The Polar Security Cutter Can Open New Markets in the Arctic

6/17/2020

Photo: Coast Guard

For the PB FY2021, the Coast Guard requested $555 million for their polar security cutter (PSC) program, with a total price of around $2.6 billion for three ships. Consistent with both the Coast Guard’s 2019 Arctic Strategy and the NDS, the PSC program would expand U.S. presence in the Arctic and Antarctic. The USCG 2019 Arctic Strategy anticipates increased competition in the Arctic among the great powers and expects forces like China and Russia to assert its influence in the region. As a result, the U.S. would need to invest heavily in vessels that would increase presence and situational awareness in the Arctic. A key driver for the interest in this region is the presence of rare earth metals – estimated value in the area being about $1 trillion - and oil. The Coast Guard’s strategy could provide maneuvering room for America’s nascent rare earth metals market.

China is the world’s leading supplier of rare-earth metals. These metals are the sources of components used on everything from medical devices to aircraft. Many of America’s most sensitive defense projects use these components. However, since China has a monopoly on rare earth metals, they have leverage over the exportation of these materials and could put many major defense programs at risk. In the Arctic, for example, China is using its Belt and Road Initiative to secure its economic interests and maintain its monopoly.

America, on the other hand, has an incredibly weak rare earth metals market. There is only one mine in the U.S. in Mountain Pass, CA. The Trump Administration has so far taken an interest in boosting rare earth extraction by using the authorities of the Defense Production Act. Moreover, last week, the White House released a memo calling for a study of “[u]se cases in the Arctic that span the full range of national and economic security missions (including the facilitation of resource exploration and exploitation and undersea cable laying and maintenance).” A 2020 USGS report on rare earth metals found that domestic production of these metals has increased over the past five years; however, China still has significant production capacity (~400% over U.S. capacity). Even with minimal production, the U.S. has improved substantially in its processing capabilities. However, that is only once piece of the puzzle, and the U.S. would benefit from opening the Arctic for market capture.

The Trump Administration has already recognized the importance of the Arctic on the strategic level. The U.S. must quickly present itself in the Arctic to both increase economic opportunities, but also enforce international law to avoid a tragedy of the commons. Icebreakers can be incredibly useful in clearing once inaccessible waterways to encourage geological surveys. Here, companies can help provide support in detecting resource-rich areas within America’s EEZ. Several growing companies within the U.S. specialize in rare earth processing. If they could invest in opening mining operations in the Arctic, they would be contributing to an underrated, yet a vital portion of the defense industrial base. 

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