President Trump on Wednesday evening issued a national emergency aimed at making the U.S. less dependent from foreign sources, in particular China, for critical minerals that are key ingredients in a wide range of industries, including defense, and creates vulnerabilities in the nation’s supply chains.
An executive order that includes the national emergency tasks the Department of Interior, working with the Treasure, Defense and Commerce Departments, to report to the White House within 60 days on an investigation into the U.S. dependence on critical minerals and recommend actions to address the threat.
“The report shall summarize any conclusions from this investigation and recommend executive action, which may include the imposition of tariffs or quotas, other import restrictions against China and other non-market foreign adversaries whose economic practices threaten to undermine the health, growth, and resiliency of the United States, or appropriate action, consistent with applicable law,” the executive order says.
The Defense Department, which is a major consumer of critical minerals, including rare earth minerals such as rare earth magnets, is focused on strengthening the domestic supply chain for these elements.
Ellen Lord, the Pentagon’s acquisition chief, told a Senate panel on Thursday that the tenuous supply chain for critical materials “is clearly an area of risk” and that for the defense industrial base microelectronics and rare earth minerals are “fragile” areas.
Sen. Dan Sullivan (R-Alaska), chairman of the Senate Armed Services Subcommittee on Readiness and Support, at the hearing referenced the new executive order, pointing out that the U.S. has raw material deposits to create domestic sources of supply for many critical minerals, including in Alaska.
“We know we’re reliant on China,” he said, adding that U.S. mining and processing practices include “much higher environmental standards than with the Chinese. So, if that’s the case, and mining and processing create good jobs, why wouldn’t we do it here as opposed to over there?”
Lord highlighted that DoD has “a number of tools” to help address vulnerabilities in the supply chain for rare earth minerals, including Title III investments in the Defense Production Act to buttress domestic sources in support of national defense. But more needs to be done, she said.
“It will require a multi-pronged approach utilizing investments, legislation and policy solutions,” Lord told the panel. “A U.S. rare earth mineral strategy should, with the necessary congressional authorizations and appropriations, consist of national stockpiles of certain rare earth elements, reestablishing rare earth mineral processing in the U.S. by implementing new incentives and removing disincentives and R&D around new forms of clean rare earth mineral processing and substitutes.”
In 2017, Trump issued an executive order that resulted in the Interior Department identifying a comprehensive list of 35 critical minerals, with rare earth minerals generally identified as one of the critical elements with the exception of scandium, which was identified as a separate mineral.
Dan McGroarty, a member of the advisory board of New York-based USA Rare Earth, which is standing up a domestic mining and manufacturing capability for rare earth and critical minerals, said Trump in 2019 issued determinations designating rare earth minerals eligible as Title III eligible in emergencies.
The new executive order extends the national emergency to all critical minerals, McGroarty said in a telephone interview with Defense Daily on Thursday.
However, he highlighted that it’s too early to predict what, if any changes, to policy and budget allocations will result from the new directive and whether it becomes “action oriented.”
USA Rare Earth has a rare earth mineral site in Texas with what it says has a more than 130-year supply of deposits, including magnets, and enough lithium to become the nation’s second largest source when fully operation in early 2023. McGroarty also said the Round Top site includes Gallium and other critical minerals.
The executive order points out that the U.S. relies on China for 80 percent of its rare earth elements, noting that more than 30 years ago the U.S. produced more of these minerals than other countries. However, it says, “China used aggressive economic practices to strategically flood the global market for rare earth elements and displace its competitors.”
In addition to asking the Interior Department to come up with recommendations for executive actions to help remedy U.S. reliance on China and other foreign adversaries for critical and rare earth minerals, the executive order says it is U.S. policy for government agencies to “prioritize the expansion and protection of the domestic supply chain for minerals, directs the department to examine existing authorities to establish grant programs to purchase or install equipment to produce and process critical minerals in the U.S., and directs the federal government to use existing authorities to speed up permits and projects related to “expanding and protecting the domestic supply chain for minerals.”