Critical Defense Materials: Government Collected Data Are Sufficiently Reliable to Assess Tantalum Availability
Released: 2016-03-17T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: The United States relies on foreign mine production of tantalum, a corrosion-resistant metal that is used in commercial and defense applications. Having reliable information on the global supply of tantalum is important for defense planning, particularly in determining if it is necessary to stockpile in case of future shortages. The House Armed Services Committee Report on a bill for the National Defense Authorization Act for Fiscal Year 2016 included a provision for GAO to examine the global tantalum supply chain, with a focus on why data reported by the government and by industry vary.

This report addresses (1) how tantalum supply data reported by government sources differ from industry data, and (2) the extent to which DOD has assessed the availability of tantalum during emergency planning scenarios. GAO reviewed data compiled by the USGS—DOD's primary source for tantalum production data—and by a tantalum industry organization that makes its information publicly available. GAO interviewed DOD and industry officials about the reporting and collection methods for the data; examined the data DOD uses to determine potential shortfalls of materials, including data for its biennial Strategic and Critical Materials Reports on Stockpile Requirements; and discussed with DOD officials steps they have taken to assess the reliability of the data used in the analyses.

section_title: What GAO Found
paragraphs: Data published by government and industry on the global supply of tantalum vary due to differences in forms of tantalum reported and data collection methods. For example, government data prepared by the United States Geological Survey (USGS) on tantalum production reports information on tantalum ore from mining. Industry data GAO obtained from the Tantalum-Niobium International Study Center includes additional forms of processed tantalum, such as synthetic concentrates and slags and recycled tantalum materials. In collecting data, the USGS employs specialists to estimate production data by country of origin for government agencies, including the Department of Defense (DOD), by conducting annual surveys of foreign governments on mine production and relying on country specialists. In contrast, industry data compiled by the Tantalum-Niobium International Study Center is based on aggregated data voluntarily reported by its member companies as a service to those members rather than in support of the federal government. The table below summarizes the differences in USGS and industry data.

Source: GAO analysis of United States Geological Survey and tantalum industry data and collection methods. I GAO-16-335

DOD assesses the availability of tantalum, among other materials, for selected planning scenarios for the National Defense Stockpile's biennial assessment process. Further, DOD takes steps to help ensure that tantalum supply data used in its stockpile analyses are reliable. For example, USGS provides the Defense Logistics Agency-Strategic Materials (DLA-Strategic Materials)—the stockpile program manager—with the data it collects and validates. Consistent with internal control standards, DLA-Strategic Materials officials said they then verify sources and check calculations to ensure that data are reliable before conducting their stockpile analyses. Since 2013, DLA-Strategic Materials has identified potential shortfalls for tantalum and recommended stockpiling. Given DLA-Strategic Materials' interest in using the most accurate information available, it is taking additional steps to review and analyze existing industry tantalum data sources to better inform its stockpile analyses.

section_title: What GAO Recommends
paragraphs: GAO is not making recommendations. Neither DOD nor the Department of the Interior provided written comments.

section_title: Letter
paragraphs: Tantalum is a material which is used in a variety of commercial and  critical defense applications such as mobile phones and turbine engines  for aircraft. The United States is entirely reliant on foreign sources for  tantalum mine production. Substantial quantities of global tantalum  production originate in high conflict zones such as the Democratic  Republic of the Congo and other countries in Central Africa, raising  concerns that proceeds from tantalum, a “conflict mineral,” may be  financing conflict in the region. In addition, large quantities of tantalum  are processed outside the United States in countries such as the People’s  Republic of China. Therefore, having reliable information on tantalum’s  supply chain, such as the amount of supply available, is important for  defense planning, particularly in determining if it might be necessary for  the Department of Defense (DOD) to stockpile the material to provide for  potential contingencies.

Congress has expressed concern about the reliability and transparency of  the tantalum supply chain, particularly questioning why data reported by  the government and by industry vary. The House Armed Services  Committee Report on a bill for the National Defense Authorization Act for  Fiscal Year 2016 included a provision for GAO to examine the global  tantalum supply chain. This report addresses (1) how data on tantalum  supply reported by government sources differs from data reported by  industry, and (2) the extent to which DOD has assessed the availability of  tantalum during national defense emergency planning scenarios.

