U.S. Army plans to fund rare earths plant for weapons development

December 11, 2019

According to an exclusive report from Reuters, the U.S. Army is planning to fund the construction of a rare earths processing facility as part of a push to secure a domestic supply of the minerals used in advanced military weapons and electronics.

The Army is focused on the production of heavy rare earths and has asked rare earth mining companies for proposals for the cost of a pilot plant. Heavy rare earths are specialized minerals that are used in weaponry among other technologies.

The move would mark the first financial investment by the U.S. military into commercial-scale rare earths production since World War Two’s Manhattan Project built the first atomic bomb.

China produces and refines a majority of the world’s rare earths and the United States has felt mounting pressure to become less dependent on China for minerals. China has threatened to stop exporting rare earths to the United States during an ongoing trade spat between the two nations.

An investment into the sector could be a big boost for the domestic rare earth sector.

“The U.S. rare earths industry needs big help to compete against the Chinese,” Jim McKenzie, chief executive officer of UCore Rare Metals Inc. told Reuters. UCore is developing a rare earths project in Alaska. “It’s not just about the money, but also the optics of broad support from Washington.”

Reuters reported that responses are due by Dec. 16. UCore, Texas Mineral Resources Corp and a joint venture between Lynas Corp and privately-held Blue Line Corp are among the expected respondents, according to company officials and sources familiar with the matter.

The Army said it will fund up to two-thirds of a refiner’s cost and that it would fund at least one project and potentially more. Applicants must provide a detailed business plan and specify where they will source their ore, among other factors.

This latest move by the Army comes after a military study earlier this year on the state of the U.S. rare earths supply chain.

The rare earths tension between the U.S. and China goes back to at least 2010, when China limited exports to Japan after a diplomatic dispute, sending prices for the niche metals spiking and fueling concerns across the U.S. military that China could do the same to the United States.

A rare earth processing pilot plant could cost between $5 million and $20 million, depending on location, size and other factors, with a full-scale plant potentially costing more than $100 million to build, industry executives said.

Photo credit: Shutterstock.



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