Ph.D. in energy physics and was a Fulbright Fellow. He is a member of the Council on Foreign Relations, a global fellow at the Woodrow Wilson International Center, and an adjunct professor of thermal physics at University College Cork. He is a board member of the Veterans Advanced Energy Project, and he holds a joint appointment at NREL on the topic of energy security.

Gregory Wischer is the founder and principal of Dei Gratia Minerals, a critical minerals consulting firm. He is also a non-resident fellow at the Payne Institute for Public Policy at the Colorado School of Mines and a non-resident fellow at the Northern Australia Strategic Policy Centre at the Australian Strategic Policy Institute. Previously, Wischer was executive vice president at an American company building a nickel-cobalt metal refinery in the United States. He received his bachelor’s in International Business from Boise State University, and he received his master’s in security studies from Georgetown University.

The views expressed in this article are those of the author and not an official policy or position of New Lines Institute.