(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, which declares a national emergency in the mining industry, directs the Interior Department to explore using the Defense Production Act to hasten the development of mines. The administration has 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 everything from electric vehicles to wind turbines to missile-guided systems, amid concerns that China could restrict exports of the products amid heightened trade tensions.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 the Interior and Energy Departments should encourage the development and reuse of old coal waste areas, material on old mining sites, as well as 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,” said Wendt. 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.”Companies involved in rare earth exploration and investment gained on Thursday. Kuantan, Malaysia-based Lynas Corp. rose more than 5%, while Fortress Value Acquisition Corp., a New York-based special purpose acquisition company, gained as much as 14%.(Updates with share prices of rare-earth companies in final paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.,
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