EXCLUSIVE-Pentagon to boost rare earths and lithium stockpiles -sources

Credit: REUTERS/Benoit Tessier

By Mike Stone

WASHINGTON, Feb 18 (Reuters) - The Pentagon plans to boost the stockpile of rare earth minerals, cobalt and lithium it manages for the U.S. government to reduce its long-term dependence on China, two people familiar with the plan said.

The new stockpile agreement guidance is expected to be announced as soon as next week, one of the people said, nearly a year after U.S. President Joe Biden issued an executive order to study U.S. supply chain resiliency in February 2021.

Rare earths are often converted into magnets and used in next-generation weapons research as well as the Lockheed Martin Corp LMT.N F-35 jet and Raytheon Technologies Corp RTX.N precision guided munitions.

Lithium, a key component used to make electric-vehicle batteries, will be vital to the Pentagon's goal of shifting its non-tactical vehicle fleet, currently 170,000 strong, to zero emissions.

An agreement between the Departments of State, Energy and Defense was signed in early February and covers the select materials as well as large batteries used in the electrical grid, the people said.

The Departments of Defense, Energy and State did not immediately respond to a request for comment.

The memo also directs inter-agency coordination of an unclassified stockpile for relevant non-fuel minerals necessary for a transition to using more clean-technologies. The agreement enables other U.S. agencies, like the Department of Energy, to coordinate on and draw from these stockpiles, according to the people who spoke on condition of anonymity.

Reuters could not determine if the agreement stipulated if the materials for the stockpiles were required to have a specific origin. The U.S. Congress has tried to stipulate where the Pentagon can source rare earths.

Rare earths are a group of 17 metals that, after processing, are used to make magnets found in electric vehicles, weaponry and electronics. Since World War Two, U.S. military scientists developed the most widely-used type of rare earth magnet but China has slowly grown to control the entire sector in the past 30 years.

The U.S. has only one rare earths mine and has no capability to process rare earth minerals. Many lithium and rare earth junior miners have hoped the Pentagon would buy more domestic product. To build reserves, the Pentagon buys supply in part from China, a paradox that many on Capitol Hill hope will abate in time.

The rare earths production process creates a lot of pollution, part of the reason why it grew unpopular in the United States. Ongoing research is attempting to make the process cleaner.

Lithium is more abundant but there is only one active mine in the United States, Albemarle Corp's ALB.N Silver Peak in Nevada. There is very limited U.S. processing capacity for the mineral.

(Reporting by Mike Stone in Washington and additional reporting by Ernest Scheyder; Editing by Nick Zieminski)

((mike.stone1@thomsonreuters.com; https://twitter.com/MichaelStone;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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