US trade representatives look into whether China is manipulating the rare earths market

A bipartisan bill was proposed in the US Senate that would require military contractors to cease purchasing rare earths from China by 2026 and utilize the Pentagon to build a permanent store of the critical minerals.
Rare earth

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Democrat Mark Kelly and Republican Tom Cotton have introduced the legislation, which is the latest in a series of measures aimed at undermining China’s stranglehold over the industry.

With the Pentagon spending billions on fighter planes and missile systems, they’re using that as leverage to force contractors out of China and, therefore, to promote the rebirth of U.S. rare earth manufacturing. After processing, seventeen metals in the rare earth family are utilized to generate magnets used in electric cars, armaments, and electrical devices. This long-term trend began in the 1940s when the United States was fighting in World War II, and military scientists produced the most widely-used form of rare earth magnet.

Only one rare earth mine exists in the United States, and the country cannot process rare earth. For the military and technology industries in the United States to grow, the government must stop relying on China for rare earth mining and processing.  To ensure a steady supply of rare earth elements, the Pentagon has proposed legislation dubbed the Restoring Essential Energy and Security Holdings Onshore for Rare Earths Act of 2022. For the time being, China has halted shipments of rare earth to Japan, and it has made vague threats to do the same to the United States.

However, the Pentagon purchases supply from China to build up that reserve, a contradiction that Senate staffers hope would fade with time. As a result of its environmental impact, the manufacturing of rare earth became controversial in the United States in the first place. Cleaning up the procedure is currently being researched.

However, Cotton would reveal whether he had spoken to President Joe Biden or the White House about the legislation. However, several members of the rare-earths industry in the United States expressed concern that military contractors may continue to seek exemptions to purchase Chinese rare-earths beyond 2026, despite the bill’s passage.

On the bill, the Aerospace Industries Association, an organization representing Northrop Grumman and other US defense-related industries, refused to provide a statement on the matter.  When asked why it appreciated “ongoing efforts by the Department of Defense and the wider U.S. government to protect the domestic rare earth supply chain and encourage free and fair competition,” MP Materials Corp responded it does so because it is responsible for the only US rare earth mine.

Rare earth miners and processors operating in the United States will not get any financial assistance from the proposed legislation, which proponents hope will be included in Pentagon spending legislation later this year. Contractors working for the Pentagon must cease utilizing Chinese rare earth within four years, with only a few exceptions permitted. It would require defense contractors to state where the minerals they use come from promptly.

MP Materials, Australia’s Lynas Rare Earth Ltd, and TDA Magnetics Inc are interested in resuming US manufacturing of rare earth and magnets. As part of this investigation, the U.S. trade representative would be tasked with recommending whether or not trade sanctions are necessary.

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