On June 2, 2020, former Secretary of Commerce Wilbur Ross announced the initiation of a Section 232 investigation into whether the quantities or circumstances of imports of vanadium into the United States threaten to impair U.S. national security. This investigation was the result of a petition filed by U.S. producers AMG Vanadium LLC (Cambridge, Ohio) and U.S. Vanadium LLC (Hot Springs, Arkansas). See Update of June 3, 2020. Vanadium is a chemical element that occurs naturally in 65 minerals and in fossil fuel deposits. It is used in the production of metal alloys and as a catalyst for chemicals across the aerospace, defense, energy and infrastructure sectors. Despite the formal request for public comments on the matter, no formal determination was issued by the Department of Commerce on this investigation, and no actions were taken by then-President Donald Trump within the statutory time period. The Department of Commerce report was made public for the first time last month and revealed a number of noteworthy findings:
- There is currently only one primary producer of vanadium in the United States, with two active secondary producers. The primary producer has only produced vanadium once during the last five years, supplying less than 4 percent of U.S. demand. The biggest challenge for the domestic industry has been low and volatile vanadium prices.
- Globally, primary and co-production of vanadium is concentrated in four countries: China, Russia, South Africa and Brazil, with China accounting for over half of global production.
- Vanadium is a critical mineral, with the Department of Interior including it on its List of Critical Minerals essential to the national security of the United States.
- Vanadium is required for national defense systems and critical infrastructure, and the industry has significant effects on other industries critical to national security.
- The United States is “presently reliant on imports of vanadium,” and those imports have had “mixed effects on the economic welfare of the United States,” although reliance on imports is not increasing.
- U.S. vanadium production “is well below domestic demand” and imports have affected the U.S. economy, but any impact has been mitigated by other actions – such as trade actions to mitigate artificially low-priced imports of ferrovanadium and critical minerals agreements with other countries to ensure reliable supplies.
- Increased global capacity and production of vanadium – particularly in China – will “further impact the long-term viability of U.S. vanadium production.”
Despite these findings, however, the Department of Commerce determined that “unilaterally imposing import tariffs or quotas in order to raise the domestic price of vanadium would largely impact domestic steel and titanium industries and would therefore have significant negative effects on the economic and national security of the United States.” The report thus concluded that while vanadium is critical to national security, “the present quantities and circumstances of vanadium imports do not threaten to impair the national security.” Despite no actions in response, Secretary Ross did conclude that there are “several steps that can and should be taken to support the domestic vanadium industry and related sectors” to ensure a safe, reliable and healthy domestic industry. These non-exhaustive recommendations are:
- Expansion of the National Defense Stockpile to include high purity vanadium pentoxide based on three benchmarks: defense system requirements, broader national security requirements and total domestic demand. This would require legislative changes to the Strategic and Critical Materials Stockpiling Act.
- Further promotion and support of recycling and reprocessing of critical minerals, including vanadium, especially since most vanadium production in the United States occurs through recycling.
- Continuing ongoing and proposed U.S. government actions that support the domestic supply of all critical minerals as such support would also address domestic vanadium supply challenges.
The report also notes that another key action that will enable strong domestic critical minerals industries comes from Executive Order 13817 and the resulting Federal Strategy, Executive Order 13953 (Addressing the Threat to the Domestic Supply Chain From Reliance on Critical Minerals From Foreign Adversaries and Supporting the Domestic Mining and Processing Industries).