One of the largest pillars in Biden administration emphasizes “Made in America” as a way to remove US dependence on other countries for critical needs, but it proves very difficult to cut China completely out of the picture.
Experts say that one of the most urgent needs for a domestic supply chain is rare earth minerals. These minerals are used to make 5G equipment, semiconductors and magnets for fighter jets and are considered a key ingredient for the future. electric car batteries.
“It’s essential that we recover these domestic industries and really stand up and invest in this sector that has been underinvested in. It’s the US mining sector,” Rich Nolan, CEO of the National Mining Association, told FOX Business.
Estimates indicate that China currently controls 70% to 80% of the rare earth industry, according to Australia’s energy and emissions reduction minister Angus Taylor. Australia has some of the world’s largest reserves of rare earths and last month announced four projects to exploit these deposits. However, China still houses almost all of the rare earths treatment centers in the world.
President Biden recently announced a plan to change that. It includes providing MP Materials, a rare earth company headquartered in the United States, with $ 35 million in taxpayer dollars to separate and process heavy rare earth elements at its Mountain Pass, California facility, and establish a complete end-to-end domestic permanent magnet supply chain. ” The funds came from the Ministry of Defense’s industrial base analysis and sustainability program.
The company promised to add an investment of $ 700 million, which includes the construction of a rare earth processing plant in Texas. This follows a $ 10 million allocation of taxpayer money from the Trump administration in November 2020 through the Defense Production Act, “… to add value-added processing and separation capabilities” to MP Material’s rare earth operations in Mountain Pass, California.
|MP||MP MATERIALS CORP||49.07||-2.35||-4.57%|
MP Materials was listed last year. Anyone can buy the stock listed on the NYSE as: MP. The Nuclear Regulatory Commission has previously questioned MP Materials about its ownership of the partly Chinese state-owned Shenghe Resources Holding Co., according to emails received by FOX Business. After these questions were answered, the NRC approved mining licenses to be transferred to what is now the publicly owned MP Materials. Shenghe currently retains about 8% ownership of MP Materials through subsidiaries.
Previously, MP Materials had an exclusive agreement with Shenghe that allowed the Chinese mining giant to export all rare earth materials extracted at MP Materials US processing facilities to China. MP Materials business executives say Shenghe essentially acted as a broker for the company to process materials and distribute the finished product around the world. SEC documents show that MP Materials rare earths concentrate accounted for about 15% of the global market.
The exclusive export contract between MP Materials and Shenghe ended on 31 March. According to SEC documents, an agreement reached in February replaced this exclusive contract and ensured that MP Materials would “… continue to sell and Shenghe will continue to purchase our rare earths concentrate under a pick-up scheme. We can also enter into short- and long-term sales contracts with new customers for the sale of our rare earths concentrate. “
At present, almost all of the world’s processing of rare earth materials is taking place in China. A spokesman for the company tells FOX Business that MP Materials plans to start its own processing of light rare earth concentrate by the end of this year, eliminating the need to export it to China. The company spokesman says they will sell the processed product on the open market with not only a domestic focus but also with a focus on buyers in Japan and South Korea. China imposes import duties on certain rare earth minerals.
It starts when MP Materials’ Mountain Pass, California, treatment center opens. However, the separated material will still be exported to China for refining until MP Materials’ new magnetic plant in Fort Worth, Texas, comes online the following year. It is expected to start producing rare earth alloys and magnets sometime in 2023 and will be used by General Motors. The goal of the Biden administration is to cut China out of the equation, but experts say it has become difficult to deal with the amount of money the Chinese spend and investments in the sector made by the Chinese Communist Party.
Late. Marco Rubio, R-Fla., Says the U.S. needs to kickstart its rare earths sector faster and is co-sponsoring a bill to offer incentives to develop production facilities. “The United States is dangerously dependent on China’s rare earth manufacturing industry,” the senator added in a statement.
This is an issue that has previously received bipartisan support. A bill introduced earlier this year by Sens. Tom Cotton, R-Ark., And Mark Kelly, D-Ariz., Are pushing for a strategic reserve and restriction of Chinese rare earth metals from being used in U.S. defense systems. Cotton, who sits on the Senate Armed Services Committee, claims this is a matter of national security.
“The United States should continue to strengthen its oversight of incoming investment from China,” he wrote in his February 2021 “Beat China” report, adding to the Committee on Foreign Investment in the United States “scrutiny of incoming Chinese investment in key sectors – such as higher education, entertainment, semiconductors, advanced telecommunications, rare earth elements, medical supplies and equipment, and artificial intelligence – should start with a presumption of denial. “
Nolan, executive director of the National Mining Association, says: “Minority ownership is one thing, control is what we are certainly concerned about. What gives me a bigger break is that the treatment takes place abroad.”
The last two administrations have taken steps to slowly start, “beginning to end”, rare earth mineral supply chains in the United States, but the questions are still over when this goal will be completed.
“It has to happen here,” Nolan adds. “I think MP Materials is trying to expand it. Other companies are trying to expand it. Certainly, the Department of Defense is now tasked with expanding it.”