Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Pentagon seeks funds to reduce U.S. reliance on China's rare earth metals

EconomyMay 29, 2019 08:05PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Molten rare earth metal Lanthanum is poured into a mold at a smelting workshop near the town of Damao in China's Inner Mongolia Autonomous Region

By Phil Stewart and Andrea Shalal

WASHINGTON (Reuters) - The U.S. Defense Department is seeking new federal funds to bolster domestic production of rare earth minerals and reduce dependence on China, the Pentagon said on Wednesday, amid mounting concern in Washington about Beijing's role as a supplier.

The Pentagon's request was outlined in a report that has been sent to the White House and briefed to Congress, said Air Force Lieutenant Colonel Mike Andrews, a Pentagon spokesman.

Rare earths are a group of 17 chemical elements used in both consumer products, from iPhones to electric car motors, and critical military applications including jet engines, satellites and lasers.

Rising tensions between the United States and China have sparked concerns that Beijing could use its dominant position as a supplier of rare earths for leverage in the trade war between the world's top two economic powers.

Between 2004 and 2017, China accounted for 80% of U.S. rare earth imports. Few alternative suppliers have been able to compete with China, which is home to 37% of global rare earths reserves.

"The department continues to work closely with the president, Congress and U.S. industry to improve U.S. competitiveness in the mineral market," Andrews told Reuters.

He gave no details but said the report was tied to a federal program designed to bolster domestic production capabilities through targeted economic incentives.

While China has so far not explicitly said it would restrict rare earths sales to the United States, Chinese media has strongly implied this will happen.

In a commentary headlined "United States, don't underestimate China's ability to strike back," the official People's Daily noted the United States' "uncomfortable" dependence on rare earths from China.

"Will rare earths become a counter weapon for China to hit back against the pressure the United States has put on for no reason at all? The answer is no mystery," it said.

GROWING CONCERN

John Neuffer, president of the Semiconductor Industry Association, said the chances of China restricting rare earth exports were growing.

"I do expect the other shoe to drop," he told an event hosted by the Washington International Trade Association.

The Pentagon has repeatedly flagged its concerns about American reliance on China for rare earth minerals, including in a 2018 report on vulnerabilities in the U.S. defense industrial base.

The Pentagon said the latest report was a Defense Production Act III rare earths mineral report. According to a Pentagon website, that program gives the U.S. president "broad authority to ensure the timely availability of essential domestic industrial resources to support national defense and homeland security requirements through the use of highly tailored economic incentives."

John Luddy, vice president for national security policy at the Aerospace Industries Association, said U.S. government funding could be used to bolster production, processing capacity and stockpiling of critical supplies.

Industry officials liken Washington's potential role to the way government funding ensures the capability to launch sensitive military and intelligence satellites into space - another costly initiative.

The Defense Department accounts for about 1% of U.S. demand, which in turn accounts for about 9% of global demand for rare earths, according to a 2016 report from the congressional U.S. Government Accountability Office.

Raytheon (NYSE:RTN) Co, Lockheed Martin Corp (NYSE:LMT) and BAE Systems (LON:BAES) Plc all make sophisticated missiles that use rare earths metals in their guidance systems and sensors.

Rare earth minerals are also essential in other military equipment such as jet engines, lasers and night vision devices.

California's Mountain Pass mine is the only operating U.S. rare earths facility. But MP Materials, owner of Mountain Pass, ships the roughly 50,000 tonnes of rare earth concentrate it extracts each year from California to China for processing.

At least three U.S.-based companies have rare earth processing plants under construction or in the planning stages, including one that is set to open next year at Mountain Pass mine to produce about 5,000 tonnes of two popular types of rare earths annually, according to a source familiar with the matter.

The other two aren't expected to open until 2022 at the earliest.

Pentagon seeks funds to reduce U.S. reliance on China's rare earth metals
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (9)
Kevin smarte
Kevin smarte May 31, 2019 4:34AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
rare earth not so rare - if that's Chinese card they are desperate
Ravi Shastri
Ravi Shastri May 30, 2019 7:06AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This should have been done long time ago! US has to have diversified supply lines. National security comes before corporate greed. Learn from the germans!
Paul Manefee
Paul Manefee May 29, 2019 6:44PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This will be an ultimate showdown of which country has true friends
Al Vlaj
alvlaj May 29, 2019 6:44PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Good thing Trump hasnt unnecessarily offended or insulted any of our allies on the world stage...
Bullish Bear
Bullish Bear May 29, 2019 6:44PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Al Vlaj  HAHAHA
Bull Shitter
Bull Shitter May 29, 2019 5:48PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The only rate earth material we need is our president...
mike sieew
mike sieew May 29, 2019 5:02PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It's time for US to bear some of the environmental consequences for processing the rare earth minerals
Titus Polichnia
Titus Polichnia May 29, 2019 4:34PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
the processing plants we create in China, create jobs for the Chinese
Titus Polichnia
Titus Polichnia May 29, 2019 4:33PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
we only ship it to them from the U.S. for processing, because labor is cheap there. If we stop processing our rems there, it will hurt them more
Lynn McCord
the907man May 29, 2019 2:04PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
REMs are not rare at all.
David David
David9 May 29, 2019 1:54PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
But they forget...only China can produce the rare earth minerals.
David David
David9 May 29, 2019 1:54PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Only China has them in large quantity. No where on earth has the same. Is similar to Venezuela or Saudi has oil.
Jason Patcher
Jason Patcher May 29, 2019 1:54PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
not exactly, China gov. subsidized their REM so they could sell at wholesale prices till everyone went out of business. It's actually a great example of a reason for the trade war.
Mark Hoffman
Mark Hoffman May 29, 2019 1:54PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Jason Patcher  Yup, exactly. China actually has more capacity for REM mining than there is global demand. They did that to corner the market and drive anyone else out of the business. That's why we send the REM ore that we mine in California to China for processing; even with shipping it's still cheaper to send it halfway around the world and get it back. That was China's intent.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email