U.S. report urges steps to reduce reliance on foreign critical minerals (updated)

Texas Mineral Resources

04/06/2019 22:45

(Adds industry, congressional reaction)
    By Andrea Shalal and Valerie  Volcovici
    WASHINGTON, June 4 (Reuters) - The U.S. Commerce Department
on Tuesday recommended urgent steps to boost domestic production
of rare earths and other critical minerals, warning that a halt
in Chinese or Russian exports could cause "significant shocks"
in global supply chains.
    The report includes 61 specific recommendations - including
low-interest loans and "Buy American" requirements for defense
companies - to boost domestic production of minerals essential
for the manufacture of mobile phones and a host of other
consumer goods, as well as fighter jets.
    It also called for closer cooperation with allies such as
Japan, Australia and the European Union, and directed reviews of
government permitting processes to speed up domestic mining.
    U.S. reliance on foreign minerals has worried U.S. officials
since 2010, when China embargoed exports of so-called rare earth
minerals to Japan during a diplomatic row. The issue took on new
urgency in recent weeks after Chinese officials suggested rare
earths and other critical minerals could be used as leverage in
the trade war between the world's largest economic powers.
    "The United States is heavily dependent on foreign sources
of critical minerals and on foreign supply chains resulting in
the potential for strategic vulnerabilities to both our economy
and military," the Commerce Department said in a long-awaited
report outlining a new federal strategy on critical minerals.
    "If China or Russia were to stop exports to the United
States and its allies for a prolonged period - similar to
China's rare earths embargo in 2010 - an extended supply
disruption could cause significant shocks throughout U.S. and
foreign critical mineral supply chains," the report said.
    Boosting trade with other countries could reduce U.S.
reliance on sources of critical minerals that could be
disrupted, and robust enforcement of U.S. trade laws and
international agreements could also help address adverse impacts
of market-distorting foreign trade measures, it said.
    The report was cheered by U.S. miners, including MP
Materials, which owns California's Mountain Pass mine, the only
current rare earths facility in the United States. 
    For now, it must pay a 25 percent tariff to ship its rare
earths to China for processing, collateral damage in the
U.S.-China trade war.  urn:newsml:reuters.com:*:nL2N2351S6
    "We welcome this report and hope that the Commerce
Department's 'Call to Action' results in some real action from
Washington," said James Litinsky, co-chairman of MP Materials.
    
    RECOMMENDATIONS 
    The report called for a combination of short-term measures,
such as stockpiling, and longer-term moves to catalyze
exploration, design and construction of new mines, as well as
re-establishing domestic downstream manufacturing supply chains.
    It recommended several measures for the Interior Department
and its subagencies, including the Bureau of Land Management and
the Forest Service, to remove obstacles to critical mineral
development and make it easier to get permits.
    It said the BLM and Forest Service should review all areas
that are currently "withdrawn" – or protected  - from
development and assess whether those restrictions should be
lifted or reduced to allow for critical mineral development.
    Commerce also proposed altering how the Interior Department
and its agencies review mining projects under the bedrock
National Environmental Policy Act, urging expedited
environmental studies and identifying minerals which can be
excluded from environmental reviews.
    The report drew immediate fire from Democrats who said the
new strategy would harm the environment and amounted to fresh
concessions to multinational corporations.
    "This administration has set shameful new records for
industry giveaways, and this is one of the worst," said Raul
Grijalva, Democratic chairman of the House of Representatives
Natural Resources Committee.
    The industry applauded the report, however.    
    "The steps outlined in this report will go a long way in
unlocking the value of all our domestic mineral resources while
continuing strict environmental protections," said Hal Quinn,
president of the National Mining Association.
    The Buy American recommendation, which would require defense
weapons and related products be built with domestically-sourced
rare earths, could make it easier to secure financing if
investors knew there would be a guaranteed revenue source for
new projects, prospective U.S. rare earth miners said.
    "I would encourage the federal government to move as quickly
as possible, and 'buy American' is one way to do that," said
Anthony Marchese, chairman of Texas Mineral Resources Corp
 TMRC.PK , which is seeking $300 million to develop the Round
Top rare earth deposit in Texas.

 (Reporting by Valerie Volcovici, David Lawder, Andrea Shalal
and Ernest Scheyder; editing by Leslie Adler, Cynthia Osterman
and Sonya Hepinstall)
 ((andrea.shalal@tr.com; +49-30-2888-5159; Reuters Messaging:
berlin.newsroom@thomsonreuters.com;))