U.S. Encouragement of Mining Investment in Developing Countries]

The topic discussed centered on the concern about potential problems in acquiring strategic critical materials and focused on short-term supply disruptions caused by politically inspired embargoes, war, civil unrest, natural disasters, and deliberate supply restrictions to raise prices by a monopoly producer or cartel of producers. There is also a longer term concern that declining investment in mining and processing capacity will lead to a demand that outstrips supply. If such an outcome reflects economic considerations, there may be little in the way of a policy response to promote additional investment that would seem appropriate. However, if the decline in investment is the result of market imperfections that impede potentially profitable investment, Government involvement becomes a defensible option. Concern exists because developing countries generally have maintained production by exploiting the results of past exploration undertaken by international mining companies. U.S. mining and smelting investments in developing countries have fallen as a percentage of total overseas mining investment in the past decade. Mining investments have slowed because the growing desire of most developing countries to exercise firmer control over extractive industries and the ability of the United States to alter the investment climates in developing countries is limited. It has initiated or supported a variety of bilateral and multilateral efforts to promote mining investment in these countries. GAO stated that the Overseas Private Investment Corporation's minerals and energy program was specifically designed to accomplish this objective. Another activity which policymakers have cited as indirectly aiding the Government's effort to address the problem is the Export-Import Bank's financing of export sales of U.S. mining equipment and expertise. U.S.-supported initiatives to encourage mining investment in developing countries have been marginally helpful as a means of securing adequate and economic supplies of strategic and critical minerals for the United States.