Key Takeaways
The U.S. Export-Import Bank approved $15.8 million for Empire State Mines to advance zinc and critical minerals production in New York.
Zinc is the fourth-most widely used metal worldwide, used in galvanizing steel, protecting it from corrosion, and producing gallium and germanium — key inputs for advanced semiconductors and defense technologies — when refined.
China has market dominance for many critical minerals and, in December 2024, banned exports of these rare earth elements to the United States.
The United States was once a hub for refined zinc, but now imports over 70% despite mining zinc domestically and having the largest zinc mine in the world, Red Dog in Alaska.
As the Red Dog mine is expected to close in 2031, the United States needs to scale up domestic mining and refining operations, encourage private investment, promote price stability, and deepen partnerships with allied nations to ensure an adequate supply of refined zinc, germanium, and gallium.
The U.S. Export-Import Bank approved $15.8 million for Empire State Mines to advance zinc and critical minerals production in New York, including developing the “first integrated natural flake graphite operations in the United States since 1956.” According to NS Energy, this is the first direct mining transaction under the Make More in America Initiative, a federal initiative to reshore industrial capacity, secure U.S. supply chains for critical materials, and expand the domestic manufacturing base. The funds will be used for capital equipment and infrastructure upgrades to support existing and future operations.
Via Mining.com, the complex at Empire State Mines consists of an operational mine, six historic mines, and a 5,000-metric-ton-per-day mill. In early 2025, an updated mine plan showed a projected production increase of 35% and a two-year extension to the mine’s life from an increased zinc resource base of 465 million pounds in measured and indicated resources and over one billion pounds in inferred resources. Exploration is continuing with a target range between 5-5.5 million metric tons at average zinc grades of 10-14%.
Graphite at the site has an inferred resource of 22 million metric tons at an average grade of 2.91% graphitic carbon, containing 653,000 metric tons of graphite. Graphite has a multitude of uses, including in electric vehicle batteries. The United States imports its graphite, with China providing 43% last year. According to the U.S. Geological Survey, China produced 79% of the world’s graphite in 2024.
According to the Center for Strategic and International Studies (CSIS), zinc is the fourth-most widely used metal worldwide, after iron, aluminum, and copper, with an annual market value of $40 billion. It is used in steel galvanization due to its low melting point, malleability, and wear resistance, protecting iron and steel from corrosion. Refining zinc also produces gallium and germanium — key inputs for advanced semiconductors and defense technologies. China has market dominance for many critical minerals and banned exports of germanium to the United States in December 2024. In 2023, China accounted for 68% of the global production of germanium. The United States is heavily dependent on refined zinc imports. Lacking sufficient refining capacity, the United States imports over 70% of its refined zinc.
Background
In Rebuilding U.S. Zinc Capacity in an Era of Global Competition, CSIS explains that the United States was once the largest zinc processor in the world, with 19 processing plants in operation. By the late 1950s, the United States had an excess supply of zinc, which prompted the government to increase stockpiles and initiate quotas and barter agreements to reduce foreign supplies. By the late 1960s and 1970s, incentive programs ended, foreign mine production decreased, and domestic processing facilities were unable to obtain enough feedstock, causing the government to release its stockpiles. The result was market volatility and demand uncertainty that closed domestic processing facilities and reduced investment in new construction. By the 1980s, the remaining U.S. processing infrastructure was largely outdated and in need of modernization.
The United States currently produces slightly more than 6% of the world’s zinc, while China produces 33%. Most of the U.S. production, nearly 70% percent, takes place at the Red Dog mine in Alaska, owned by Canada’s Teck Resources. Red Dog is the top-producing zinc mine in the world due to its high ore grades and mill rates and reasonably low production costs; however, production at Red Dog is expected to decrease in the future as ore depletes and degrades.
The United States is heavily dependent on foreign suppliers for refined zinc due to a lack of domestic refining capacity. In 2024, the United States imported 600,000 metric tons — 73% of the refined zinc it consumed. It produced almost 750,000 metric tons of zinc concentrate and exported 580,000 metric tons, lacking the capability to refine it. Between 2020 and 2023, the United States imported 59% of its refined zinc from Canada and 16% from Mexico. These imports are affected by Trump’s tariffs and may result in the countries looking into other markets for export.
Analysis
Zinc is an essential component of the industrial processes for steel and semiconductors, making it a critical mineral for ensuring American competitiveness in technology and defense. U.S. investment in the Empire State Mines will help to bring the mining stage of the production process onshore, which could benefit national security by shifting production away from China. However, given China’s relatively low share (33%) of the zinc mining market and Canada and Mexico’s dominance of refining, the national security stakes for zinc seem relatively low compared to other critical minerals. Additionally, government-backed loans of this kind often have the adverse effect of distorting market signals away from market-driven investments toward politically favored ones, reducing economic growth.
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