Electronics Industry Vulnerable to International Politics

We live in a world where it has never been easier to travel internationally, import goods, or share information across the globe. This ever-increasing globalization has immeasurable benefits, but it also comes with unique risks and challenges. The growing reliance of the US on foreign sources for minerals — the raw materials for the very technologies and infrastructure that make globalization possible — leaves domestic industry supply chains vulnerable to international conflicts and political strife.

Indonesia's export ban on unprocessed mineral ores provides the latest example. As a leading producer and exporter of minerals, including bauxite, copper, nickel, tin, gold, and silver, Indonesia's shift in trade policy left the US, China, and other nations competing for the remainder of the tight global supply of these important resources. Meanwhile, domestic industries have been forced to scramble for supplies or pay higher premiums for the minerals placed under the ban.

Similar restrictions and geopolitical instability among other mineral-rich nations, such as South Africa and Russia, are occurring with greater frequency, making the acquisition of key mineral resources increasingly a zero-sum game and threatening industries that support the US economy.

It's no wonder that 100% of US manufacturers cite achieving a secure and efficient supply chain as a serious challenge, according to a report by BDO USA released in May. With the minerals and metals-heavy electronics industry expected to grow 6% domestically by 2015 and the consumer electronics industry expected to grow by 2.4% in 2014 in the US alone, demand for these essential resources — and related supply chain concerns — is sure to grow.

Fortunately, we have commercially-recoverable reserves of many important minerals here in the United States. For instance, the Duluth Complex in northeastern Minnesota is home to the world's second largest accumulation of copper and the world's third-largest accumulation of nickel, both of which are crucial to various electronic applications such as tablets, computers, circuitry, and batteries. Supplies from this project, and countless others like it, could have a profound impact on the development of the technologies that are driving American innovation and economic growth.

However, a duplicative permitting process for new mineral mines keeps many of our nation's resources locked underground, subjects mining companies to permitting delays that can last nearly a decade, and leaves manufacturers vulnerable to supply chain disruptions. Mining projects in the Duluth Complex began the process six years ago and expect several more years until completion. Instead of producing the minerals our industries need domestically, we remain 100% import reliant for 19 different minerals, and more than 50% dependent on foreign sources for another 22 key resources.

Recognizing the precariousness of this position, policymakers are beginning to take action to facilitate the development of strong, stable supplies of domestic minerals, which would provide much needed predictability for manufacturers across the country. The National Strategic and Critical Minerals Production Act was passed last year in the House of Representatives to limit duplicative efforts from the permitting process, while maintaining stringent environmental restrictions. It's now time the US Senate takes up similar legislation to ensure reliable mineral supply chains for US industries and to keep pace with American innovation.

2 comments on “Electronics Industry Vulnerable to International Politics

  1. apek
    June 19, 2014

    Good article. Globalization is causing severe geo political tensions are the coming years would show the increasing ego political dangers on electronics industry and US economy.

  2. SP
    June 21, 2014

    Quite agree that electronics industry gets affected due to international politics. There are different rules and regulations globally, electronics market would get affected. Every country has a different kind of politics localy but electronics remains the same but its the rony that there is no standard policy globally.

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