Jan 14, 2022: Bipartisan legislation in the US Senate will force defense contractors to stop buying rare earth minerals from China by 2026 and use the Pentagon to build a permanent stockpile of strategic minerals.

The bill, sponsored by Arkansas Republican Senators Tom Cotton and Arizona Democrat Mark Kelly, is expected to be introduced Friday, according to Reuters. This is the latest in a series of US legislations aimed at undermining China’s almost complete control over the sector.

It basically employs the Pentagon’s multibillion-dollar purchase of fighter jets, missiles and other weapons as a leverage to stop contractors from relying on China and, by extension, support the revival of US rare-earths production.

Rare earth minerals are a group of 17 metals that are used after processing to make magnets found in electric vehicles, weapons and electronics. While the United States built the industry during World War II and U.S. military scientists developed the most widely used rare earth magnet, China has gradually developed over the past 30 years to control almost the entire region.

The United States has only one rare earth mine and does not have the capacity to process rare earth minerals. The United States depends on China for about 80% of its rare earth imports.

In December, China brought together several of its key producers to build a behemouth that would strengthen its control over the global industry it has dominated for decades.

According to state media reports, the new entity, China Rare-Earths Group, will speed development of mines in the country’s south.

In the past, the United States has worked with other countries in the World Trade Organization to try to export more rare earths to China amid global shortages. Known as the Restoring Essential Energy and Security Holdings Onshore for Rare Earths Act 2022, the bill would make the ongoing storage of Pentagon materials codified and permanent.

China temporarily suspended exports of rare earths to Japan in 2010 and issued vague threats that it could do the same to the United States. To build this reserve, though, the Pentagon buys some supplies from China, a contradiction that Senate staff hope will diminish over time.

The bill, which sponsors expect to be added to Pentagon funding legislation later this year, offers no direct support for the U.S. rare earth sector. Instead, it requires Pentagon contractors to stop using Chinese rare earths within four years, except in exceptional circumstances. Defense contractors will urgently need to disclose where they get their minerals from.

The bill only applies to weapons, not other items purchased by the US military. In addition, the US Trade Representative will need to investigate whether China is distorting the rare earth market and will suggest trade sanctions where needed.

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