To compare the data available on tantalum supply reported by  government sources and industry sources, we met with officials from the  United States Geological Survey (USGS), Defense Logistics Agency  Strategic Materials (DLA-Strategic Materials) and the Office of the  Undersecretary of Defense for Acquisition, Technology and Logistics  within DOD, as well as officials from the Tantalum-Niobium International  Study Center (TIC) and other companies to identify tantalum data sources  and collection methods and to discuss the available tantalum supply data.  For the purposes of our review we focused on USGS tantalum production  estimates, which are DOD’s primary source for estimated tantalum  production in the 2015 Strategic and Critical Materials Report on  Stockpile Requirements (Stockpile Report). We also reviewed industry  data collected by the TIC, an international, non-profit association founded  in 1974 with about 90 member companies worldwide. Some of the TIC’s  data are publically available, and it is one of several industry data sources  being considered by DOD to inform its analysis in the Stockpile Report.  We obtained and analyzed the USGS tantalum data used by DOD, and  assessed the reliability of USGS data by (1) reviewing existing  information about the data and the system that produced them, and (2)  interviewing agency officials knowledgeable about the data. We  determined that the data were sufficiently reliable for the purpose of this  report. We also examined industry data to identify similarities and  differences between the data sources and the methods of compiling the  data. Based on our review of industry data, we determined the data were  not sufficiently reliable for the period of our review. As a result, we do not  compare supply estimates from USGS and industry. We use the  information obtained from industry to demonstrate differences between  industry and USGS collection and reporting methods.

To assess the extent to which DOD has evaluated the availability of  tantalum supply during national defense emergency planning scenarios,  we examined DOD reports and data used in the stockpile analysis and  met with officials from DLA-Strategic Materials to determine what steps  were taken to assess the reliability of the data. In particular, we examined  how DOD used the data to assess the availability of tantalum during  specific national defense emergency scenarios as part of the National  Defense Stockpile’s biennial requirements assessment process, and we  reviewed DOD’s Stockpile Reports from 2011, 2013, and 2015 to  understand DOD’s analyses and efforts to identify risks related to the  availability of tantalum. Further, we met with officials from DOD and the  Institute for Defense Analyses, the federally funded research center that  assists with the stockpile analysis, to understand the Risk Assessment  and Mitigation Framework for Strategic Materials model used to inform  the Stockpile Report and the specific steps and challenges to determining  tantalum availability. See Appendix I for additional details on the scope  and methodology.

We conducted this performance audit from August 2015 to March 2016 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Tantalum is a hard, gray metal with a high melting point that is highly  resistant to corrosion. It is a good conductor of heat and electricity. These  attributes make it a valuable material for use in numerous military  applications such as capacitors used in electronics equipment including  computers, turbine engines for aircraft, and the linings of missile  warheads. It is also used in numerous commercial consumer products  such as mobile phones, personal computers, chemical processing  equipment, heat exchangers, anti-lock brake systems, and airbag  activation systems. It is possible to substitute other materials for tantalum,  but substitutions usually result in a loss of performance.

Worldwide tantalum supply begins with mining tantalum ore—a  concentration of tantalum-containing minerals, such as tantalite, microlite,  and wodginite—that is economically feasible to mine. Ore is the principal  raw material from which tantalum is derived, and can be mined through  industrial operations which may be mechanized or through artisanal  mining operations, which are characterized by a lack of mechanization.  The ore is further processed into tantalum concentrate by physically  removing unwanted materials. Tantalum is also derived from synthetic  concentrates, where tantalum is extracted from slags, for example, from  processing tin concentrates or other forms of industrial processing.

These concentrates can be chemically processed into tantalum salts,  tantalum oxides, or other marketable tantalum materials such as tantalum  powder, metal, and alloys, which are then further manufactured into end- products. Figure 1 shows details of the tantalum supply chain.

The USGS collects, monitors, and analyzes information about natural  resource conditions, issues, and problems, including those related to  tantalum, to provide information to various government agencies,  including DOD. Within USGS, the National Minerals Information Center  develops and provides statistics and information on the worldwide  production, consumption, and flow of minerals and materials essential to  the United States economy and national security. To communicate this  information, the USGS produces two publications that include information  on tantalum, among other minerals.

The Minerals Yearbook is an annual publication that provides  statistical data on over 90 commodities over a 5-year period. It also  includes data from over 175 countries on mineral production and  trade, among other things.

The Mineral Commodity Summaries is based on the data reported in  the Yearbook and published each January. The annual summary  includes similar historical data as reported in the Minerals Yearbook,  as well as production estimates from the current reporting year.

According to the USGS’ 2015 Mineral Commodity Summaries, the United  States relies solely on imports to meet needs for tantalum; there has been  no significant tantalum mined in the United States since 1959 because  the tantalum cannot be economically mined at prevailing prices.  Countries for which the USGS reported tantalum mine production in 2014  are Brazil, Burundi, China, Democratic Republic of the Congo, Ethiopia,  Mozambique, Nigeria, and Rwanda. Although Australia has some of the  largest reserves of tantalum, USGS reported no production for the  country in 2014. The USGS estimated in its 2015 Mineral Commodity  Summaries that the two largest producers of mined tantalum in 2014  were Rwanda and the Democratic Republic of the Congo, producing  approximately 600 and 200 metric tons, respectively. This amount  represented approximately two-thirds of USGS’ total 2014 estimated  global mine production.

