Rare change of heart: Let's mine our own crucial metals

After years of passively relying on China to supply our military with crucial materials for the production of high-tech weapons systems, the United States is taking some important steps toward restoring its ability to harvest its own so-called rare earths.

Rep. Duncan Hunter, R-Calif., introduced a bill this week that would allocate 1 percent of the Pentagon’s Major Defense Acquisition Programs overhead budget and transfer that money to a Strategic Metals Investment Fund. The proceeds, as much as $50 million a year, would be used to aid prospective producers of the critical metals that are needed to make the new F-35 fighter jet, rocket-guided missiles, catapults that loft planes off aircraft carriers, GPS systems and other crucial weapons systems.

Bellwether previously examined our dangerous reliance on China, which currently mines and manufactures more than 90 percent of the world’s supply of rare earth. The U.S. used to have its own, secure production chain for these important products, but found it was cheaper to import them. The last major American rare earths mine and production facility declared bankruptcy in 2015.

“My bill has now got the best chance it has ever had,” Hunter told me. “I’ve got White House support. They read your articles and got in touch with me.”

Hunter credits President Trump’s team with bringing a new attitude to the importance of mining critical materials at home, instead of relying on an unreliable supplier like China. In 2010, for instance, China temporarily cut off exports of rare earths in a trade dispute, shocking commodities markets worldwide and driving prices sky-high.

Experts in the field say there has been a sea change in attitude since Trump’s election. “There’s a sense that this administration recognizes the significance of the critical metals gap that we’ve allowed to develop,” says Dan McGroarty, who maintains a Washington-based critical metals industry consultancy.

At an industry conference in Toronto this week, bankers and venture capitalists, heartened by the administration’s promises, were kicking the tires on potential startup deals, says one attendee, longtime critical metals analyst Jack Lifton. “Last year was a desert. This year, there are oases of optimism. People hope this White House is going to follow through on reducing regulations. That’s good for the industry.”

Those same dealmakers were lying low during the Obama administration, convinced that the U.S. government was hopelessly mired in reliance on China as a supplier and anticipating more of the same if Hillary Clinton moved into the White House.

With President Trump vowing to strengthen the U.S. military, and to negotiate tougher with China, entrepreneurs hope domestic production of important elements needs for weapons systems will soon be revived. It might be one of those rare times when government and common sense appear in the same sentence.