Taxpayers Are Backing An Effort To Break China’s Grip On Key Mineral Refining. It Isn’t Working

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Nick Pope Contributor
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Taxpayers are funding U.S. government efforts to break China’s dominance of rare earth mineral refining capacity, but the Department of Defense (DOD)-backed efforts are flailing, according to Reuters.

The DOD has spent millions of taxpayer dollars in an effort to support ventures to boost American rare earth refining, a critical energy security effort given that China controls 87% of the world’s refining capacity, according to Reuters. China has strategically manipulated the rare earths extraction and refining markets to its advantage over the past several years, leaving the U.S. in a potentially vulnerable position until it can manage to build up the domestic capacity needed to source key components for devices including smartphones, electric vehicles (EVs) and fighter jets.

MP Materials, a U.S.-based rare earths mining company, received $35 million from the DOD in February 2022 to help construct a refining facility for heavy rare earth minerals near its California mine, which is the only rare earth minerals mine in the U.S., according to a DOD press release. The project has been a failure so far due to lingering effects of the pandemic and technical issues, leaving MP dependent on Chinese refining to generate its revenues, according to Reuters.

MP planned to use that particular refining facility to source raw materials for a separate battery plant it is building in Texas, which would in turn supply General Motors with batteries to use in its emerging EV product line, according to Reuters. MP’s second-largest shareholder is a Chinese firm called Shenghe Resources, the outlet reported. (RELATED: ‘Unacceptable’: GOP Reps, Defense Experts Raise Red Flags Over Pentagon’s Reliance On China For Critical Minerals)

“The (rare earths) commissioning process is painstaking, with stops and starts,” Jim Litinsky, MP’s CEO and largest shareholder, said to investors in May, according to Reuters. China moved in July to restrict exports of key rare earth minerals to the U.S. as tensions mount between Beijing and Washington.

Australia-based Lynas Rare Earths and U.S.-based chemical company Blue Line had worked with Trump administration officials in 2019 to build new refining facilities near San Antonio, Texas, but that effort, funded in part by the Pentagon, has since fallen apart for reasons unknown, according to Reuters. Lynas also received $30.4 million in DOD support in February 2021 to establish refining capacity outside of Chinese control, according to a DOD press release.

Lynas has plans for other refining facilities that it is building along the Texas coastline, which will be facilitated with up to $258 million in Pentagon funding, according to Reuters. It also plans to open a new processing facility in Australia later this year, Reuters reported.

The DOD and Blue Line all did not respond immediately to requests for comment. Lynas could not be reached for comment.

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