MethodologyContact usSupportLogin
The US House of Representatives Select Committee on Strategic Competition between the US and Chinese Communist Party recommended congress to authorize the creation of a critical mineral “Resilient Resource Reserve,” it said in a report with around 150 policy recommendations published on Tuesday December 12.The adoption of such a reserve is intended to “insulate American producers from price volatility and (the People’s Republic of China’s) weaponization of its dominance in critical mineral supply chains,” according to the report.
Such a reserve would be used to sustain the price of a critical mineral when prices fall below a certain threshold and would be replenished through contribution from companies when prices are “significantly” higher, the report stated.
The fund would target critical metals where there is high price volatility, low US domestic production and import dependence on China. Cobalt, manganese, light and heavy rare earths, vanadium, gallium, graphite, germanium and boron are critical minerals that fall under that category, according to the report.
The US already has the Defense Logistics Agency (DLA) Strategic Materials, which focuses on the analysis, planning and procurement of materials critical to national security, rather than managing price volatility and encouraging domestic production as stated in the recommendation.
The recommendation would have to first be drafted into a bill, before being debated and voted on in both US congressional chambers and approved by the US president before being implemented.
Domestication of battery recycling in the US was also a recommendation. The committee recommended export restrictions on any facility that receives Department of Energy or Department of Defense funding for the processing of black mass.
Research funding for alternative battery chemistries was another recommendation from the committee.
The report also calls for Congress to develop tax incentives that create a preference for American manufacturing.
One incentive is enacting the Rare Earth Magnet Manufacturing Production Tax Credit Act (H.R. 2849) to establish a $20 per kilogram tax credit for light and heavy rare earth magnets manufactured in the US and a $30 per kilogram credit for US manufactured magnets where 90% of the component materials are produced domestically.
Another is the development of 100 percent tax credits for magnets that can substitute for rare earth neodymium iron boron (NdFeB) magnets.
In her testimony to the Select Committee, Liza Tobin, the senior director for economy at the Special Competitive Studies Project, said that “the PRC intentionally creates overcapacity and sells products at below-market rates in order to gain market share and move up the value chain.”
China produces over 80% of the world’s permanent rare earth magnets. The only other large producer is Japan which has a highly developed magnet sector supplying its electronics and automotive industries.
There are currently two large-scale NdFeB magnet projects under development in the US.
US rare earth mining firm MP Materials has launched construction of a NdFeB magnet plant in Texas; and E-Vac Magnetics, a US subsidiary of German magnet maker Vacuumschmelze, has announced plans to establish high-volume rare earth permanent magnet production in the US by 2025.
US carmaker General Motors (GM) has concluded long-term supply deals with both projects.
Rare earth prices have been increasingly unpredictable and volatile in recent years. Prices for neodymium-praseodymium (NdPr) oxide, the main building block for NdFeB magnets, more than doubled last year but have since slumped sharply.
Fastmarkets’ weekly price assessment for neodymium-praseodymium oxide 99% ratio (75:25), fob China was $66-68 per kg on December 7, down from $71-74 per kg on October 19 when the price first launched.
Participants in the cobalt market, which has seen a sustained decrease in prices and oversupply the past few months, said that they welcomed the recommendations.
Cobalt is used in nickel cobalt manganese (NCM) electric vehicle batteries as well as in rotating parts for jet engines. There are also defense and medical applications for cobalt metal.
Fastmarkets’ daily price assessment for cobalt standard grade, in-whs Rotterdam was $13.10-14.40 per lb on Wednesday, down from $18.30-19.95 at the start of the year. The midpoint of the price is at its lowest since August 2019.
Fastmarkets’ research team is forecasting a 6,000-tonne surplus of cobalt in 2024, up from the 4,000 tonnes expected in 2023.
In October, market participants said that they expect an increase of refined cobalt metal coming out of China, because of an oversupply in cobalt intermediates such as hydroxide.
While Chinese-origin cobalt metal faces a 25% tariff to the US, newly produced metal from China could displace other origin units from Europe to the US, market participants said.
Bryce Crocker, chief executive of Jervois Global, which owns the Idaho Cobalt Operations (ICO), said that the company welcomes the recommendation in an announcement on Wednesday.
Low cobalt prices halted construction at the Idaho project earlier this year.
Market participants and experts also believe that a price support mechanism is important for the establishment of new, non-Chinese gallium and germanium production.
Both metals were hit this year by new export controls from China, which produces the overwhelming majority of the world’s gallium and most of its germanium.
In August, after the export control came into effect, a market expert told Fastmarkets that investment in gallium projects in particular would not be carried out without some form of protection against “unsustainable prices that could — again — materialize as a result of Chinese overcapacity.”
In the US, Trafigura-owned Nyrstar first announced plans to expand its Clarksville smelter in the US state of Tennessee to refine gallium and germanium in 2022. The company put a price tag of $150 million on this project.
Fastmarkets’ twice-weekly price assessment for gallium 99.99% Ga min, in-whs Rotterdam was $500-600 per kg on Wednesday, up from $255-310 per kg at the beginning of the year.
While market participants say they welcomed the committee’s recommendation, many acknowledged that such a recommendation would take time to become official legislation and policy — if approved.
“It’s not approved yet and can take months if not a couple years for anything to be bought. We welcome seeing it in the market though,” one cobalt market participant said.
Find out more about the launch of Fastmarkets’ rare earths prices and discover further insights here.