In a bid to expand the production of rare-earth minerals domestically in the U.S., President Trump has signed an executive order to reduce U.S. dependence on China for those critical minerals.
The executive order pronounces a national emergency specifically for the mining sector and it seeks to expedite the development of domestic mines through activating provisions in the Defense Production Act. The Interior Department is tasked with seeing how this can happen.
In the recent past, the federal government has used this same law to boost the production of the different medical supplies which are needed in the fight against the COVID-19 pandemic.
According to Gavin Wendt (senior resource analyst), western countries were in the past happy to get all their rare-earths supplies from China since those materials were cheap and China had to shoulder the environmental effects of extracting those minerals.
However, as the trade war between the U.S. and China took a turn for the worse last year, there were concerns that China could suddenly restrict the export of these critical minerals in order to hit the U.S. where it hurts. In 2019 for example, the U.S. imported 80% of all the rare earth minerals exported by China, and that shows how dependent on China critical sectors, such as electric vehicle making, missile guidance systems and wind turbines, among others are regarding supply chains of vital inputs.
The President signed this particular executive order while on his way to Minnesota to ask voters there to stand behind him in the coming elections. Minnesota has an “Iron Range” having a large population of miners.
The executive order indicates that the Energy Secretary is tasked with developing and publishing guidelines that specify the projects eligible for support due to their links to the supply chains of vital minerals needed to push the clean energy agenda.
The supply chain players that meet the requirements spelt out by the Energy Secretary will be eligible for loans earmarked for the clean energy sector.
The Energy and Interior Departments are also charged with encouraging the reuse and development of old coal waste locations, disused mining sites as well as any materials left on previously active mining sites. The purpose of these activities is to recover any critical minerals holed up within those locations.
One of the biggest hurdles that prospective producers of rare-earths in the West have faced has been an inability to access funding for their projects. One key solution out of this dilemma has been for governments to move in and subsidize production, and right up to now, not many have been willing to consider such an intervention.
With this executive order, it now looks like the tide is turning and the U.S. federal government has realized that supporting mining entities financially and enacting needed legal reforms are the only way to break the yoke of dependence on China for the needed minerals. It would be interesting to know if entities like GoldHaven Resources Corp. (CSE: GOH) (OTCQB: ATUMF) believe the steps being taken by the U.S. are extensive enough to turn around the extraction of rare earths.
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