The National Defense Stockpile maintains a domestically held inventory  of strategic and critical materials. DOD uses USGS information on  materials, in part, to help address its National Defense Stockpile program  objectives. One objective of the National Defense Stockpile program is to  decrease the risk of dependence on foreign suppliers or single suppliers  for strategic and critical materials, such as tantalum, that are used in  defense and essential civilian applications. Authority for stockpiling  strategic and critical materials, which can include tantalum, is contained in  the Strategic and Critical Materials Stockpiling Act (Stockpile Act) that  lays out the purpose and responsibilities for the National Defense  Stockpile.

DOD generates national emergency scenarios for the Stockpile Act and  related National Defense Stockpile Report. These scenarios cover four- year timeframes where the first year represents a period of conflict, and  years two through four represent a period of recovery. The one-year  period of conflict takes into consideration the following conditions: (1) a  catastrophic attack on a United States city by a foreign terrorist  organization or rogue state, (2) two near simultaneous major combat  operations, (3) war damage from a highly capable enemy, and (4)  ongoing military activities such as a military presence in a foreign country.  On behalf of DOD, DLA-Strategic Materials serves as the National  Defense Stockpile program manager, whose functions include: determining materials deemed strategic and critical, precluding, when possible, a dangerous and costly dependence by  the United States upon foreign sources for supplies of such materials  in times of national emergency, and  submitting a biennial report to Congress detailing stockpiling  requirements and recommendations for the National Defense  Stockpile based on certain national emergency planning assumptions.

USGS and DOD have an interagency support agreement to facilitate data  sharing in support of DOD’s biennial Stockpile Report. According to the  agreement, USGS provides DOD with data on United States production,  consumption, imports, exports, and world production by country for  materials in the National Defense Stockpile and other materials critical for  defense applications. USGS data on worldwide tantalum production is the  primary production data source used by DOD to support its stockpile  analyses. As the program manager for the National Defense Stockpile,  DLA-Strategic Materials is responsible for compiling the data it receives  from a number of entities, including the USGS and Department of  Commerce, and performing analyses to determine if shortfalls for  materials will occur during potential conflict scenarios. Table 1 provides a  list of the sources of data and examples of the data used by DLA- Strategic Materials.

The analyses focus on the sources of materials and the likelihood these  materials will be available in the conflict scenario based on forecasted  demand for materials in critical defense and civilian uses. In the case of a  material shortfall, the analyses also consider mitigation strategies such as  increased production or substitutions that could be made for these  materials. The results of these analyses are published biennially in DOD’s  Stockpile Report and are the basis for DOD’s recommendations to  stockpile certain materials.

section_title: Tantalum Data from Government and Industry Sources Vary Due to Differences in Forms of Tantalum Reported and Data Collection Methods
paragraphs: Government and industry tantalum information differ because the  government reports on tantalum ore from mining operations, whereas  industry data include not only mining but also data on additional forms of  processed tantalum, such as synthetic concentrates and scrap. In  addition, government and industry have different data collection methods  to address their specific needs. Differences include which forms of  tantalum are measured, the frequency of data collection, and data  validation practices. Having reliable tantalum data is important because  DOD uses the information to assess the availability of tantalum supply by  country during specific planning scenarios, among other efforts.
subsections: section_title: Government and Industry Report Tantalum Data Differently
paragraphs: Government and industry data differ on the forms of tantalum reported.  DOD’s primary government source for mineral production data, the  USGS, captures data on tantalum ore from mining operations but does  not include or estimate synthetic concentrates such as tantalum derived  from tin slags, other means of industrial processing, or secondary types of  tantalum such as scrap or recycled tantalum. USGS officials told us that  they have limited visibility into the supply from secondary types of  tantalum, such as scrap or recycled materials, and thus for reliability  reasons, only report mine production. However, USGS officials also said  their data includes some artisanal mining reported from countries like  Rwanda or the Democratic Republic of the Congo, although it is difficult to  quantify how much of the tantalum production they report is from  industrial versus artisanal mining.

Industry data, which, for the purpose of our review, are largely publically  available data from the TIC, include tantalum supply from sources other  than mined ore. For example, the TIC reports tantalum data that includes  supply from mining as well as synthetic concentrates and slags from  processing tin concentrates and other materials. Further, the TIC reports  data on purchases of tantalum ore, synthetic concentrates, and some  recycled material from member companies. These data may also include  artisanal mined ore and processed materials of unknown origin. As a  result, TIC data on tantalum purchased by processors—companies that  modify the tantalum and change it into different forms for use—show  higher supply figures than USGS reports on tantalum ore from mining  operations.

section_title: Government and Industry Have Different Data Collection Methods
paragraphs: Our review also identified differences in data collection methods that  affect USGS and industry tantalum reporting, including differences in how  and when data are collected and validated. The USGS collects data on  tantalum and other minerals to provide information to various government  agencies, including DOD. Table 2 summarizes a comparison of  government and industry data reporting and collection practices.

