DoD Quietly Resumes Funding for Rare Earth Metals Project in Which Chinese Company Has a Stake

The US Department of Defence has been trying to reduce its dependence on Chinese rare earth minerals since last year, after Chinese media warned that Beijing could cut off its rare earth supplies to the US amid escalating tensions between the two countries.

The Pentagon has quietly determined that it is in the best interest of the US government to resume funding for two rare earth minerals processing projects despite one of the project’s ties with a Chinese company, Reuters has reported, citing government documents it has at its disposal.

In April, the DoD granted two companies – Australian mining giant Lynas Corporation and US rare earth mining and processing company MP Materials, contracts for the creation of two rare earths separation facilities in California and Texas. However, later that same month, the Pentagon put the funding on hold “until further research can be conducted” after the US Department of Energy expressed concerns relating to an unnamed Chinese company’s minority stake in MP Materials.

In new documents related to the funding deal cited by Reuters dated 10 July, the Pentagon was said to have concluded, following a third party legal and programme review, that the process to award Lynas and MP Materials the contracts was done fairly, and that funding had been resumed.

The Pentagon, Lynas and MP Materials declined to comment on Reuters’ report.

In May 2019, the US Department of Defence announced that it would work to reduce dependence on Chinese rare earth minerals after the People’s Daily newspaper warned that Beijing might cut off supplies amid the US-China trade dispute, and Washington’s crackdown on Chinese tech giant Huawei. The US is estimated to depend China for as much as 80 percent of its rare earth minerals needs, including for the production of armaments and advanced technologies.

At the same time, the US has also engaged in talks on shifting rare earths imports from China to Africa.

Last year, a group of Republican Senators including Ted Cruz of Texas proposed a bill that would limit rare earths dependence on China and legally require the Pentagon to provide grants for pilot projects for the mining of rare earths minerals on American soil, and for defence contractors to use US-derived rare-earth elements in all military applications.