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Biden Makes Strategic Investment To Counter China's Rare Earth Dominance

The U.S. federal government has allocated $35 million for a company that plans to develop a processing facility for rare earth metals in California. The investment is part of nascent efforts to reduce U.S. dependence on Chinese rare earths.

Per a Bloomberg report, the company, Nevada-based MP Materials Corp, will invest $700 million of its own money in the project, which will not only be focused on rare earths mining and processing but seek to build a whole supply chain for permanent magnets, which are a key component of electric vehicles and wind turbines.

"We can't build a future that's made in America if we ourselves are dependent on China for the materials that power the products of today and tomorrow," President Biden said this week, as quoted by Reuters.

However, the issue with new mine openings in the country is a sensitive one and could hinder efforts to boost the States' independence of metals and minerals imports.

According to Biden, the federal government would not allow new mines unless "the historical injustices that too many mining operations have left behind" can be avoided.

Also, he said, "Environmental protections are paramount. We have to ensure that these resources actually benefit folks in the communities where they live, not just shareholders."

Currently, the United States imports 80 percent of the rare earths that it needs from China. This is an uncomfortable position for Washington, given the complicated relations between the two nations.

Changing the situation, however, would take quite a bit of time: China has been building its dominant position in rare earths production and processing for decades, after the U.S. and Europe decided they did not need to develop local supply.

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Currently, there is one single rare earths mine in the United States, the one operated by MP Materials Inc. However, the company sends the mined output to China for processing.

By Irina Slav for Oilprice.com

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