The following is a guest post by American Resources expert and J.A. Green & Company president and founder Jeffery A. Green
The United States has placed itself in a very precarious situation with respect to its ability to produce and refine strategic and critical materials. Over the past few years we have willfully ceded our last remaining production capacity for rare earth elements to the Chinese who have readily adopted the role as the world’s monopolist when it comes to the production of these crucial elements. In fact, China now controls more than 90 percent of the global production of rare earth elements.
While rare earths are small, yet critical materials essential to the proper functioning of society’s high tech items, smart phones, computers, and televisions, they are also essential for the proper function of numerous defense-related end items including aircraft and missiles. Without access to these materials, we risk having to revert to Vietnam-era technologies, not a prudent strategy for the world’s greatest fighting force.
Compounding the problem, the only major domestic producer of certain rare earth products, a major publically traded United States Corporation, filed for bankruptcy in 2015 after compiling more than $1 billion in debt. The company subsequently shuttered and disassembled its U.S. mining facility and sold a portion of its assets to China to pay creditors. Thus, the United States was left with no domestic production capacity for certain strategic and critical materials. Any restriction on access to foreign rare earth elements would leave the U.S. without the ability to produce a host of defense-related components and in a risky and precarious security situation.
Legislation recently introduced by Congressman Duncan Hunter (CA) would aim to rectify this dangerous hole in U.S. national security policy. The Materials Essential To American Leadership and Security Act of 2017 or METALS Act would require certain major defense acquisition programs (“MDAP”) to forgo a small fraction of their overhead costs in order to reestablish a domestic industrial base for rare earth elements and other materials deemed strategic and critical for defense applications. Aircraft and missile MDAPs which utilize strategic and critical materials would be required to contribute just one percent of their internal programmatic administration funds to create a working capital fund designed to reignite the domestic industrial base for strategic and critical material production and separation. The revolving fund, to be known as the Strategic Materials Investment Fund, would issue five-year, interest-free loans to domestic companies seeking to bridge the “Valley of Death” and provide an alternative to Chinese-produced materials. Additionally, the fund would reimburse defense contractors should they incur higher prices for procuring domestically produced strategic and critical materials.
The METALS Act would support and strengthen our domestic industrial base by providing the necessary capital to companies attempting to ensure American independence from non-allied foreign powers and provide a safe and secure supply chain for the Department of Defense. Funding for the Strategic Materials Investment Fund is specifically derived from the Department of Defense’s internal programmatic administration funds to alleviate any impact on the procurement of weapons systems. The bill would in no way impact the quantities of weapons systems to be procured.
The METALS Act is the first step toward reestablishing safe and secure domestic supply chains for strategic and critical materials and ensuring the United States always has access to materials essential for defense and national security.