Exclusive: the Pentagon race to track the production of rare earths in the context of a trade dispute with China

(Reuters) – The Pentagon quickly assesses the US's rare earth capacity in a race to ensure a stable supply of equipment specialized in the country's trade dispute with China, which controls the rare earths sector according to a government document consulted by Reuters. .

This surge comes weeks after China threatened to limit exports to the United States of rare earths, a group of 17 minerals used to build fighter jets, tanks and a range of consumer electronics.

The Pentagon wants the miners to describe their plans for developing rare earth mines and processing facilities in the United States, and is asking manufacturers to detail their mineral requirements, according to the document dated June 27.

Responses must be received no later than July 31, which highlights the urgency of the Pentagon. The fiscal year of the US government ends in September.

The US Air Force, which is part of the Pentagon and created the document, has confirmed its existence. The Pentagon headquarters did not respond to a request for comment.

Responses will be reviewed by two government contractors, including Northrop Grumman Corp., who did not respond to requests for comment.

"The government wants to know how much of these minerals we could eventually produce and how long," said Anthony Marchese, president of Texas Mineral Resources Corp., who works on the development of the Round Top rare earths deposit in the western part of the country. l & # 39; State.

Several miners, however, declined to comment when asked whether they would respond to the Pentagon, a sign of the sensitivity associated with the development of rare earth mines during the ongoing trade dispute between the United States and China .

The document does not directly promise loans, subsidies or other financial assistance for rare earth projects in the United States. But the Pentagon's demand stems in part from the Defense Production Act (DPA), a US law dating back to the 1950s that gives the Pentagon the freedom to buy equipment needed for national defense.

According to industry analysts and consultants, some type of financial assistance is finally expected by the industry after the Pentagon has reviewed the responses.

China dominates

Although China owns only a third of the world's rare earth reserves, it accounts for 80% of US mineral imports because it controls almost all of the material's processing facilities, according to data from the US Geological Survey.

The money that the US military will spend on stimulating the rare earth industry in the United States is unclear, with the DPA setting no financial limit. The Pentagon's June letter indicates that government investments typically range from $ 5 million to $ 20 million per project.

"The overall goal is to guarantee and ensure a viable domestic (rare earth) supplier in the long run," according to the nine-page document.

The Air Force Research Laboratory, which drafted the application, said it wanted information on the "gaps, risks and opportunities that rare earths in the United States can face through investments" from the United States. 'army.

"There is no guarantee that the submissive subject will receive military support," said Diana Carlin, head of the Air Force Executive Agents program for the DPA procurement program, in a Reuters e-mail release.

James Litinsky, co-chair of MP Materials, owner of the Mountain Pass Mine in California, said that the United States needed "a sustainable supermajure for the supply of these minerals by the West" . A supermajor would be a major producer dominating the global industry.

MP Materials, the only existing US rare earth facility, ships its ore to China for processing and is subject to a 25% tariff since last month.

Some analysts in the sector have asked the Pentagon to expand the scope of its study and commit to directly funding the government to manufacture rare earth magnets and engines, like the Chinese government.

"The US government does not have a comprehensive approach to the rare earth supply chain, even now, and that's a problem," said Jack Lifton, industry analyst at Technology Metals Research LLC.

INVOICES TO THE AMERICAN SENATE

The Pentagon's request is based on several decrees by President Donald Trump on strategic minerals, which, he said, are essential to national defense.

Several US senators have sponsored legislation in recent weeks to boost domestic production of lithium, rare earths and other strategic minerals. On Thursday, US Senator Marco Rubio, a Republican from Florida, introduced a bill allowing rare earth producers to create cooperatives, bypassing US antitrust laws.

None of the bills has yet been passed.

The Pentagon also held talks with rare earth suppliers in Malawi and Burundi, department officials told Reuters last month.

"There is an urgent need to develop a rare earth supply chain in North America," said Don Lay, CEO of Medallion Resources Ltd, who said earlier this month that he is studying potential sites in the Americas. North to develop an extraction facility for rare waste. lands.

(INTERACTIVE GRAPH – Rare earth production tmsnrt.rs/2I9MfL5).

(GRAPHIC-Rare earth export prices rise after China shook the sword link of the trade war: tmsnrt.rs/2Id5tQ2).