(Reuters)-According to a government document seen by Reuters, the U.S. military plans to reserve rare earth magnets for Javelin missiles and F-35 fighter jets. Critics claim that this measure does not help build domestic special magnets. industry. It is now almost entirely manufactured in Asia.
The document shows that the Pentagon is seeking advice to store a six-month circulating supply of neodymium iron boron (NdFeB) magnets, a rare earth magnet essential for weapons manufacturing, and details the latest attempts to weaken China’s control of rare earths. . Department.
Beijing has been using this power to leverage in the trade war with Washington.
The request effectively seeks someone to store a supply of dedicated magnets for 6 months and maintain it for at least 30 months. It does not provide financial support for the manufacture of neodymium iron boron magnets, and industry analysts and executives call this a short-sighted mistake by the Pentagon.
"This is definitely a curveball," said Peter Afiuny of Urban Mining Co, a private company that builds rare earth magnet facilities near Austin, Texas. "We expect that the phone will be strategically aimed at actually doing something to stimulate domestic production capacity."
China and Japan are the world's largest producers of NdFeB magnets. Although a scientist at the US Naval Research Laboratory invented these special magnets in the early 1980s, none of these special magnets were made in the United States.
Reuters reported last week that the Pentagon is funding the construction of rare earth processing facilities. But after being processed, rare earths must become magnets, otherwise they are of little value to electronics and weapon manufacturers.
The Pentagon said it may change its strategy in the future.
Pentagon spokesperson Lieutenant Colonel Mike Andrews said: "The Department of Defense (DoD) will continue to evaluate the market and take additional actions when necessary to strengthen the supply chain and ensure the supply of these important components."
President Donald Trump this year ordered the military to update its supply chain for niche materials, warning that dependence on other countries may hinder U.S. defense.
According to the document, the response to this latest request by the Pentagon will expire on January 22, 2020. The Pentagon stated that the winner will be selected after the technical review period, but did not elaborate on the timetable.
The Pentagon plans to spend 10 million U.S. dollars on the program, and recipients will support another 10 million U.S. dollars in total. According to the document, each recipient will receive a maximum of 3 million U.S. dollars.
When asked why it chose the 30-month reserve plan, the Pentagon declined to comment.
"Our government is usually slow to act, unless there is a serious crisis, then we need to take extraordinary actions to alleviate the problem," said Steve Constantinides, a consultant to the US rare earth industry.
Since Hitachi Metals Co., Ltd. 5486.T controls the processing patent of NdFeB magnets, the request is likely to benefit the Japanese company. Urban Mining, a Texas start-up company, said its NdFeB manufacturing process involves recycling old magnets.
Hitachi licenses its technology to manufacturers in China and elsewhere, but not in the United States. So far, Chinese manufacturers are still the cheapest magnet manufacturers in the world.
Hitachi Metals declined to comment.
The Pentagon’s request recognizes that if there are no domestic rare earth resources available to build reserves, foreign suppliers can be used. But the US Congress this year approved legislation prohibiting the Pentagon from using magnets made in China, North Korea, or Russia, which further complicates the supply chain.
Hitachi Metals itself expanded a NdFeB magnet plant in China Grove, North Carolina in 2011, and then closed the NdFeB magnet business around 2015 due to economic difficulties. The equipment is now being auctioned.
Critics say this shows that the US government needs to be directly involved.
"Government support is an insurance policy for domestic manufacturing," said Ed Richardson of the American Magnetic Materials Association, an industry trade organization.
Richardson estimates that the Pentagon will need to spend approximately $50 million to build a rare earth magnet facility in the United States. "This is a small amount of money, so if we go to war with China, we will not call them to ask for the supply of rare earth magnets."
Reporting by Ernest Shedd; additional reporting by Yuka Obayashi in Tokyo; editing by Amran Abocar, David Gregorio, and Sonya Hepinstall
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