Dec 12, 2019 - Economy

U.S. Army to fund rare-earth minerals facilities after China threat

Jacob Knutson

A rare-earth mineral storage facility in china — A rare-earth mineral storage facility in China in 2010. Photo: STR/AFP via Getty Images

The U.S. Army is planning to finance mines and processing plants to establish a domestic supply of rare-earth minerals, which are used in weapons and electronics, according to a government document reviewed by Reuters.

Why it matters: The investment comes in response to a threat from China, which processes most of the world's rare earths, to stop exporting them to the U.S. amid the ongoing trade war.

Between the lines: President Trump last year warned that relying on other nations for strategic minerals could hamper U.S. defenses, and ordered the Pentagon to update its supply chain.

Details: Though the U.S. has domestic deposits of rare earths, it imports roughly 80% of its supply from China because mining and processing the materials can be difficult and environmentally dangerous.

The minerals, which include neodymium and yttrium, are necessary components in nuclear rods, precision-guided missiles, smart bombs, military jets and most consumer electronics.
Depending on its location and size, a pilot processing facility could cost between $5 million and $20 million to build. A full-scale facility could cost more than $100 million, according to Reuters.

Flashback: The U.S. hasn't invested in domestic rare earths since developing the atomic bomb during World War II.

Worth noting: In 2010, China stopped exporting rare earths to Japan after it arrested a Chinese fishing trawler captain for fishing in Japanese waters.

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U.S. Army to fund rare-earth minerals facilities after China threat

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