To facilitate its data collection, the USGS employs country and mineral  commodity specialists to help estimate tantalum production by country of  origin. USGS officials said they use the term commodity to refer to ore,  minerals, and materials, and their mineral commodity specialists have  expertise in mineral and material markets and industries. According to  USGS and DLA-Strategic Materials officials, providing production  information by specific country is important to DLA-Strategic Materials’  ability to assess tantalum supply risks and how much tantalum the United  States may be able to acquire during conflict scenarios. USGS country  and mineral commodity specialists annually survey foreign governments  on the production of tantalum from mining, gather data and information  from in-country visits, and review mineral reporting provided by  embassies and industry sources to estimate tantalum production. USGS  officials told us that while the quality of the data provided by foreign  governments can vary widely, its specialists use their expertise with a  mineral commodity or country to estimate production even if the data are  incomplete or questionable. For example, in cases where the amount of  tantalum reported is significantly different than previous information,  specialists can use mining permits, trade analysis, and mine capacities to  confirm estimates.

In contrast, TIC data are provided as a service to its member companies  rather than in support of the federal government, and are based on  tantalum supply data voluntarily reported by those members. The TIC  employs an independent company to compile surveys from its member  mining and processing companies on a quarterly basis. Supply data are  compiled and aggregated into categories such as raw material reported  by mining, sales of tantalum products, and material purchased by  companies that further process tantalum. These data are not reported by  company or country of origin.

USGS and industry also vary in their procedures for validating tantalum  data. USGS data are required to meet USGS Fundamental Science  Practices, a set of consistent practices, philosophical premises, and  operational principles that serve as the foundation for research and  monitoring activities. These practices describe how USGS work is  carried out and how the resulting information products, such as maps,  imagery, and publications, are developed, reviewed, and approved. The  USGS also examines the mineral commodity data it collects by using a  set of 14 statistical standards, most recently revised in November  2014. These 14 standards include definitions of statistical terms,  conversion factors, and guidelines for graphic display of statistical  information, among other things. In addition, USGS mineral commodity or  country specialists compile and review survey data. In cases where these  experts have different estimates, USGS officials said that managers  resolve the differences based on discussion with the analysts, their own  expertise, and contacts within other governments or industry to arrive at a  final USGS position. Further, USGS guidelines provide that at least 75  percent of surveys should be returned in order to report data in its  publications.

In comparison, TIC officials stated that they do not have processes in  place to validate the data received from their member companies, but  they do have some guidelines for compiling the data. For example, the  TIC guidelines request that member companies not report sales and  purchases from other member companies to avoid double-counting of  primary tantalum production. Further, the guidelines require that two- thirds of member companies, and certain major companies, provide data  before the publications are released. However, industry officials we spoke  with told us the TIC is not in a position to check or validate information  provided by its members and that it is uncertain how much of the tantalum  market the TIC’s members encompass, making it difficult to ascertain how  much of the worldwide tantalum market is reflected in its data.

section_title: DOD Has a Detailed Process in Place to Evaluate the Availability of Tantalum and Is Taking Steps to Mitigate Risk Posed by Existing Data
paragraphs: DOD has established a process for evaluating materials’ availability,  including tantalum, as part of the National Defense Stockpile’s biennial  requirements assessment process as required under the Stockpiling Act.  To inform DOD’s stockpile analysis, USGS provides DLA-Strategic  Materials with the data it collects and validates, and DLA-Strategic  Materials takes steps to ensure that the data are reliable. Further, as the  program manager for the National Defense Stockpile, DLA-Strategic  Materials assesses the availability of tantalum and other materials for  national defense emergency planning scenarios as required under the  Stockpiling Act. For example, in DOD’s 2015 Strategic and Critical  Materials Report on Stockpile Requirements, tantalum was among over  90 materials assessed for a potential shortfall. DLA-Strategic Materials is  also taking additional steps to review and analyze industry data sources  to address tantalum data challenges and better inform its stockpile  analysis.
subsections: section_title: DOD Has a Detailed Process to Assess Tantalum Availability for National Emergency Planning Scenarios
paragraphs: DOD has a process for assessing the available supply of tantalum in  selected planning scenarios as part of the National Defense Stockpile’s  biennial requirements assessment process, as required under the  Stockpiling Act. Prior to evaluating tantalum and other materials’  availability, DOD officials take steps to ensure that supply data used in its  stockpile analysis are reliable. As discussed previously, USGS has  documented procedures to validate its data and DLA-Strategic Materials  officials identified additional steps they take to ensure that data are  reliable, consistent with Standards for Internal Control in the Federal  Government and other guidelines. For example, DLA-Strategic  Materials officials said that their material specialists coordinate closely  with USGS commodity and country specialists to verify data sources,  such as whether production data are from USGS surveys or mining  publications, and to determine how missing or incomplete data have been  accounted for in its reports. Moreover, DLA-Strategic Materials officials  told us they check USGS calculations and unit conversions to ensure  accuracy prior to sending the data to the Institute for Defense Analyses,  the federally funded research center responsible for the model used to  perform the stockpile analysis. DLA-Strategic Materials officials also  noted that they rely heavily on their own subject matter expertise, as well  as interviews with knowledgeable industry and government officials and  complementary data sources to inform their review of USGS production  data and make decisions about whether to adjust tantalum figures. While  DLA-Strategic Materials officials told us they are aware of limitations to  USGS data, they told us they have generally relied on USGS mine data  as the primary source for production data because its estimates are more  conservative. Nevertheless, representatives stated that they believe the  information USGS is able to collect and confirm is a basis for DOD’s  stockpile recommendations. Further, DLA-Strategic Materials officials told  us that USGS has the knowledge-base and resources to effectively  gather and validate reliable and unbiased mine production data as part of  its stated mission and responsibilities.

