Pentagon to counter China threats by funding US rare earth mines

The U.S. Defense Department requested federal funding to support the ramp-up of several American rare earth element mines after China threatened an export ban.

The Sino-American trade war raged this week with a series of back-and-forth retaliations.  With China generally being unable to gain advantage by pressuring the Trump administration over the risks of higher import prices and key component interruptions, Bloomberg reported that Beijing's leadership has a plan to restrict export supply of the 17 so-called rare earth elements that are crucial to the U.S. production of military jet engines, satellites, and lasers, plus consumer products from iPhones to electric cars.

The threat against the U.S. was issued Thursday in a China People's Daily incendiary headline: "United States, don't underestimate China's ability to strike back."  The article warned of the United States' "uncomfortable" dependence on China rare earths.

The Government Accountability Office in 2016 reported that the United States represents about 9 percent of world demand for rare earth elements, with the Defense Department accounting for 1 percent of demand.  But 15 of the 17 elements are key inputs across most of America's high-tech weapons systems.

From the 1950s through the mid-1990s, California's Mountain Pass Mine supplied most of the world's demand for rare earth elements, including europium for color TVs.  But China targeted domestic production, and export supply of rare earth elements beginning in the late 1990s as a pathway to enter the Western world's high-tech supply chain.

Rare earth elements are not very rare, but they are found in deposits of the low-level radioactive element thorium.  Miners know that mining and processing thorium requires substantial environmental mitigation to protect workers and adjacent communities to avoid health risks of developing pancreatic, lung, and other cancers.

By selling product at 30 percent below market and mostly ignoring mine tailings and dumping refining wastewaters loaded with heavy metals, acids, and radioactive elements into giant unlined ponds, China was able to corner over 80 percent of the rare earth market.  Mountain Pass continues to mine about 20 percent of rare earth element ore, but 100 percent is shipped by containers to China for refining.

China's State Council disclosed in 2012 that the country's rare earths operations typically produce wastewater with a "high concentration" of radioactive residues that have "severely damaged surface vegetation, caused soil erosion, pollution, acidification, and reduced or even eliminated food crop output."

According to the Germany-based Institute for Applied Ecology, Bayan-Obo, China's largest rare earths project features an 11-square-kilometer waste pond — about three times the size of New York City's Central Park — filled with toxic sludge and thorium.

Air Force spokesman Lt. Col. Mike Andrews in a press conference outlined the funding request that was sent to the White House and briefed to Congress.  Col. Andrews emphasized: "The department continues to work closely with the president, Congress and U.S. industry to improve U.S. competitiveness in the mineral market."

None of the report details was disclosed, but Col. Andrews said a federal program would employ targeted economic incentives to boost domestic rare earth production.

American Elements began discussions with the Trump administration in 2017 aimed at the U.S. government nationalizing the Mountain Pass mine to expedite environmental approvals to ramp up production.  CEO Michael Silver told Daily Manufacturing News at the time, "The [White House] staff understood the urgency of the matter." 

In a sign that new competitors will enter the domestic market, Australian rare-earths processor Lynas Corp. and Texas chemical company Blue Line Corp., announced a partnership this week to "see that US companies have continued access to rare-earth products by offering a US-based source."

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