Lawmakers seek to curb US reliance on China for rare earths

The Pentagon, headquarters of the US Department of Defense. Credit: Wikipedia

U.S. House lawmakers introduced a bipartisan bill aimed at reducing dependence on China for rare earths used in everything from electric vehicles to missiles to wind turbines.

The legislation co-authored by Republican Lance Gooden and Democrat Vicente Gonzalez, both of Texas, is similar to that introduced in May by Senator Ted Cruz. The measure would give tax incentives for companies involved in the mining, reclaiming and recycling of critical minerals and metals from deposits in the U.S.

The bill is part of a push in Congress to shift supply chains, particularly in industries critical for national defense, away from China and back toward the U.S. The effort has drawn broad support from domestic rare-earth companies.

“The tax incentive seeks to level the playing field with regard to the subsidies China provides from mine to magnet,” Pini Althaus, chief executive officer of USA Rare Earth, which is developing the Round Top Mountain deposit in Texas, said in a phone interview. “It would significantly improve the bottom line of any domestic rare earth project.”

Althaus also said the House measure reduces the potential for China to dissuade investment in U.S.-based rare earth projects and supply chains, because those businesses will be better able to compete.

Rare earths — a group of 17 elements used in high-tech and military applications — gained greater attention in the U.S. last year amid concern that China would limit shipments as a trade war between the two countries escalated. President Donald Trump last year ordered the Defense Department to spur production of rare-earth magnets.

The legislation “lowers the cost of capital, which is the goal because China has lowered the cost of capital for their sector, and our sector needs to be able to compete,” Jim Litinsky, the incoming CEO of MP Materials, currently the sole U.S. miner of the minerals, said in a phone interview. “It’s probably the one thing I’ve seen everyone get behind.”

Republicans Will Hurd, Roger Williams, Pete Olson and Randy Weber, as well as Democrat Henry Cuellar, are co-sponsors of the bill. All are Texas representatives.

(By Joe Deaux)

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