President Donald Trump has announced that American companies will now have access to Venezuela's vast oil reserves. But the country's other resources are also attracting the attention of his administration.
Venezuela has untapped reserves of minerals, metals and potentially rare earth elements, experts say. These raw materials are indispensable for industries from defense to technology, and the administration has repeatedly stressed their importance to U.S. national security.
But while Washington is seeking to secure critical elements for Venezuela, it is a difficult task, experts say, and would do little to strengthen America's supply chain.
The quantity and economic viability of Venezuela's mineral resources are uncertain, CNN reports. Companies also face significant risks from mining in Venezuela without sustainable security guarantees.
Many of these regions have guerrilla soldiers and armed groups engaged in illegal gold mining. The energy-intensive extraction of rare earths can also harm the environment.
“It is clear that even beyond oil, the country has a wide range of natural resources,“ said Reed Blakemore, director of research at the Atlantic Council’s Global Energy Center.
“But if we talk about the conditions under which we can exploit these mineral resources and bring them to market, that is far more challenging,“ said Blakemore. “And even, frankly, more challenging than the oil story.“
China’s Role in the Supply Chain
Even if American companies try to mine Venezuela’s rare earths, getting them out of the ground is only part of the process. These materials are typically shipped to China for refining.
China will account for more than 90% of the world’s rare earth refining by 2024, according to the International Energy Agency. The country holds a virtual monopoly on the processing and refining of the materials due to decades of government subsidies, industry expansion and lax environmental regulations.
Rare earths have become a major sticking point in the trade tensions between the United States and China. Last year, Beijing imposed some controls on rare earth exports amid trade disputes, raising concerns about the lack of secure supply chains for these critical materials in America.
“China still has a near-unique capacity to process rare earths, and that industrial and geopolitical advantage cannot be overcome overnight,“ said Joel Dodge, director of industrial policy and economic security at the Vanderbilt Policy Accelerator.
Critical Minerals and Rare Earths
The U.S. Geological Survey has identified 60 “critical minerals” that are vital to economic and national security.
These critical minerals include a mix of commodities including aluminum, cobalt, copper, lead and nickel. The list also includes 15 rare earths, such as cerium, dysprosium, neodymium and samarium. Rare earth elements refer to a category of 17 specific metallic elements.
These commodities are essential inputs in everyday technology, such as phones, batteries and television screens, as well as in military and defense equipment, such as lasers, fighter jets and missiles.
“Rare earth elements“ is a misnomer, as the elements are relatively ubiquitous in the Earth's crust, according to Julie Klinger, a geographer and associate professor at the University of Wisconsin-Madison. But mining and refining them is the hard part.
In recent years, U.S. lawmakers have become concerned about the country's reliance on imports of these critical elements. Efforts are underway to develop local mining and refining of rare earths in the United States, but planning timelines could take years, if not decades.
Critical Minerals in Venezuela
The U.S. Geological Survey does not include Venezuela on its list of rare earth countries (countries on the list include China, the United States, Brazil, and Greenland, among others).
Two and a half decades of rule by Presidents Hugo Chavez and Nicolas Maduro in Venezuela have created a gap in information about the extent of the country's resources, experts say.
However, experts believe that Venezuela has deposits of some minerals, such as coltan - from which the metals tantalum and niobium are obtained - and bauxite, which can contain aluminum and gallium. Tantalum, niobium, aluminum, and gallium are considered critical minerals by the United States Geological Survey.
In 2009, Chávez touted the country's natural resources, including "blue gold," a nickname for coltan. That same year, Chávez said that a large coltan reserve had been discovered in the country, according to Reuters.
In 2016, Maduro created the Orinoco Mining Arc, a section of Venezuela designated for mineral exploration and extraction. But the region is plagued by illegal mining.
“While the country has large deposits of mineral resources, it is crippled by a combination of poor geological data, a low-skilled workforce, organized crime, lack of investment and an unstable political environment,“ said Sung Choi, metals and mining analyst at BloombergNEF, in a note.
“Despite its current geological potential, Venezuela is unlikely to play any meaningful role in the critical minerals sector for at least the next decade,“ Choi concluded.