Exclusive: U.S. Army will fund rare earths plant for weapons development




  • In US
  • 2019-12-11 06:08:34Z
  • By Reuters

By Ernest Scheyder

(Reuters) - The U.S. Army plans to fund construction of rare earths processing facilities, part of an urgent push by Washington to secure domestic supply of the minerals used to make military weapons and electronics, according to a government document seen by Reuters.

The move would mark the first financial investment by the U.S. military into commercial-scale rare earths production since World War Two's Manhattan Project built the first atomic bomb.

It comes after President Donald Trump earlier this year ordered the military to update its supply chain for the niche materials, warning that reliance on other nations for the strategic minerals could hamper U.S. defenses.

China, which refines most of the world's rare earths, has threatened to stop exporting the specialized minerals to the United States, using its monopoly as a cudgel in the ongoing trade spat between the world's two largest economies.

"The U.S. rare earths industry needs big help to compete against the Chinese," said Jim McKenzie, chief executive officer of UCore Rare Metals Inc <UCU.V>, which is developing a rare earths project in Alaska. "It's not just about the money, but also the optics of broad support from Washington."

The Army division overseeing munitions last month asked miners for proposals on the cost of a pilot plant to produce so-called heavy rare earths, a less-common type of the specialized minerals that are highly sought after for use in weaponry, according to the document.

Responses are due by Dec. 16. UCore, Texas Mineral Resources Corp <TMRC.PK> and a joint venture between Lynas Corp <LYC.AX> and privately-held Blue Line Corp are among the expected respondents, according to company officials and sources familiar with the matter.

The Army said it will fund up to two-thirds of a refiner's cost and that it would fund at least one project and potentially more. Applicants must provide a detailed business plan and specify where they will source their ore, among other factors.

This latest move by the Army, a division of the Pentagon, comes after a military study earlier this year on the state of the U.S. rare earths supply chain.

The rare earths tension between the U.S. and China goes back to at least 2010, when China limited exports to Japan after a diplomatic dispute, sending prices for the niche metals spiking and fueling concerns across the U.S. military that China could do the same to the United States.

The U.S. Army Combat Capabilities Development Command Chemical Biological Center and the U.S. Army headquarters did not respond to requests for comment.

The request does not give a specific financial amount the Army could fund, though it is derived in part from the Defense Production Act (DPA), a 1950s-era U.S. law that gives the Pentagon wide financial latitude to procure equipment necessary for the national defense.

A rare earth processing pilot plant could cost between $5 million and $20 million, depending on location, size and other factors, with a full-scale plant potentially costing more than $100 million to build, industry executives said.

"It's great to see interest in financially supporting the industry from the Department of Defense," said Jon Blumenthal, CEO of Blue Line Corp, which earlier this year signed a memorandum of understanding to build a rare earth processing facility in Texas with Australia-based Lynas Corp <LYC.AX>.

Blumenthal declined to comment when asked if Blue Line will respond to the Army's request. Lynas declined to comment.

It is not clear how the Army will rank the responses given that much of the rare earths industry expertise is now located in China, though the modern rare earths industry itself had its genesis in the United States decades ago.

"Instead of providing funds for yet another study, this allocates money toward establishing a U.S.-based rare earth supply chain," said Anthony Marchese, CEO of Texas Mineral Resources, which is developing the Round Top mine in Texas with USA Rare Earth.

After processing, however, rare earths need to be turned into rare earth magnets, found in precision-guided missiles, smart bombs and military jets and China controls the rare earths magnet industry, too.

The Pentagon has not yet launched an effort to finance domestic magnet manufacturing.

"Closing the magnet gap would do more to address the nation's defense needs, and as well the needs of electric vehicle makers and others," said Ryan Castilloux, managing director with Adamas Intelligence, a research firm that closely tracks the rare earths industry.


Graphic: Rare Earth Production - https://fingfx.thomsonreuters.com/gfx/editorcharts/USA-TRADE-CHINA-RAREEARTH/0H001PGB36J0/eikon.png


(Reporting by Ernest Scheyder; Additional reporting by Melanie Burton in Melbourne; Editing by Marguerita Choy)

COMMENTS

More Related News

BioNTech, Fosun launch another COVID-19 vaccine trial
BioNTech, Fosun launch another COVID-19 vaccine trial
  • US
  • 2020-08-05 08:58:17Z

Germany's BioNTech and China's Shanghai Fosun Pharmaceutical on Wednesday announced the start of another COVID-19 vaccine trial in China with a total of 144 participants. "The study is designed to support the regulatory approval process for the Chinese market and intends to confirm that the safety and immunogenicity profile observed in participants from the German and U.S. trials is comparable to that of Chinese participants," BioNTech said in a statement.

Banks snared by Hong Kong sanctions laws as US-China spat spirals
Banks snared by Hong Kong sanctions laws as US-China spat spirals

International banks in Hong Kong are caught in the crossfire of competing laws enacted by the United States and China as the superpowers clash over the city's future, with analysts warning businesses are being forced to pick a side. The first is a bipartisan US bill sanctioning Chinese and Hong Kong officials responsible for the current crackdown on political freedoms in the city. The second is a sweeping security law Beijing imposed on the finance hub that includes a ban on businesses complying with foreign sanctions.

US announces
US announces 'highest level' visit in decades to Taiwan

The United States announced Wednesday its "highest level" visit in decades to Taiwan, a move sure to infuriate China with relations between the two superpowers at historic lows. Washington's de facto embassy in Taipei confirmed that health chief Alex Azar would lead an upcoming delegation to the self-ruled island, which China's communist leaders claim and have vowed to one day seize. "This marks... the first Cabinet member to visit in six years, and the highest level visit by a US Cabinet official since 1979," the American Institute in Taiwan said.

China pursues economic self-reliance as external risks grow - advisers
China pursues economic self-reliance as external risks grow - advisers

China is looking to reduce its reliance on overseas markets and technology for its economic development, government advisers say, as U.S. hostility and a global pandemic increase external risks that could hamper longer-term progress. The country's leaders have proposed a so-called "dual circulation" model of growth to steer the economy, the sources said, which would prioritise "internal circulation" to boost domestic demand and be supplemented by "external circulation".

China
China's services sector expands at slower pace in July - Caixin PMI

Growth in China's services sector slowed in July from a decade high the previous month, as new export business fell and job losses continued, an industry survey showed on Wednesday, pointing to cracks in the sector's post-COVID recovery. The services sector, which accounts for about 60% of the economy and half of the urban jobs, had been slower to recover initially than large manufacturers, but the recovery has gathered pace in recent months as the nationwide COVID-19 restrictions on public gatherings gradually lifted. The Caixin survey showed new export businesses received by Chinese services firms contracted again in July after a brief expansion, weighing on the growth of overall new...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: US