Trump Enlists Pentagon on Rare-Earth Magnets Amid Chinese Threat

July 23, 2019by Jennifer A. Dlouhy

WASHINGTON — President Donald Trump on Monday ordered the Defense Department to spur the production of a slew of rare-earth magnets used in consumer electronics, military hardware and medical research, amid concerns China will restrict exports of the products.

Trump invoked the 69-year-old Defense Production Act — once used to preserve American steelmaking capacity — to remedy what he called “a shortfall” in production of the super-strong magnets made with rare-earth minerals neodymium and samarium.

U.S. capacity to produce the magnets “is essential to the national defense,” Trump asserted in issuing the designations Monday. Without action, Trump said, American industry “cannot reasonably be expected to provide the production capability” for the products.

The Defense Production Act allows the president to prioritize contracts for materials, equipment and services in order to preserve or build up domestic manufacturing capabilities. It has been invoked to compel purchases of semiconductor manufacturing equipment so companies could churn out radiation-hardened microelectronics used by the military — such a niche market that businesses might not have made the investment on their own. It has also been deployed to finance research and procurement projects in lithium ion batteries, lightweight ammunition and other technologies.

Trump’s orders Monday singled out magnets made of neodymium, iron and boron as well as those made with samarium and cobalt.

The action follows a Trump administration report in June asserting that the U.S. needs a stable supply of critical minerals to ensure U.S. economic prosperity and the national defense. At the time, the Trump administration promised to take “unprecedented action” to ensure the U.S. wouldn’t be cut off from supplies of rare earths, a group of 17 obscure but vital elements whose production is dominated by China.

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With assistance from Jennifer Jacobs.

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©2019 Bloomberg News

Visit Bloomberg News at www.bloomberg.com

Distributed by Tribune Content Agency, LLC.

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