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By Shane Lasley
Mining News 

Trump: rare earths essential to US defense

Issues presidential determinations for Pentagon to bolster production of elements "essential to the national defense" North of 60 Mining News – August 1, 2019

 

Last updated 9/26/2020 at 5:12am

Defense Production Act Title 3 rare earth element REE declaration Trump

Ucore Rare Metals Inc.

The Bokan Mountain rare earth deposit looms above the American flag flying over Kendrick Bay in Southeast Alaska.

With the issuance of five presidential determinations related to the domestic production of rare earth metals and magnets, President Donald Trump is making it clear the White House sees this group of 17 technology elements as essential to the security of the United States.

In five memos sent to the secretary of defense on July 22, Trump made an official determination under Section 303 of the Defense Production Act of 1950 that domestic production, separation and manufacturing of rare earths is "essential to the national defense" of the U.S.

Mark Esper was confirmed as the new secretary of defense a day after the presidential memos were sent.

The language in all five memos was essentially the same, with each relating to different links of the REE supply chain, from mines to magnets.

These memos address domestic:

• production of rare earth metals and alloys;

• separation and processing of heavy rare earth elements;

• separation and processing of light rare earth elements;

• production of neodymium-iron-boron rare earth permanent magnets; and

• production of samarium-cobalt rare earth permanent magnets.

Title 3 of the Defense Production Act allows a U.S. President to incentivize the domestic industrial base with the goal of expanding the production and supply of critical materials and goods. Authorized incentives include loans, loan guarantees, direct purchases and purchase commitments, and the authority to procure and install equipment in private industrial facilities.

To make a determination under section 303, the president must determine that the material is essential to national defense; U.S. industry cannot reasonably expect to provide the material in a timely manner without presidential action; and actions under the section are the most cost effective, expedient, and practical alternative method for meeting the need.

The president sent requisite determinations to the Senate Committee on Banking, Housing, and Urban Affairs that makes the case that each of the five segments of the U.S. rare earth supply chain meet the criteria set out under Section 303 of the Defense Production Act.

"Without presidential action under section 303 of the act, United States industry cannot reasonably be expected to provide the production capability for rare earth metals and alloys adequately and in a timely manner," Trump penned in one of the memos sent to the committee. "Further, purchases, purchase commitments, or other action pursuant to section 303 of the act are the most cost-effective, expedient, and practical alternative method for meeting the need for this critical capability."

Addressing the China advantage

These determinations by President Trump come in the wake of China once again threatening to restrict exports of rare earths, a group of 17 elements essential to electric vehicles, green energy, high-tech devises and a wide array of military hardware.

A brief description of each element and its uses can be found at 15 rare earth elements scandium and yttrium in Critical Minerals Alaska, a magazine published by Mining News.

According to the United States Geological Survey Mineral Commodities Summary 2019, the U.S. was 100 percent reliant on imports of rare earths during 2018.

MP Materials' Mountain Pass Mine in California's Mojave Desert did produce some rare earths on American soil last year.

While this seems counter to USGS claims of 100 percent foreign dependence for this group of elements, Mountain Pass rare earth concentrates are shipped to China to be separated into the individual rare earths and often manufactured into the other materials needed by the U.S. high-tech and national defense sectors.

As a result, China continues to supply roughly 80 percent of America's rare earths, either as metals or value-added products.

In addition to the potential damage a cut-off of supply of these essential elements could inflict on U.S. industry and national security, China's near monopoly of the entire rare earths supply chain means the Middle Kingdom can control prices. This could make it difficult for the private sector to compete with a country that can suppress the raw materials prices in order to gain greater value from manufacturing the electric vehicles, high-tech, green energy and wide array of other products that require rare earths.

To find out more about China's rare earths strategy, read: Rare earths more than trade war weapons published in the June 14 online edition of North of 60 Mining News.

Dan McGroarty, who served in senior positions at the Pentagon and White House on critical minerals, and serves on the advisory boards of Texas Mineral Resources Corp and USA Rare Earth, joint venture partners developing the Round Top rare earth and strategic minerals deposit in Texas, believes the presidential determination is an important step to addressing U.S. vulnerabilities.

"For years now, we've seen more studies than I can count on the dangers of import dependency, given the criticality of rare earths to every major advanced weapons platform," McGroarty wrote in a July 23 email to Mining News. "Yesterday's Presidential DPA directives are the strongest indication to date that the United States is moving to address this vulnerability and the leverage it gives China."

Pentagon lays groundwork

Even before being prompted by President Trump, the Pentagon was laying the groundwork for establishing a domestic supply of rare earth elements under the Defense Production Act.

Earlier this month, Reuters reported that it viewed documents coming out the U.S. Air Force asking the mining sector to provide plans for developing mines and processing facilities in the U.S. These memos also queried manufacturers about their requirements for this group of 17 essential elements.

According to Reuters, these requests for information were dated on June 27 and required a response by July 31, which indicates the Pentagon is moving rapidly to get the ball rolling on domestic production of rare earth elements.

Defense Production Act Title 3 rare earth element REE declaration Trump

President Donald Trump

It is expected that the mining sector responses to this Pentagon request, coupled with President Trump's Defense Production Act determinations related to the domestic production of rare earth metals and magnets, will result in millions of federal dollars being invested in securing a long-term domestic supply of rare earths and the capacity to separate these 17 elements needed by the U.S. military and private sector alike.

"The Presidential DPA determinations are significant, because – by U.S. law – they are the predicate to federal funding on national security grounds," McGroarty wrote. "The presidential declarations suggest that the table is being set for federal action to encourage the reestablishment of a U.S. rare earths supply chain."

McGroarty is the GeoPolicy editor for The Economic Standard, http://www.theeconomicstandard.com, which is devoted to substantive debate and analysis of business policy issues.

Author Bio

Shane Lasley, Publisher

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Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.

 

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