Senators Introduce Bill to Strengthen Domestic Supply Chain
With concerns over reliance on China for rare-earth magnets, Senators Catherine Cortez Masto (D-NV) and Eric Swalwell (D-CA) have introduced legislation to promote the manufacturing of these crucial components in the United States. The bill aims to build a robust domestic supply chain, reduce dependence on foreign sources, bolster national security, and create thousands of jobs.
Production Tax Credits Encouraged
The proposed legislation includes provisions for production tax credits to incentivize domestic manufacturing. The bill suggests a $20 per kilogram credit for magnets made in the US, with an additional $30 per kilogram credit for magnets that contain domestically sourced, recycled, or reclaimed components. The senators hope that these credits will encourage businesses to invest in manufacturing rare-earth magnets within the country.
Supporting the Green Energy Transition
The bill comes at a time when the US is aggressively pushing for greater production of electric vehicles (EVs) and pursuing ambitious green energy goals. The Biden administration aims to have 50% of all vehicle sales be electric by 2030, while some states, including California, have set regulations for only allowing EVs to be sold after 2035. However, the production of EVs requires significantly more minerals, including rare earths, copper, lithium, nickel, and cobalt.
Addressing Supply Chain Vulnerabilities
Although the US has ample reserves of rare-earth minerals, environmental regulations have hindered their mining and production. The legislation seeks to address this issue by promoting increased mineral production. Senators Cortez Masto and Jacky Rosen, both from Nevada, have been advocating for greater mineral production and have recommended regulations to facilitate new mining projects.
Supporting American Businesses
MP Materials, the operator of the Mountain Pass rare-earth mine in Nevada, is the only domestic producer of rare-earth minerals. However, due to the lack of manufacturing capacity in the US, the company is forced to export its minerals. The new legislation aims to support companies like MP Materials and strengthen the entire supply chain by encouraging private investment in the manufacturing of rare-earth magnets.
James Litinsky, the chairman and CEO of MP Materials, emphasized the importance of converting the mined minerals into magnets to secure the supply chain for various applications, including national security.
“This bipartisan legislation is a crucial step towards leveling the competitive playing field,” Litinsky said. “It will catalyze private investment to address the very critical gap in our supply chain that previous policies have overlooked.”
The senators hope that by enacting this legislation, the US can establish a resilient domestic supply chain for rare-earth magnets, reducing dependence on foreign sources and safeguarding national security interests while driving economic growth and job creation.
