Pentagon strikes deal over Texas-based rare earth elements mine to ween US off reliance on China


The Pentagon awarded an Australia-based company tens of millions of dollars to ramp up its rare earth element operations in Texas as the United States and its allies push back against Chinese global dominance of the crucial industrial sector.

The Defense Department announced this week that Lyans Rare Earths Corporation, the largest rare earth element mining and processing company not located in China, would be receiving just over $30 million to establish light rare earth elements separation capacity at a facility in Hondo, Texas, — the same location as its proposed heavy rare earth elements facility that also received millions in U.S. government funding last year.

Rare earth elements are an assortment of 17 soft heavy metals found in the earth’s crust that are key in everything from cellphones to weapons systems, and China is estimated to control up to 80% of global production. The Pentagon noted light rare earth elements “are critical to numerous defense and commercial applications, including petroleum refining, glass additives, and magnets used in electric vehicle drivetrain motors and precision-guided munitions” and that if the Lynas project is successful, it will produce “approximately 25 perfect of the world supply of rare earth element oxides.”

The Pentagon said its award “aligns with the U.S. government’s strategy to ensure secure and reliable supplies of critical minerals” under an executive order by former President Donald Trump in 2017 and that it “follows a series of rare earth element actions the Department of Defense has taken in recent years to ensure supply and strengthen defense supply chains.”

Recent U.S. efforts include federal acquisition rules to “transition defense supply chains to non-Chinese sources” of rare earth element magnets and using small business funds “to accelerate the development of new rare earth element processing technologies.”

Amanda Lacaze, the company’s CEO, made it clear she understood the geopolitical stakes during a Fortune Global Forum in 2019. Lynas Corporation’s rare earth elements deposit in western Australia is among the world’s highest grade rare earth mines, and in Malaysia, the company runs the globe’s largest rare earth processing plant.

“Twice in the last decade, CEOs have had to sit up and take notice. And that is, in 2010, China threatened to stop the export of rare earth materials to Japan, and again, in the trade tensions between the U.S. and China … one of the threats from China has been to stop the export of rare materials,” Lacaze said.

The Australian business leader noted that “China has a dominant market position because, 30 years ago they decided that they would” and that “China thinks generationally, and here in the West, we tend to think in three or four-year electoral terms.” She said, “I think the Chinese have given us an excellent case study in developing rare earths” in their creation of a Chinese hub that is “fully integrated from mine to magnet.” Lacaze recommended that the West should have “a more strategic approach to what is indeed a strategic mineral.”

Trump signed an executive order in September arguing that “a strong America cannot be dependent on imports from foreign adversaries for the critical minerals that are increasingly necessary to maintain our economic and military strength” and that “our dependence on one country, the People’s Republic of China, for multiple critical minerals is particularly concerning.” The former president said that “the United States now imports 80 percent of its rare earth elements directly from China” and concluded that this posed “an unusual and extraordinary threat” to the U.S. economy and its national security.

The Chinese Communist Party’s “Made in China 2025” initiative made it clear that dominance in key industries like rare earth production is an important part of China’s global strategy.

The U.S. Embassy in Australia tweeted back in April that “the United States is working with Australia and other partners to secure the supply chains critical to our security, prosperity, and even our health as we weather the COVID-19 pandemic” as it congratulated Lynas Corporation and its Texas-based partner, Blue Line, on a contract to produce heavy rare earth elements. Then-Secretary of State Mike Pompeo tweeted: “Great to see the private sector embody the strength of the U.S.-Australia partnership. With grit and tenacity, we shall overcome the challenges posed by COVID-19.”

The Pentagon took similar actions in November, contributing $9.6 million to the effort by the Las Vegas-headquartered MP Materials to establish light rare earth element processing capabilities. That company helps operate the Mountain Pass rare earth elements mine in Southern California on the Nevada border, which once supplied the majority of the world’s rare earth elements. Molycorp, a Colorado-based mining company, used to operate the same mine but filed for bankruptcy in 2015. The Defense Department also provided smaller grants to California-based TDA Magnetics and Texas-based Urban Mining Company for “rare earth element magnet supply chain studies and inventory demonstrations.”

A number of U.S. politicians have been drawing attention to the rare earth elements issue over the past year.

Republican Sen. Ted Cruz introduced the Onshoring Rare Earths Act of 2020, or ORE Act, in May 2020 to “end U.S. dependence on China for rare earth elements and other critical minerals used to manufacture our defense technologies and high tech products by establishing a supply chain for these minerals in the U.S., including by requiring the U.S. Department of Defense to source these minerals domestically.” The law has not yet passed.

The House GOP’s China Task Force released a report in September concluding that “the CCP is seeking to control global sensitive and strategic materials” and noting that “rare earth metals are critical elements used across many of the major weapons systems the U.S. relies on for national security.”

Republican Sen. Marco Rubio and others penned a letter to the head of the Department of the Interior in December, floating the idea of a “Rare Earth Metallurgy Cooperative” that “could operate on a cost-basis, thus being shielded from price manipulations by China.”

The Global Times, a Chinese state-run outlet, weighed in this week to critique the U.S. rare earth efforts, arguing that “the U.S. is embarking on an effort to promote domestic production of rare earths in a bid to break China's grip on previous rare-earth supplies, but it is doubtful whether its effort will really make a difference.”

View original Post


Please enter your comment!
Please enter your name here