The Stockpiling Act is intended to provide a process to mitigate  dangerous and costly reliance on foreign sources of materials during  national emergencies. In accordance with the Stockpiling Act, DLA- Strategic Materials reports its findings of potential shortfalls of materials in  the Stockpile Report every two years. In its 2015 report, tantalum was  among over 90 materials assessed for a potential shortfall. Additionally,  from 2011 through 2015 DLA-Strategic Materials identified potential  shortfalls for tantalum. Since 2013, it has recommended stockpiling  various amounts of tantalum. For example, in its 2013 Stockpile Report,  DLA-Strategic Materials reported a shortfall for tantalum of 623,307  pounds, and DLA-Strategic Materials subsequently recommended  stockpiling 187,000 pounds of tantalum divided evenly over a four-year  period along with other mitigation strategies to address the estimated  shortfall. In May 2015, subsequent to issuing the 2015 Stockpile Report,  DLA-Strategic Materials was provided with updated primary tantalum  production data from USGS that revised the supply of tantalum upward,  reducing the estimated shortfall. However, based on historical and  consistent shortfalls as well as the United States’ reliance on foreign  sources, DLA-Strategic Materials officials told us they plan to continue to  seek legislative authority to stockpile tantalum. Table 3 identifies the  reported tantalum shortfalls in DOD’s Stockpile Report from 2011 to 2015  and recommended stockpiling actions.

DLA-Strategic Materials uses a repeatable three-step process to identify  potential shortfalls for materials during national emergency scenarios.

In the first step, DLA-Strategic Materials identifies materials to assess  and establishes data requirements needed for the shortfall  assessments. DLA-Strategic Materials monitors a “watch list” of over  160 materials, which includes tantalum, that are of interest to the  defense community. DLA-Strategic Materials then narrows the watch  list to a smaller number of materials using an internal ranking system  where additional weight is given to risks associated with heavy  reliance on foreign sources of supply and single points of failure along  the supply chain, among others.  In the second step, DLA-Strategic Materials determines whether  material shortfalls exist in the context of national emergency  scenarios. A component of this step is to estimate the global supply of  tantalum available for United States civilian and defense needs. To  estimate available supply, DLA-Strategic Materials and the Institute  for Defense Analyses rely on country reliability assessments, as well  as the specific assumptions of the national emergency scenarios, to  decrement foreign production during a conflict. DLA-Strategic  Materials receives inputs from the intelligence community for the  country reliability assessments and officials told us they may “zero  out” a country’s supply as part of their analyses if that country is  deemed to be unreliable under the assumptions of the national  emergency scenario. Because USGS production data is country- based, DLA-Strategic Materials can apply the assumptions of the  national emergency scenario and country reliability assessments to  decrement those amounts.  In the third step of the process, DLA-Strategic Materials decides what  mitigation strategies are appropriate to reduce any identified  shortfalls, which may include recommendations to stockpile the  material. For example, when a shortfall estimate is initially generated,  DLA-Strategic Materials will determine whether mitigating options,  such as substitution, reducing exports, or additional purchases of a  material are sufficient to eliminate the shortfall. If mitigating options  are not sufficient to eliminate the shortfall, the result is a net shortfall  and DLA-Strategic Materials may decide to recommend a stockpiling  action for that material. Figure 2 illustrates the shortfall analysis  processes.

