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26 Jul, 2020 07:12

US resumes funding for rare earth miners amid deteriorating relations with China – report

US resumes funding for rare earth miners amid deteriorating relations with China – report

The Pentagon has reportedly decided to resume sponsoring two rare earth mineral processing projects, to cut US dependence on the top global supplier of the vital materials, China, as tensions soar between the two nations.

Australia’s Lynas Corporation, the world’s largest rare earth miner outside China, and its US rival, MP Materials, won grants from the US military for rare earth separation facilities in Texas and California in April. However, the funding was quickly put on hold as senators urged that only US rare earth projects be provided with support. At the same time, the US Department of Energy expressed concern about Beijing’s influence in MP Materials, as a Chinese company holds a minority stake.

After months-long additional research conducted by a third party, the Department of Defense decided to resume funding of the projects, Reuters reported earlier this week. According to documents dated July 10, the review concluded that the award process had been followed fairly. It is not clear how much money the firms are set to receive under the program.

Rare earths are a group of elements vital for the production of multiple devices, from cell phones to advanced military gear. As is the case for the rest of the world, the US is heavily reliant on China for the widely used materials as it accounts for most of the global production. Since China signaled that it could cut off the supplies at the height of trade tensions between the world’s two largest economies last year, the Trump administration has been looking for ways to boost domestic production.

However, China has not mentioned restricting these imports amid the recent escalation with the US, and even included the materials in the latest tariff waivers, issued in May.

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