The United States is accelerating efforts to establish a domestic supply chain for rare earth elements, crucial for defense and green energy industries, aiming to reduce its reliance on dominant producer China by 2027.
“We are on track to meet our goal of a sustainable mine to magnet supply chain capable of supporting U.S. defense requirements by 2027,” said Laura Taylor-Kale, Assistant Secretary of Defense for Industrial Base Policy, at a mining conference in Perth, Australia.
The U.S. has been driving the buildout of a global rare earths supply chain beyond China since COVID-19 disrupted supply chains. It has funded projects in allied nations like Australia, which along with Canada and the UK, is classified as a domestic source under the Defense Production Act.
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This year, the U.S. extended support for the first time to two Australian rare earths projects, offering up to $850 million to help construct the supply chain. It had previously backed Lynas Rare Earths, the world’s largest producer outside China, to build a new processing facility in Texas.
However, these expansion plans come as rare earth prices have slumped due to rising Chinese exports, hurting cashflows and profits for Western producers as well as China’s top three firms.
Delinking from Chinese Prices
Tom O’Leary of Iluka Resources, which received a $667 million Australian government loan for a new processing plant, argues for Western rare earth prices to delink from depressed Chinese levels, calling it “not a normal market.”
“So today they are still losing money.. and yet they are still producing,” commented O’Leary on Chinese pricing.
READ: China Restricts Rare-Earth Technology Exports
Lynas CEO Amanda Lacaze agreed there was a “market imbalance” that could be addressed by growing non-Chinese supply. “The important thing is growing the non-Chinese industry,” she said, citing government partnerships as crucial to “address the imbalance.”
As the U.S. races to secure rare earth supplies vital for economic and national security, breaking China’s dominance through a resilient global supply chain has become a strategic imperative.
Information for this story was found via Reuters and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
