Pentagon seeks funds to cut US reliance on China rare earths

May 30, 2019 09:31
A file picture shows molten rare earth metal Lanthanum being poured into a mold at a smelting facility in China's Inner Mongolia region. There is speculation that China could use rare earths to strike back at the US in the trade war. Photo: Reuters

The US Defense Department is seeking new federal funds to bolster domestic production of rare earth minerals and reduce dependence on China, Reuters reports.

The Pentagon’s request was outlined in a report that has been sent to the White House and briefed to Congress, a spokesman was quoted as saying.

Rising tensions between the US 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 two sides.

“The department continues to work closely with the president, Congress and US industry to improve US competitiveness in the mineral market,” Pentagon spokesman Lt. Col. Mike 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.

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.

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

While China has so far not explicitly said it would restrict rare earths sales to the US, 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.

John Neuffer, president of the Semiconductor Industry Association, said the chances of China restricting rare earth exports are 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 US 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 US 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.”

– Contact us at [email protected]