Ernest Scheyder

(Reuters) – A bipartisan piece in U.S. Senate will be presented on Friday. It would require defense contractors to cease buying rare earths form China by 2026, and instead use the Pentagon’s permanent stockpile to acquire strategic minerals.

This bill was sponsored by Senators Tom Cotton (an Arkansas Republican) and Mark Kelly (an Arizona Democrat). It is just the latest of a series of U.S. laws that seek to stop China from gaining control of the sector.

The Pentagon’s billion-dollar purchase of missiles, fighter jets and other weapons by the Pentagon is used as leverage to force contractors to abandon China. This will also support U.S. rare Earths production.

The rare earths, a collection of 17 metals, can be used, once processed, to produce magnets in electronic vehicles, weaponry, and other applications. China is slowly gaining control of the sector, despite the fact that the United States established the industry during World War Two. In addition to the U.S. military scientist who developed the most popular type rare earth magnet, China also has the benefit of being the original inventor.

Only one mine of rare earths exists in the United States. The United States does not have any capability to extract rare earth minerals.

Cotton stated to Reuters that the United States must end its dependence on China in rare earths extraction, processing and export.

Senator John McCain, who is a member of the Senate’s Armed Forces and Intelligence Committees, said that China’s rise to the top spot in rare earths was “simply an American policy decision.” He also stated that he hopes that new policies will loosen Beijing’s hold.

This bill, known as the Restoring Essential Energy and Security Holdings Offshore for Rare Erds Act of 2022 (or the Restoring Essential Energy and Security Holdings ONshore for Rare earths Act of 2022), would make permanent and codify the Pentagon’s continuing stockpile of these materials. China blocked rare earth exports into Japan temporarily in 2010, and threatened the United States with the same.

However, to create that reserve, the Pentagon imports some supply from China. This paradox is something that Senate staff hope will disappear in time.

It is possible for rare earths to be very polluting, and this was why the process became unpopular in the United States. Current research is trying to improve the cleaning process.

Cotton claimed that he discussed the bill with various U.S. agencies, but declined comment on whether he was speaking to President Joe Biden or White House.

He stated that Congress would lead in this area because members are concerned about the topic regardless of their party affiliation.

Encourage domestic output

Although the sponsor expects that this bill could be folded into Pentagon funding legislation late in the year, it does not directly support the U.S.’s emerging rare earths sector.

It requires Pentagon contractors not to use Chinese rare earths for at least four years. Waivers are only allowed in very rare cases. It would require defense contractors to instantly disclose the source of minerals they use.

Cotton stated that these requirements should encourage domestic (rare earths-based) development in the country.

In the last two years, grants have been given by Pentagon to U.S. companies that are trying to resume rare earth processing and production. These include MP Materials Corp and Australia’s Lynas Rare Earth Ltd., TDA Magnetics Inc., and Urban Mining Co.

Kelly, a former astronaut and a member of the Senate’s Armed Services and Energy committees, said the bill should “strengthen America’s position as a global leader in technology by reducing our country’s reliance on adversaries like China for rare earth elements.”

It only covers weapons and equipment that the U.S. military buys.

A U.S. trade representative will also need to determine if China is causing distortions in the rare earths marketplace and recommend trade sanctions.

Cotton answered a question about whether this step might be seen by Beijing as hostile.