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US Bill Seeks to Prevent Defense Industry From Becoming Dependent on Chinese Rare Earths

Jonathan loves talking politics, economics and philosophy. He carries unique perspectives on everything making him a rather odd mix of liberal-conservative with a streak of independent Austrian thought.
Published: January 20, 2022
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Visitors walk down the inclined shaft at Steenkampskraal (SKK) rare-earth mine on July 29, 2019, about 80Km from the Western Cape town of Vanrhynsdorp. (Image: RODGER BOSCH/AFP via Getty Images)

On Jan. 14, the U.S. Senate introduced a bipartisan bill that aims to prevent American defense contractors from buying rare earths from China by 2026. The bill is being sponsored by Republican Senator Tom Cotton and Democrat Senator Mark Kelly.

Rare earths are a group of 17 metals that are deemed crucial to tech industries, right from smartphones to missiles. The rare earths industry was born during World War II and was initially developed by the U.S.

Over time, China became the dominant player in the market, controlling up to 85 percent of the global supply. As a result, up to 80 percent of rare earths imports by the U.S. at present come from China. According to the United States Geological Survey (USGS), China has some of the largest rare earths deposits in the world, estimated to be around 44 million tons.

The Jan. 14 bill, called the Restoring Essential Energy and Security Holdings Onshore for Rare Earths Act of 2022, seeks to develop a permanent stockpile of strategic material via the Pentagon. 

The fact that the Pentagon buys billions of dollars’ worth of jets, missiles, and other weaponry will be used as leverage to force defense contractors to stop sourcing rare earths from China. This is expected to support the production of rare earths in the United States.

In an interview with Reuters, Cotton, who is also a member of the Senate’s Armed Forces and Intelligence committee, called China’s global domination of the rare earths market as a result of a policy choice made by the U.S. 

He expressed hope that newer policies will shake up Beijing’s grip on the market. According to the Senator, he has talked with several American executive agencies about the bill and is confident that it has widespread support among all party members.

“Ending American dependence on China for rare earths extraction and processing is critical to building up the U.S. defense and technology sectors… This is an area in which Congress will lead because many members have been concerned about this very topic, regardless of party,” Cotton said.

The push to secure America’s rare earths supply has strengthened due to Washington’s rising tensions with an aggressive Beijing. The Chinese regime has earlier used its rare earths market dominance to threaten opponents. 

Back in 2010, Beijing blocked the export of rare earths to Japan following a territorial dispute between the two countries. The communist regime has issued vague threats to Washington that it won’t shy away from using the same tactics with the U.S.

The new bill thus seeks to plug in a major vulnerability of the United States by ensuring that the Pentagon builds a stockpile of rare earth materials. However, building such a reserve will require the Pentagon to buy rare earths in large quantities from China, which is a contradiction many expect will subside after some years. 

In December, Danielle Miller of the Pentagon’s Office of Industrial Policy had proposed that the U.S. and its allies mine more to ensure a steady, global supply of strategic minerals necessary for commercial and military applications. 

“Domestic production of strategic and critical materials is the ultimate hedge against the risk of deliberate non-market interference in extended overseas supply chains… We are under no illusions about the competing pressures facing [the U.S. mining industry],” Miller said at a conference.

Meanwhile, China is taking steps to further strengthen its position in the rare earths market. In December, it consolidated several rare earths producers into a single entity called the China Rare-Earths Group. The new entity is expected to speed up mine development in the Global South.