Pentagon in Talks With Australia on Rare Earths Plant to Cut Reliance on China: Official

August 27, 2019 Updated: August 27, 2019

The U.S. Department of Defense is in talks with Australia to host a facility that would process rare earth minerals, part of an effort to reduce reliance on China for the specialized materials used in military equipment, a senior U.S. official said.

The push comes as China threatens to curb exports to the United States of rare earths, a group of 17 minerals that are used in manufacturing electronic chips. Those components are found in fighter jets, tanks, and high-tech consumer electronics.

China is the world’s largest processor and producer of the minerals. There are no known substitutes.

“We’re concerned about any fragility in the supply chain and especially where an adversary controls the supply,” Ellen Lord, the Pentagon’s under secretary of defense for acquisition and sustainment, told reporters at a Washington event on Aug. 26.

Lord said the Pentagon is looking at several options to partner on rare earth processing facilities, adding “one of the highest potential avenues is to work with Australia.”

The Australian embassy to the United States in Washington didn’t immediately respond to a request for comment.

The Pentagon update came after the United States said earlier this year that it would look to Australia and Canada to develop rare earths reserves around the world, to reduce the global reliance on China. The United States has also held talks with rare earths projects across Africa.

Lord said she’s held several talks with Australian officials this year about whether such a plant could supply the Pentagon’s needs.

President Donald Trump last month ordered the Pentagon to find better ways to procure a range of magnets made from rare earths, warning that the nation’s defense would suffer without adequate stockpiles.

Australia’s Lynas Corp. is the world’s largest rare earths miner and processor outside of China. It wasn’t immediately clear if the Pentagon would partner with Lynas or another Australian entity.

Rare earth minerals need to be processed after they are extracted from the ground. While there is only one operational rare earths mine in the United States, the country has no processing facilities. California’s Mountain Pass mine is building a processor and hopes to have it online by next year.

In June, China more than doubled tariffs on U.S. rare earths imports for refining to 25 percent. Last week, Beijing said it would tack on an additional 10 percent, starting next month, the latest tit-for-tat exchange in a protracted dispute between the world’s top two economies.

By Ernest Scheyder and Bryan Pietsch.