China to buy rare earths from U.S. as part of trade pact

Texas Mineral Resources

15/01/2020 23:25

By Ernest Scheyder
    Jan 15 (Reuters) - China has agreed to buy two types of rare
earth metals from the United States as part of an initial trade
deal inked on Wednesday, a move likely to boost U.S. production
of the strategic minerals.
    The agreement, signed in Washington by Chinese Vice Premier
Liu He and U.S. President Donald Trump, gives China two years to
ramp up purchases of hundreds of U.S. products, including
scandium and yttrium, two of the 17 rare earths commonly used in
lighting and computers. urn:newsml:reuters.com:*:nL1N29K0MV
    It was a surprising about-face for China, whose status as
the top global producer of the specialized minerals used to make
electronics, military weapons and other high-tech equipment was
seen as giving it leverage in its trade war with Washington. 
    Chinese President Xi Jinping visited a rare earths facility
last May, a step widely interpreted as threatening exports to
the United States, which are at their lowest level since
2015. urn:newsml:reuters.com:*:nL4N29J164
    The trade agreement does not involve neodymium or
praseodymium, the two most commonly used types of rare earths.
China dominates their production, as well as the manufacture of
rare earths magnets. After rare earths are processed, they must
be turned into magnets, otherwise they are of little value to
electronics and weapons manufacturers.
    Neither scandium nor yttrium are currently produced in the
United States. However, several junior miners are developing
U.S. mines to produce them and other rare earths. 
    The initial trade deal effectively gives those junior miners
a guaranteed customer, a step that should help in the hunt for
project financing.
    "This provides an additional market for U.S. producers,"
said Anthony Marchese, chief executive of Texas Mineral
Resources Corp  TMRC.PK , which is developing the Round Top mine
in Texas with USA Rare Earth.
    The Round Top project has scandium and yttrium deposits, as
do projects under development by UCore Rare Metals Inc  UCU.V 
and Rare Element Resources Ltd  REEMF.PK . 
    The trade deal comes as the Pentagon has moved in recent
months to help fund U.S. rare earth and rare earth magnet
projects, part of an attempt to help create a domestic supply
chain free from China, according to documents seen by
Reuters. urn:newsml:reuters.com:*:nL1N28K21L urn:newsml:reuters.com:*:nL1N28Q1RM
    The rare earths tension between the two countries 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. urn:newsml:reuters.com:*:nL2N24N1LH

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Rare Earth Production    https://tmsnrt.rs/2I9MfL5
U.S., China tiptoe around holes in new trade agreement   
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 (Reporting by Ernest Scheyder; editing by Richard Pullin)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))