section_title: DOD is Taking Steps to Mitigate Risks from Existing Data
paragraphs: While DOD has a detailed process for evaluating the availability of  tantalum and other materials, DOD, USGS, and industry officials  identified several challenges that affect their ability to gather complete  and reliable tantalum data. For example, the USGS reported that unlike  other materials and precious metals, tantalum concentrates are not  publicly traded through commodities exchanges. Rather the material is  bought and sold through networks of dealers and on contract between  producers and consumers, some of whom may not provide accurate  statistical data. Further, according to industry officials, artisanal mining,  which is difficult to quantify in USGS reporting, may account for a  significant portion of global tantalum production. In addition, industry  officials commented that some artisanal mining production may enter the  supply chain labeled as scrap to disguise its origin. While DLA-Strategic  Materials officials told us that some of these concerns are not unique to  tantalum, they said the lack of transparent tantalum supply data affects  their ability to collect complete information to inform the stockpile  analysis. Given the above challenges, officials from DOD, USGS, and  industry acknowledged that tantalum has an “opaque” supply chain,  making it difficult to collect more accurate data.

Recognizing these challenges, DLA-Strategic Materials is taking  additional steps to inform its analysis of tantalum availability. For  example, DLA-Strategic Materials has requested that the Institute for  Defense Analyses perform additional work on materials of interest. In  2013, the Institute for Defense Analyses completed a review that  identified weaknesses in the supply chain for processed tantalum used in  some defense applications. Further the Stockpiling Act permits DOD to  identify materials requiring further study. According to the 2015  Stockpile Report, significant reliance on foreign sources or a single point  of failure is the main basis for additional study, but other reasons, such as  a net shortfall or the potential for supply chain disruption can also result in  additional research into a material. Under this authority, DLA-Strategic  Materials said they are conducting research into whether certain  materials, such as tantalum, could be recovered through recycling of  manufactured materials.

Moreover, citing concerns about differences in tantalum data reported by  USGS and industry sources, DOD’s 2015 Stockpile Report noted that  DLA-Strategic Materials will be comparing data and performing additional  analyses on these two sources in advance of their 2017 report. DOD’s  efforts to review industry data were ongoing during our review, but  officials noted several limitations to TIC data. For example, as discussed  above, the TIC’s data is not reported by country, which limits its use in  support of the National Defense Stockpile analyses. Further, DLA- Strategic Materials officials told us they are uncertain about what portion  of the industry is covered by TIC’s reporting members, or how accurate  the data are since there may be incentives for members to over- or under- report. Given these concerns, DLA-Strategic Materials officials identified  several potential next steps they are considering upon completing their  review of the TIC data. For example, officials said they could use the data  as a complementary source to inform their review of USGS mine  production data, similar to DLA-Strategic Materials’ use of Roskill  Information Services market report data. Additionally, officials told us  that given the challenges of collecting accurate and reliable tantalum  data, they may consider running two sets of analyses for tantalum in  future stockpile reports—one using only USGS data and another that  includes industry data estimates. In addition to their review of TIC’s data,  DLA-Strategic Materials is also in the process of compiling its own  estimates for the supply of tantalum derived from slag, scrap, and  recycled tantalum based on data and interviews with various sources,  including USGS, Roskill Information Services, and tantalum processing  companies. DLA-Strategic Materials officials told us that they plan to use  these estimates to inform their 2017 analysis since the United States  mostly imports these secondary types of tantalum, which are not included  in USGS figures.

section_title: Agency Comments
paragraphs: We are not making recommendations in this report. DOD and the  Department of the Interior were provided copies of the draft report.  Neither DOD nor the Department of the Interior provided written  comments. The Department of the Interior provided technical comments  that were incorporated, as appropriate.

We are sending copies of this report to the appropriate congressional  committees, the Secretary of Defense, the Under Secretary of Defense  for Acquisition, Technology, and Logistics, the Secretary of the Interior,  the Director of the United States Geological Survey, the Secretary of  Commerce, the Chairman of the Securities and Exchange Commission,  and other interested parties. In addition, the report is available at no  charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-4841 or at makm@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix II.

section_title: Appendix I: Objectives, Scope and Methodology
paragraphs: The House Armed Services Committee Report on a bill for the National  Defense Authorization Act for Fiscal Year 2016 included a provision for  GAO to examine the global tantalum supply chain. This report addresses  (1) how data on tantalum supply reported by government sources differ  from data reported by industry and (2) the extent to which the Department  of Defense (DOD) has assessed the availability of tantalum during  national defense emergency planning scenarios.

