March 7, 2017 – Washington, DC – Today, Rep. Duncan Hunter (R-CA) introduced the Materials Essential to American Leadership and Security (METALS) Act. The legislation rectifies a dangerous lapse in the supply chain for strategic and critical materials essential for numerous defense and national security applications.
“The U.S. must no longer be wholly dependent on foreign sources of strategic and critical materials,” said Rep. Hunter. “The risk of this dependence on national security is too great and it urgently demands that we re-establish our depleted domestic industrial base.”
Presently, the People’s Republic of China dominates the production of rare earth elements, controlling more than 90 percent of global production. These critical materials are key components of everything from high technology consumer electronics to advanced weapons systems, including the Joint Strike Fighter.
Over the past decade, the U.S. has lost its capacity to produce these materials and ceded this ability to foreign nations, namely China. In fact, the last major domestic producer of rare earth elements declared bankruptcy in 2015, shuttered its California mine and processing plant and sold a portion of its assets to the Chinese. The mine is now is being considered for purchase by a firm with ties to a Russian billionaire.
Through the creation of a working capital fund, the METALS Act would allow domestic companies to access the capital they need to bridge the “Valley of Death” and develop new, advanced, green technologies for the production of strategic and critical materials. The Strategic Materials Investment Fund would leverage a small fraction—just 1 percent—of Department of Defense overhead costs for major defense acquisition programs that are reliant upon strategic and critical materials in order to provide five-year, interest-free loans to companies who succeed in developing new production or manufacturing techniques for strategic and critical materials. The fund would also reimburse those defense programs which faces higher costs for procuring domestically-sourced strategic and critical materials.
The METALS Act strictly prohibits any reduction in the quantities of weapons systems to be procured. Funding for the Strategic Materials Investment Fund is specifically derived from the Department of Defense’s internal programmatic administration funds to alleviate any impact on weapons systems procurement.
In addition to the creation of the Strategic Materials Investment Fund, the METALS Act would also prohibit the foreign sourcing of ammonium perchlorate. This chemical is used extensively as a propellant for rockets and missiles used by the Department of Defense and for manned spaceflight. Procuring ammonium perchlorate from domestic sources ensures the United States will have continued access to this essential chemical.
To address the issue of the potential acquisition of domestic rare earth mines by foreign investors, the METALS Act prohibits the approval of such a sale by the Committee on Foreign Investment in the United States.
Lastly, the bill would direct the Secretary of Defense to conduct a report on the ability of thorium-fueled nuclear reactors to meet to the needs of the United States Navy for naval power.
The METALS Act is a means to ensure American independence from non-allied foreign powers and to establish safe and secure supply chains for the Department of Defense. The bill supports the U.S. domestic industrial base by aiding domestic investment opportunities and consequently mitigates the risk of a supply chain interruption for materials that have become essential for American military superiority.