US bill would block defence firms from using Chinese rare earths | Politics News

Bipartisan legislation to be introduced in the US Senate would force defense contractors to stop buying rare earths from China by 2026 and use the Pentagon to create a permanent stockpile of strategic minerals.

The bill, co-sponsored by Arkansas Republican Senator Tom Cotton and Arizona Democrat Mark Kelly, is expected to be introduced on Friday, Reuters news agency reported. It is the latest in a series of US legislation that seeks to thwart China’s near-total control of the sector.

It is essentially using the Pentagon’s purchase of billions of dollars in combat aircraft, missiles and other weapons as leverage to demand that contractors stop relying on China, thereby supporting a revival of US rare earth production.

Rare earths are a group of 17 metals that, after processing, are used to make magnets found in electric cars, weapons, and electronics. While the United States established the industry in World War II and American military scientists developed the most widely used type of rare earth magnet, China has slowly grown to dominate almost the entire sector over the past 30 years.

The United States has one rare earth mine and does not have the capacity to process rare earth minerals. The United States relies on China for about 80 percent of its imports of rare earth elements.

In December, China boosted several of its major producers to create a giant that would cement its dominance of the global industry it had dominated for decades.

State media reported that the new entity, China Rare-Earths Group, would accelerate the development of mines in the south of the country.

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“Ending US dependence on China to extract and process rare earth elements is critical to building the US defense and technology sectors,” Cotton told Reuters.

The senator, who sits on the Senate Armed Services and Intelligence committees, called China’s development into a rare earths world leader “just a political choice made by the United States,” adding that he hoped the new policies would loosen Beijing’s grip.

In the past, the United States has worked with other countries in the World Trade Organization to try to force China to export more rare earth elements amid a global shortage.

Known as the Basic Energy Recovery and Onshore Security Property of the Rare Earth Act of 2022, the bill would codify and make the Pentagon’s ongoing storage of materials safe. China temporarily banned exports of rare earth elements to Japan in 2010 and issued vague threats that it could do the same to the United States.

To build that reserve, though, the Pentagon is buying supplies in part from China, a paradox that Senate staff hope will recede in time.

Workers transport soil containing rare earth elements for export at a port in Lianyungang, Jiangsu Province, China in 2010 [File: Stringer/Reuters]

The rare earth element production process can be highly polluting, which is part of the reason why it is not so popular in the United States. Constant research tries to make the process cleaner.

Cotton said he had spoken to several US executive agencies about the bill, but declined to say whether he had spoken with President Joe Biden or the White House.

“This is an area in which Congress will lead, because many members are concerned about this very topic, regardless of party,” he said.

The bill, which sponsors expect may be folded into Pentagon funding legislation later this year, does not provide any direct support for the emerging rare earth sector in the United States.

Instead, it requires Pentagon contractors to stop using Chinese rare earth elements within four years, allowing exemptions only in rare cases. Defense contractors will be required to immediately identify the source of the minerals.

These requirements “should encourage more local [rare-earths] Cotton said.

Tensions between the United States and China

In the past two years, the Pentagon has given grants to companies trying to restart rare earth processing and magnet production, including MP Materials Corp, Australia’s Lynas Rare Earth Ltd, TDA Magnetics Inc, Urban Mining Co.

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

US President Joe Biden and Chinese President Xi Jinping hold a virtual meetingTensions between the United States and China are rising, and the United States’ desire to expand the domestic rare earth industry is seen as part of the broader geopolitical struggle. [File: Tingshu Wang/Reuters]

The law applies only to weapons, not to other equipment purchased by the US military.

In addition, the US Trade Representative will be asked to investigate whether China is distorting the rare earth element market and to recommend whether trade sanctions are needed.

When asked if the move could be viewed by Beijing as hostile, Cotton said, “I don’t think the response to Chinese aggression or Chinese threats is to continue exposing ourselves to Chinese threats.”

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