WASHINGTON (REUTERS) - US Senator Ted Cruz introduced legislation on Tuesday (May 12) to help revive the US rare earths industry with tax breaks for mine developers and manufacturers who buy their products, the latest attempt by Washington to break China's control over the strategic sector.
China is the largest global processor of rare earths, a group of 17 minerals used to make electronics and military equipment. The country has threatened to stop exporting the specialised minerals to the United States amid the ongoing trade war, prompting efforts by Washington to help revive its domestic rare earths industry.
Mr Cruz's legislation, if approved, would let mining companies deduct from their tax bill the costs of building rare earths mines, processing facilities and equipment purchases.
It would also let electronics manufacturers deduct 200 per cent of the cost of US rare earth products, including magnets, a measure designed to entice companies to buy fewer of the strategic minerals from China and more from the United States.
"I believe China is the most significant geopolitical threat to the United States for the next century," Mr Cruz, a Texas Republican, said in a statement.
The Bill would also require the Pentagon to use US-derived rare earth products in all weaponry.
Similar Bills from other senators have yet to pass, though elements from them all could eventually be folded into broader US military funding legislation, congressional staffers have said.
Reuters reported last month that a Chinese company's minority stake in the only US rare earths mine has prompted concerns from scientists at the US Department of Energy. The US Department of Defence decided to fund the mine's owner, MP Materials in April.
Australia-based Lynas Corp also received Pentagon rare earths funding.
Two days after the Reuters report, Mr Cruz and five other senators sent a letter to the Pentagon pushing it to only fund US rare earth projects.
Mr Cruz's legislation introduced on Tuesday also would provide US$50 million (S$70.91 million) in grants for rare earth pilot projects, with roughly a third allocated for minerals recycling from old mine waste, among other sources.
"We commend Senator Cruz for recognising that the first step in addressing China's dominance in the rare earths sector is prioritizing domestic US rare earth development," said Mr Pini Althaus, chief executive of USA Rare Earth, which is developing the Round Top rare earth mine in Texas with Texas Mineral Resources Corp.
Alaska, Wyoming and California also contain large concentrations of rare earths.