To compare available tantalum data reported by government sources to  industry sources, we met with United States Geological Survey (USGS)  officials, Defense Logistics Agency Strategic Materials (DLA-Strategic  Materials) and other DOD officials, and tantalum industry officials from the  Tantalum-Niobium International Study Center (TIC) to identify tantalum  data sources and collection methods, and to discuss the availability of  tantalum supply data. For the purpose of our review we focused on USGS  tantalum production estimates, which are DOD’s primary source for  estimated tantalum production in the 2015 Strategic and Critical Materials  Report on Stockpile Requirements (Stockpile Report). We also reviewed  industry data collected by the TIC, an international, non-profit association  founded in 1974 with about 90 member companies worldwide. Some of  the TIC’s data are publically available, and the TIC is one of several  industry data sources used by DOD to inform their analysis in the  Stockpile Report. We obtained and analyzed the USGS tantalum  production data that DOD used in developing the 2015 Strategic and  Critical Materials Report on Stockpile Requirements as well as industry  data to identify similarities and differences between the data sources and  the methods of compiling estimates. We assessed the reliability of USGS  data by (1) reviewing existing information about the data and the system  that produced them, and (2) interviewing agency officials knowledgeable  about the data. USGS takes steps to collect and confirm production  estimates for use in their publications such as the Mineral Commodity  Summaries and the Minerals Yearbook. Based on our review of the data  and interviews with USGS and DOD we determined that USGS data were  sufficiently reliable for our purposes. To assess the processes used by  USGS to ensure the reliability of its data, we obtained USGS  Fundamental Science Practices and Statistical Standards and discussed  how those practices are implemented in the reviews of data to be  published in USGS publications. In addition, due to differences in data  collection and reporting methods, USGS and industry tantalum data are  not directly comparable and, therefore, we do not compare supply  estimates from these sources for the purpose of this report. We use the  information to demonstrate differences between industry and USGS data  and collection methods.

For industry, we met with officials from the TIC, Roskill Information  Services Ltd., Commerce Resources Corporation, and Global Advanced  Metals. To the extent possible we confirmed types of information  provided by the TIC by comparing it to published reports. We examined  quarterly reports showing tantalum supply and discussed the types of  data collected and reported and the processes used to assess reliability.  However, based on our review of the process for collecting the data and  assessing the reliability of the data provided by the members and on  interviews with industry officials, we determined that the industry supply  numbers were self-reported, but not verified, and, therefore, not  sufficiently reliable for direct comparison to USGS data. Therefore, we did  not compare USGS and industry figures for this report.

To assess the extent to which DOD has evaluated the availability of  tantalum during national defense emergency planning scenarios, we  obtained and analyzed information in reports prepared by DLA-Strategic  Materials for DOD’s Office of the Undersecretary of Defense for  Acquisition, Technology, and Logistics including the Stockpile Reports  from 2011 through 2015 and the Annual Industrial Capabilities Reports to  Congress. We met with officials from DLA-Strategic Materials and the  Institute for Defense Analyses, the federally funded research center that  assists with the stockpile analysis, to determine what steps were taken to  assess the reliability of data used in the assessment process and mitigate  risk. We obtained and examined DLA-Strategic Materials’ proposed  Annual Materials Plans for fiscal years 2015 through 2017. We reviewed  relevant legislation, regulations, and policy including:  the Strategic and Critical Materials Stock Piling Act (50 U.S.C. § 98 et  seq.); provisions of the Dodd-Frank Wall Street Reform and Consumer  Protection Act (Pub. L. No. 111-203 §1502; policy documents from the Office of the Under Secretary of Defense  for Acquisition, Technology, and Logistics concerning determining  potential shortfalls and the organizational structure for executing the  provisions of the Stockpiling Act.

We reviewed DLA-Strategic Materials data used in the assessments and  documentation of the steps they took to assure data reliability. To  determine the extent to which DOD has assessed the availability of  tantalum during specific national defense emergency scenarios as part of  the National Defense Stockpile’s biennial requirements assessment  process, we reviewed the interagency support agreement between USGS  and DLA-Strategic Materials. To understand the data and support USGS  provides DLA-Strategic Materials, we reviewed the worldwide USGS  production data provided to DLA-Strategic Materials for its assessment.  We reviewed DOD reports to understand the analyses DOD had  conducted to identify risks related to the availability of tantalum. Further,  we met with officials from USGS, DLA-Strategic Materials, and with  analysts from the Institute for Defense Analyses. We discussed sources  of tantalum supply with industry representatives to determine what other  sources of tantalum supply data are available and the general reliability of  such data. We obtained documentation on the model DLA-Strategic  Materials uses to conduct its stockpile analysis including the categories of  information considered by the model to determine potential shortfalls and  provide support for recommending stockpiling amounts.

