he United States faces a security vulnerability that existed before the COVID-19 pandemic disrupted supply chains or Russia invaded Ukraine—relying on adversaries for critical materials. One of the most fragile of all the Pentagon’s supply chains is the one that furnishes titanium. Key to aircraft frames, guided missiles, naval vessels, armor and rocket engines, the element is sourced entirely abroad. Russia’s ongoing war in Ukraine, which has driven up prices and disrupted the global supply chain for titanium, should be a wakeup call for the United States. The United States must take action to ensure that it is not reliant on adversarial nations for such a critical resource in the future.
The global titanium market is dominated by China, Japan, and Russia, which are the world’s first, second- and third-largest producers of titanium sponge, respectively. Titanium sponge feeds into the finished titanium products used in defense articles. Since the early 2000s, China increased its titanium sponge production 22-fold from 9,500 metric tons to 210,000 metric tons last year. And while China consumes most of the titanium it produces, it is ramping up production for export, which could affect prices that are already artificially low. Russia has manipulated the market for titanium sponge, much like it does with gas, which drives down prices for titanium sponge globally. Russian VSMPO-Avisma locked customers, such as Boeing and Airbus, into contracts at artificially low prices, distorting the market for titanium sponge and making it cost prohibitive for the U.S. titanium industry to continue to manufacture titanium sponge. Given their positions in the market, China and Russia dictate the price and the supply for titanium while making the Pentagon strategically dependent on America’s great power rivals. This pertains not just to the United States, but also to its NATO allies. In late July, the European Union withdrew a plan to sanction Russia's state-owned titanium producer VSMPO-Avisma because of concerns from France—home to plane maker Airbus.
Titanium’s importance is hardly in doubt. In 2018, the Commerce Department’s Bureau of Industry and Security declared it “essential” to U.S. defense. Earlier this year, the Interior Department listed it among critical minerals. Likewise, Congress recently recognized it as a strategic material. Furthermore, advances in 3D-printing with titanium powder are part of additive manufacturing, which the National Security Council has included in its list of critical and emerging technologies to be prioritized within the United States and safeguarded from adversary nations. However, titanium is also available in other areas and among U.S. allies—such as in Ukraine.
Congress has displayed concern about vulnerabilities created by gaps in the supply chain for titanium among other strategic and critical materials. This year’s House National Defense Authorization Act (NDAA) mandates the U.S. Department of Defense (DoD) deliver a report to Congress on its requirements for strategic and critical materials to identify supply chain vulnerabilities. Specific reporting requirements for titanium were also included. Last year’s NDAA included a provision, Section 6505, that requires the executive branch explore how the United States can better access the Ukrainian titanium industry to reduce its dependence on Russia and China. This year’s NDAA includes a reporting requirement about efforts to reestablish U.S. titanium processing facilities, the last of which shuttered in 2020 because its methods were no longer cost-effective.
However, the time to simply study the problem has past—now is the time to act. The fastest way to lessen the vulnerability that exists with titanium would be to reestablish titanium processing in the United States, but with new technology that can make it more cost effective. Given the artificially low price of titanium sponge, the U.S. government can and should step in to assist by ensuring this year’s final NDAA retains the reporting requirement to onshore titanium processing facilities. It can also use a provision in the 2022 Additional Ukraine Supplemental Appropriations Act that included $600 million for the Defense Production Act (DPA) to bring this capability to the United States from Ukraine. Some of these monies are allocated “to expand domestic capacity and invest in domestic production of strategic and critical materials to respond to global shortfalls to ensure a secure and resilient industrial base.” Technology has been developed by the Ukraine-based Velta—of which the authors of this piece are executives—which makes titanium processing both more efficient and cleaner. Titanium is but one essential material needed to help keep America secure but addressing U.S. titanium vulnerability would be a significant and crucial step towards giving America the supply chain security it needs.
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Fixing A Critical Materials Vulnerability in U.S. Security
Photo by Scott Webb via Unsplash.
