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

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

By Ernest Scheyder

 

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FILE PHOTO: A front-end loader is used to reinforce a safety berm inside the open pit at a rare earth facility in California June 29, 2015. REUTERS/David Becker/File Photo

 

(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. defences.

 

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 fuelling 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 defence.

 

A rare earth processing pilot plant could cost between $5 million (£3.9 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 defence 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.

 

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-- © Copyright Reuters 2019-12-11
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While I'm not happy that it's the army funding the initiative, getting out from under China's control of the rare earth supply chain is a national security issue.  I'd have preferred to see it fall under some other government entity, but they don't have the budget that the military has. 

 

Hopefully, we'll see something akin to the strategic petroleum reserve where the USA stockpiles enough rare earths to keep our companies making all the things requiring rare earths (almost everything nowadays) for months and months in the case of a supply disruption.

 

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A post containing a music video has been removed as this is not the forum for music videos. 

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The link to Lynas is interesting, as its Mt Weld deposit in Western Australia is the richest on the planet.

Lynas has had endless trouble with its processing plant in Malaysia, due to environmental issues with the waste. Just wondering if the US military will override that.

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There are tons of relatively easily extractable Rare Earth Minerals in the ocean.   In one particular portion of the ocean they lay on the ocean floor in rocks about the size of potatoes.   The International Treaty has divided the area into zones for extraction.   Oh, but the US is not a member of that treaty on the oceans, so the US cannot 'mine' the Rare Earths .  

 

Oh, and guess who has the largest share of mining rights?   China.

 

https://www.cbsnews.com/news/rare-earth-elements-u-s-on-sidelines-in-race-for-metals-sitting-on-ocean-floor-60-minutes-60-minutes-2019-11-17/

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When I saw this headline I thought; "Aha - the Americans are growing triffids!"

 

Then I read the article.

 

Silly me!

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3 hours ago, Lacessit said:

The link to Lynas is interesting, as its Mt Weld deposit in Western Australia is the richest on the planet.

Lynas has had endless trouble with its processing plant in Malaysia, due to environmental issues with the waste. Just wondering if the US military will override that.

That's why China out produces all other places in rare earth products.. And they do it cheaper. Damn the environmental consequences, full steam ahead so to speak.

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4 hours ago, Lacessit said:

The link to Lynas is interesting, as its Mt Weld deposit in Western Australia is the richest on the planet.

Lynas has had endless trouble with its processing plant in Malaysia, due to environmental issues with the waste. Just wondering if the US military will override that.

The US military should stay out of Malaysia and most of Australia. 

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13 hours ago, Bluespunk said:

The ever more sophisticated weapons piling up in the arsenals of the wealthiest and the mightiest can kill the illiterate, the ill, the poor and the hungry, but they cannot kill ignorance, illness, poverty or hunger.” 
― Fidel Castro

 

1 hour ago, mickey rat said:

The war industry is alive and well. 🤑

“China accounts for around 80% of U.S. rare earths supply, materials used in many high-tech goods, ranging from consumer items like electronic cars all the way to cutting-edge weapons and communications systems.” quoted from the above attached chart.

 

I do not know why Reuters choose to highlight the weapons and military other than it's they are the ones being tasked to solve the problem, which was the same with nuclear energy. China is holding the rare earth's production over the heads of the whole world.  The USA has the technology and monetary ability to fund it, most likely at Los Alamos National Laboratories or other similar facility.  It's a logical place to do it and with military funding.

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1 minute ago, AgMech Cowboy said:

 

“China accounts for around 80% of U.S. rare earths supply, materials used in many high-tech goods, ranging from consumer items like electronic cars all the way to cutting-edge weapons and communications systems.” quoted from the above attached chart.

 

I do not know why Reuters choose to highlight the weapons and military other than it's they are the ones being tasked to solve the problem, which was the same with nuclear energy. China is holding the rare earth's production over the heads of the whole world.  The USA has the technology and monetary ability to fund it, most likely at Los Alamos National Laboratories or other similar facility.  It's a logical place to do it and with military funding.

Rare earths are actually not all that rare. It's the waste to ore ratio that inhibits most countries from mining them, that plus the pollution generated from processing. As another poster has said, the Chinese don't give a damn.

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