Trump Moves to Expand Rare Earths Mining, Cites China Threat

(Bloomberg) — President Donald Trump signed an executive order aimed at expanding domestic production of rare-earth minerals that are vital to many critical manufacturing sectors in an effort to reduce dependence on China.

The order declares a national emergency in the mining industry and directs the Interior Department to explore using the Defense Production Act to hasten the development of mines. The administration previously used the law to accelerate production of medical supplies during the coronavirus pandemic.

The president’s actions are a direct consequence of China’s dominance of the sector for decades, said Gavin Wendt, a senior resource analyst at MineLife Pty. Previously, “the West was happy to be supplied with cheap rare earths from China, with China bearing the environmental consequences,” he said.

Critical minerals have been a focus in the U.S. as China accounted for 80% of total U.S. imports of rare-earth compounds and metals last year. Last year, the White House ordered the Defense Department to spur the production of rare-earth magnets that go inside products ranging from electric vehicles to wind turbines to missile-guided systems out of concern that China could restrict exports of the products amid heightened trade tensions.

Shares of companies involved in rare earths exploration and investment gained Thursday. Kuantan, Malaysia-based Lynas Corp. rose more than 5%, while Fortress Value Acquisition Corp., a New York-based special purpose acquisition company, climbed as much as 14%.

Trump signed the order on his way to campaign stops in Minnesota, where he has made particular appeals to miners and residents of the state’s “Iron Range” area to support his re-election.

The executive order stated that the Energy Secretary shall develop and publish guidance to clarify which projects supporting domestic supply chains for the minerals are eligible for a loan program earmarked for clean energy. The order also states that the Interior and Energy Departments should encourage the development and reuse of old coal waste areas and material on old mining sites and abandoned mining sites for recovery of the critical minerals.

“The big problem for aspiring producers in the West has been the ability to source project funding and offtake agreements,” Wendt said. If the West wants to develop alternate production, “governments might have to step up and help subsidize projects — something they’ve refused to do in the past,” he said.

U.S. lawmakers recently introduced bipartisan legislation aimed at reducing dependence on China for rare earths. Separately, the European Union stepped up its push to become less reliant on imports of the raw materials as the European Commission vowed create a rare-earths alliance by the end of the year.

The order also seeks to “reduce the vulnerability of the United States to the disruption of critical mineral supply chains through cooperation and coordination with partners and allies, including the private sector.”