September 14, 2022
Titanium is one of the most fragile of all the Pentagon’s supply chains. The U.S. often relies on adversaries for these critical materials, but Russia’s war in Ukraine and its disruption of the titanium supply chain should be a wakeup call, writes Velta’s Andriy Brodskyy and Olena Lesnyak.
T
he United States faces a security vulnerability that existed before the COVID-19 pandemic disrupted supply chains or Russia invaded Ukraine—relying on adversaries for critical materials. One of the most fragile of all the Pentagon’s supply chains is the one that furnishes titanium. Key to aircraft frames, guided missiles, naval vessels, armor and rocket engines, the element is sourced entirely abroad. Russia’s ongoing war in Ukraine, which has driven up prices and disrupted the global supply chain for titanium, should be a wakeup call for the United States. The United States must take action to ensure that it is not reliant on adversarial nations for such a critical resource in the future.
The global titanium market is dominated by China, Japan, and Russia, which are the world’s first, second- and third-largest producers of titanium sponge, respectively. Titanium sponge feeds into the finished titanium products used in defense articles. Since the early 2000s, China increased its titanium sponge production 22-fold from 9,500 metric tons to 210,000 metric tons last year. And while China consumes most of the titanium it produces, it is ramping up production for export, which could affect prices that are already artificially low. Russia has manipulated the market for titanium sponge, much like it does with gas, which drives down prices for titanium sponge globally. Russian VSMPO-Avisma locked customers, such as Boeing and Airbus, into contracts at artificially low prices, distorting the market for titanium sponge and making it cost prohibitive for the U.S. titanium industry to continue to manufacture titanium sponge. Given their positions in the market, China and Russia dictate the price and the supply for titanium while making the Pentagon strategically dependent on America’s great power rivals. This pertains not just to the United States, but also to its NATO allies. In late July, the European Union withdrew a plan to sanction Russia's state-owned titanium producer VSMPO-Avisma because of concerns from France—home to plane maker Airbus.
Titanium’s importance is hardly in doubt. In 2018, the Commerce Department’s Bureau of Industry and Security declared it “essential” to U.S. defense. Earlier this year, the Interior Department listed it among critical minerals. Likewise, Congress recently recognized it as a strategic material. Furthermore, advances in 3D-printing with titanium powder are part of additive manufacturing, which the National Security Council has included in its list of critical and emerging technologies to be prioritized within the United States and safeguarded from adversary nations. However, titanium is also available in other areas and among U.S. allies—such as in Ukraine.
Congress has displayed concern about vulnerabilities created by gaps in the supply chain for titanium among other strategic and critical materials. This year’s House National Defense Authorization Act (NDAA) mandates the U.S. Department of Defense (DoD) deliver a report to Congress on its requirements for strategic and critical materials to identify supply chain vulnerabilities. Specific reporting requirements for titanium were also included. Last year’s NDAA included a provision, Section 6505, that requires the executive branch explore how the United States can better access the Ukrainian titanium industry to reduce its dependence on Russia and China. This year’s NDAA includes a reporting requirement about efforts to reestablish U.S. titanium processing facilities, the last of which shuttered in 2020 because its methods were no longer cost-effective.
However, the time to simply study the problem has past—now is the time to act. The fastest way to lessen the vulnerability that exists with titanium would be to reestablish titanium processing in the United States, but with new technology that can make it more cost effective. Given the artificially low price of titanium sponge, the U.S. government can and should step in to assist by ensuring this year’s final NDAA retains the reporting requirement to onshore titanium processing facilities. It can also use a provision in the 2022 Additional Ukraine Supplemental Appropriations Act that included $600 million for the Defense Production Act (DPA) to bring this capability to the United States from Ukraine. Some of these monies are allocated “to expand domestic capacity and invest in domestic production of strategic and critical materials to respond to global shortfalls to ensure a secure and resilient industrial base.” Technology has been developed by the Ukraine-based Velta—of which the authors of this piece are executives—which makes titanium processing both more efficient and cleaner. Titanium is but one essential material needed to help keep America secure but addressing U.S. titanium vulnerability would be a significant and crucial step towards giving America the supply chain security it needs.
