Thursday, 17 October, 2019

Rare earth producer Lynas to prioritise U.S. military supplies

Why Tiny Magnets Could Be China's Destructive New Trade-War Weapon Pentagon eyes rare earth supplies in Africa in push away from China
Ginger Lawrence | 09 June, 2019, 12:40

In December 2017, Trump called on the Department of Commerce and other United States agencies to develop new sources of critical materials to reduce vulnerabilities to supply disruptions, especially from foreign sources.

"In the 1980s, when policy changes in the West and in China enabled industrial interests to relocate to places offering the cheapest labor and most lax environmental regulations, Western rare earth supply chain firms gradually relocated to China", she explained.

The Chinese Academy of International Trade and Economic Cooperation had stated that China is now the world leader in rare earth separation and purification. Ironically, the USA was the leading global producer of rare earths from the 1960s to the 80s, when production began shifting off shore.

While speaking on the sidelines of a conference in Chicago, material engineer at Pentagon's Defense Logistics Agency (DLA), Jason Nie, stated, "We are looking for any source of supply outside China".

China could maximize harm on the U.S. economy not just by slashing flows of rare-earth materials, but by curbing supplies of small, powerful magnets that use them.

Mei agreed that it is necessary to set up export controls for strategically important products that China produces in bulk, such as rare earths, saying it may be hard to track the exports.

The editorial was threatening at times, calling decision-makers in the U.S.

China's top economic planner on Tuesday said it had discussed "possible export controls" for rare earths at a symposium of industry experts.

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"As with our energy security, the Trump administration is dedicated to ensuring that we are never held hostage to foreign powers for the natural resources critical to our national security and economic growth", Interior Secretary David Bernhardt said in a separate statement.

Rare-earth minerals used in electric vehicles, military jet engines, batteries, satellites and even washing machines are the latest target of the trade standoff between the world's two largest economies.

"If you put yourself in China's shoes, this is their main weapon in the trade war", said Mark Seddon, an Argus metals analyst.

China dominates global processing capacity for rare earths, with Australia's Lynas Corp the only non-Chinese company with any significant capacity.

California's Mountain Pass mine is the only operating US rare earths facility.

The Department of Commerce published a 50-page report on June 4 that included 61 recommendations, including measures to boost domestic production, in order to reduce the country's dependence on imports, mostly from China.

The report includes 61 specific recommendations - including low-interest loans and a buy American provision for defense companies - to increase United States rare earths supply.