The Pentagon wants to end its reliance on China for rare earth minerals. But can it be done?

The Pentagon is funding projects at two U.S. mines and one magnet manufacturing company that could offer a fix to America's dependence on rare earth minerals from China. But uncertainty hangs over whether the mines can deliver enough material, and how soon.

The U.S. does not have a full, domestic supply chain to produce and process rare earth minerals — used to make armored vehicles, precision-guided weapons, batteries and night-vision goggles — yet dozens of mines have recently begun to design processing facilities and new methods of rare earth production, such as recycling.

Washington's quest for a solution on how to end China’s reign over the market is not new, but in the last couple of years, rare earth mineral dependence has been lumped in with the Trump administration’s broader push to revitalize U.S. industries and “decouple” from China amid escalating tensions. China is the largest global processor of rare earths, accounting for around 80 percent of U.S. rare earths supply.

What’s new? The Pentagon this week signed a contract with Australia’s Lynas Corp., owner of the Mount Weld mine in Western Australia, to begin design work and research on a rare earth separation facility in Texas. Reuters reported that the Pentagon has also resumed funding to MP Materials, owner of Mountain Pass mine in California, to create a facility there. A Chinese investor owns almost a tenth of MP Materials, prompting concern and a brief pause in funding.

The department also announced late last week it’s giving $28.8 million under the Defense Production Act Title III to Urban Mining in Texas. That company aims to provide an alternative, cleaner way of providing critical rare earth magnet components to reduce dependency on China through recovering rare earths from various types of electronic waste. Only a small fraction of rare earth elements within end products come from recycled materials so far, as it's a newer type of manufacturing.

Up in the air: Rare earth industry analysts say it’s an open question as to whether the mines selected by the Pentagon will be able to succeed in their designs, as building a processing facility could take significant investment and many years to fully operate. A debate among mineral economists and experts focuses on whether the mines produce enough of both heavy and light rare earth minerals to be commercially viable.

“If what we want is access to efficient production of rare earth materials [choosing a limited number of mines and therefore] restricting our market access is the opposite of solving the problem,” said Eugene Gholz, a former Pentagon adviser who worked on rare earth mineral policy in the department’s industrial policy office.

The Defense Department did not respond to multiple requests for comment.

Other proposals: The Senate’s annual defense policy bill, S. 4049, includes an amendment on rare earth minerals. It sets a goal of ensuring a secure supply chain of “strategic” minerals by 2030, which falls short of China’s “Made in China 2025” strategy that aims to make it the leader in high-tech industries such as information and clean energy cars.

“I see these DoD decisions as individual stepping stones with a path that’s not yet certain,” said David Henderson, founder and president of Rittenhouse International Resources.

China’s threat to cut off rare earths exports to the U.S. early last year, as well as its move to become entirely self-sufficient, has renewed concern in Washington that the U.S. will be left defenseless without critical mineral imports from Asia. The threat during the early stages of the U.S.-China trade war set off alarms, inspiring the Pentagon to release a report on how best to end China's dominance on the market.

What the experts say: “If you’re in a hurry to go forward with someone who’s currently in production, these are the companies you would pick. It reduces some kind of uncertainty in the investment that the government is going to make. On the other hand ... their concentration of heavy rare earths are low,” Gholz said.

The Pentagon’s contracts are limited to designing the separation facility, not building the plant, which could take five to 10 years. Gholz also said the full process could require more than $100 million to get up to full-rate production. "But, the Congress right now is spending a trillion dollars without batting an eyelash, who cares about 100 million,” he continued.

The Wall Street Journal reported in April that the Pentagon said it may award up to $40 million for the minerals, but it's uncertain whether that would apply to a single program or the entire program.

While the defense industry’s demand for rare earths is a much smaller fraction compared to other growing markets, such as electric vehicles, applications in the defense world could grow if a secure supply chain is set up in the U.S.

In the rush to bring the supply chain back to the U.S., however, “we seem to be potentially tripping over ourselves,” said Matthew Lehner, a former Senate Energy and Natural Resources Committee staffer and Obama administration official.

“There are a bunch of unviable mines that are vying for federal funds to prop up the stock price. So, that’s what appears to be at stake here. … I think it’s just a lack of understanding,” Lehner said.

Other ways forward: Beyond diversifying the market by selecting other locations and mines for funding, analysts also said investing in more research and innovation in the field, such as recycling from waste, may prove beneficial. Another expert said invoking Title VII of the DPA to establish a volunteer group of industry executives who could be called to government service in the name of national defense would also help bring in experts who know the field.

CORRECTION: A previous version of this report mischaracterized one of the company's the Pentagon has struck a contract with. Urban Mining, a magnet manufacturing company, recovers rare earths from various types of electronic waste.