Senators Introduce Bipartisan Bill to End Reliance on Chinese Rare Earth Elements

Senators Tom Cotton (R-AR) and Mark Kelly (D-AZ) introduced the Restoring Essential Energy and Security Holdings Onshore for Rare Earths ("REEShore") Act – the bipartisan bill to protect the United States from the threat of rare earth elements supply disruptions, encourage domestic production of these elements, and to reduce dependence on China.

"Eliminating U.S. dependence on other countries for the extraction and processing of these elements is critical to winning the strategic competition with China and protecting national security," the senators said, “adding that the REEShore Act would strengthen its position as a global technology leader by reducing its dependence on rivals like China for rare earth elements status."

This bipartisan bill is intended to support the domestic production of rare earth metals and rare earth metal products in the United States. To that end, the REEShore Act would (1) require the establishment of a strategic reserve of rare earth metals, (2) impose disclosure requirements on certain Department of Defense (DoD) contractors, (3) prohibit the use of rare earth metals processed or refined in China in DoD contracts, (4) require audits of compliance with the REEShore Act, (5) require the United States Trade Representative ("USTR") to investigate Chinese practices with respect to rare earth metals, and (6) request a report on efforts by U.S. allies to reduce reliance on rare earth metals from non-allied countries.

The REEShore Act defines "rare earth metals" to include the following: beryllium, cerium, cobalt, dysprosium, erbium, europium, gadolinium, graphite, holmium, lanthanum, lithium, lutetium, manganese, neodymium, praseodymium, promethium, samarium, scandium, tantalum, terbium, thulium, tungsten, ytterbium and yttrium.

If enacted as currently drafted, the REEShore Act would require the Department of Defense to submit a strategic stockpile report to Congress within 270 days. The report covers strategic requirements for U.S. inventories of rare earth metals and processed and refined rare earth metal products, and requirements for such metals and products to support the United States for one year in the event of a supply disruption.

The bill does not currently contain a definition of "rare earth metal products." The legislation would also authorize the Department of Defense, within three years of the submission of the Strategic Reserve Report, to take such actions as may be necessary to procure appropriate quantities of all types of rare earth metals and processed and refined rare earth metal products to support the strategic needs described in the report.

Existing regulations prohibit DoD from procuring samarium cobalt magnets, neodymium iron boron magnets, tungsten metal powder, tungsten heavy alloy, or any finished or semi-finished component containing tungsten heavy alloy, tantalum metal, and alloy, or any end product containing any of the above materials from North Korea, China, Russia, or Iran.

The bill states, "It is the policy of the United States to encourage allied nations of the United States to eliminate, to the maximum extent practicable, dependence on rare earth metals from non-allied nations." In support of this policy, the REEShore Act requires the Department of Defense to coordinate with other companies involved in the mining, processing, or production of extremely rare earth elements.

While there is no certainty that the bipartisan bill will be enacted, the proposed legislation portends a series of significant developments that should occur in the industry in the near future.

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