In addition, we interviewed DOD officials from the Under Secretary of  Defense for Acquisition, Technology, and Logistics and DLA-Strategic  Materials about actions underway to increase the accuracy of the data  reported in the Stockpile Report. We obtained and analyzed such  documentation as was available about proposed and ongoing actions to  improve the reliability and accuracy of tantalum data. We assessed  DOD’s policies, procedures, and practices against criteria in applicable  statutes, Standards for Internal Control in the Federal Government, and  GAO’s Framework for Assessing the Acquisition Functions at Federal  Agencies.

We determined whether or not documentation for the determination of  reliability of the data used in the DLA-Strategic Materials model was  provided but did not assess the adequacy of the information provided. We  interviewed officials from USGS and DLA-Strategic Materials to clarify the  issues. We concluded that the data had been collected and used in  accordance with principles developed by USGS and DLA-Strategic  Materials and were sufficiently reliable for the purpose of obtaining an  understanding of the process used to collect the data, the model for  determining potential shortfalls of material, and the reports produced by  DLA-Strategic Materials.

We conducted this performance audit from August 2015 to March 2016 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Penny Berrier, Assistant Director;  Marie Ahearn; Pedro Almoguera; John Beauchamp; Stephanie  Gustafson; Jeffrey Harner; Mathew Jacobs; Carol Mebane; Jean  McSween; Meghan Perez; Katrina Pekar-Carpenter; and Roxanna Sun  made significant contributions to this review.


Question-summary annotations: questions: question: Why might different sources produce different tantalum data?
answer: Data published by government and industry on the global supply of tantalum vary due to differences in forms of tantalum reported and data collection methods.
child_questions: question: How are the data from the USGS specialized?
answer: For example, government data prepared by the United States Geological Survey (USGS) on tantalum production reports information on tantalum ore from mining.

question: How are the data from the Tantalum-Niobium International Study Center specialized?
answer: Industry data GAO obtained from the Tantalum-Niobium International Study Center includes additional forms of processed tantalum, such as synthetic concentrates and slags and recycled tantalum materials.

question: How does the USGS collect data?
answer: In collecting data, the USGS employs specialists to estimate production data by country of origin for government agencies, including the Department of Defense (DOD), by conducting annual surveys of foreign governments on mine production and relying on country specialists.
child_questions: question: How is this different from the Tantalum-Niobium International Study Center's data collection?
answer: In contrast, industry data compiled by the Tantalum-Niobium International Study Center is based on aggregated data voluntarily reported by its member companies as a service to those members rather than in support of the federal government. The table below summarizes the differences in USGS and industry data.

questions: question: Why does the DOD assess tantalum?
answer: DOD assesses the availability of tantalum, among other materials, for selected planning scenarios for the National Defense Stockpile's biennial assessment process.
child_questions: question: What does it ensure about the tantalum?
answer: Further, DOD takes steps to help ensure that tantalum supply data used in its stockpile analyses are reliable.

question: What does the USGS do with the data it collects and validates?
answer: For example, USGS provides the Defense Logistics Agency-Strategic Materials (DLA-Strategic Materials)—the stockpile program manager—with the data it collects and validates.
child_questions: question: What does the DLA do with this data?
answer: Consistent with internal control standards, DLA-Strategic Materials officials said they then verify sources and check calculations to ensure that data are reliable before conducting their stockpile analyses.

question: How has DLA analysis provided insight?
answer: Since 2013, DLA-Strategic Materials has identified potential shortfalls for tantalum and recommended stockpiling. Given DLA-Strategic Materials' interest in using the most accurate information available, it is taking additional steps to review and analyze existing industry tantalum data sources to better inform its stockpile analyses.

questions: question: What is the importance of tantalum?
answer: The United States relies on foreign mine production of tantalum, a corrosion-resistant metal that is used in commercial and defense applications.

question: Why is reliable tantalum information important?
answer: Having reliable information on the global supply of tantalum is important for defense planning, particularly in determining if it is necessary to stockpile in case of future shortages.
child_questions: question: How did the US address this need of correct data?
answer: The House Armed Services Committee Report on a bill for the National Defense Authorization Act for Fiscal Year 2016 included a provision for GAO to examine the global tantalum supply chain, with a focus on why data reported by the government and by industry vary.

questions: question: What does this report cover?
answer: This report addresses (1) how tantalum supply data reported by government sources differ from industry data, and (2) the extent to which DOD has assessed the availability of tantalum during emergency planning scenarios.

question: What did the GAO review?
answer: GAO reviewed data compiled by the USGS—DOD's primary source for tantalum production data—and by a tantalum industry organization that makes its information publicly available.
child_questions: question: What information did the GAO collect for this review?
answer: GAO interviewed DOD and industry officials about the reporting and collection methods for the data; examined the data DOD uses to determine potential shortfalls of materials, including data for its biennial Strategic and Critical Materials Reports on Stockpile Requirements; and discussed with DOD officials steps they have taken to assess the reliability of the data used in the analyses.