The United States currently has no industrial capacity to produce rare earth permanent magnets, so it has to import them in large quantities, mostly from China. But does this heavy dependence on imports constitute a threat to American national security?

This question will lead to a new US Department of Commerce investigation, announced last Friday (September 24), to determine the national security impact of imports of neodymium-iron-boron (NdFeB) permanent magnets, the earth magnet rare most manufactured.

“I think [the investigation] reflects the emergence of a whole-of-government approach on the part of the United States to critical rare earth and mineral issues, ”said Dan McGroarty, advisory board member of USA Rare Earth, a company developing a mine of rare earths. rare earths in Texas and a separation facility in Colorado and has manufacturing equipment from NdFeB.

The investigation comes against the backdrop of increased US government attention to critical minerals. The Pentagon is also investing resources in rare earths, as is the Department of Energy, and Congress is considering using fiscal tools to boost the rare earth industry. At the same time, China is seeking to strengthen its own rare earth dominance, with rumors that the central government will merge all rare earth companies into two giant corporations to maximize control and leverage.

“There is a lot of activity on the Chinese government side, and there is now an increase in activity on the US side, including the Commerce Department. [Section] Inquiry 232 is just one piece, ”McGroarty said.

What are Rare Earth Permanent Magnets?

As the name suggests, rare earth permanent magnets have permanent magnetic fields and contain rare earths because the magnetic properties of metals greatly increase the strength of the magnet. Rare earths are a group of 17 metals used to produce many important technologies.

NdFeB magnets have a wide range of applications, covering military and civilian industry. They are used in electric vehicles and wind turbines, making them essential to the climate economy. They are also used in fighter jets and missile guidance systems, as well as in consumer electronics like smartphones and refrigerators.

How do permanent magnets affect national security?

In a nod to the importance of NdFeB magnets to the US military, the Department of Defense ordered a stockpile in 2019 to ensure a six-month rotating supply of specialized magnets. Some saw this as a short-term remedy at best, as the stock did not really solve the problem of the United States having zero NdFeB production capacity.

But it’s not just in the military arena where NdFeB magnets can have a grip on national security. The global transition from fossil fuels to clean energy also carries national security risks. For example, as the future global economy is increasingly fueled by electricity produced from low-carbon sources such as wind and solar, the ability to source raw materials to manufacture and deploy Large-scale solar panels and wind turbines will be a top priority to ensure energy security and national security.

A White House review of the country’s critical supply chains, published in June (pdf), found that only China has active capacity at all levels of the NdFeB industry supply chain. Meanwhile, although the United States currently has only one active rare earth mine at Mountain Pass in California, it has no industrial capacity to separate and process the mined materials into metals and alloys for the manufacture of magnets. . As part of the report’s recommendations, it was suggested that an investigation into section 232 (pdf) be launched. Now, less than four months later, this is what is happening.

What Can the Section 232 Investigation Do?

Under the Trade Expansion Act, Section 232 empowers the President to impose tariffs on products that the Commerce Department considers to be imported “in such quantities or under such circumstances as they threaten to carry. attack on national security ”. It was a tool former President Donald Trump used quite often: he ordered eight such investigations (pdf) during his tenure and acted on five of them, imposing tariffs on products such as the ‘steel, aluminum, automobiles and auto parts.

As part of the investigation, the Commerce Department invites industry players to submit relevant information that may assist with the investigation. The information gathered can provide a detailed map of the industry landscape: for example, how many NdFeB magnets are imported as stand-alone products and how many are already incorporated into finished products?

For its part, MP Materials, the operator of the Mountain Pass rare earth mine, has already expressed in a press release that it is “looking at[s] look forward to participating in the formal process led by the Ministry of Commerce ”, while stressing the importance of a“ whole-of-government approach to establishing a free and fair market for national participants ”.

If tariffs are ultimately imposed on NdFeB magnets, they can be applied to imports from certain countries (e.g. China) while exempting others with the aim of reducing dependence on a competitor. strategic and diversify sources. But there are other complexities as well. For example, if an American company imports products with built-in NdFeB magnets, will their suppliers be able to tell them where those magnets are coming from?

“The complexities are pretty significant,” said a person with knowledge of the US rare earth industry. “The magnets are integrated [in the technology], and therefore addictions themselves are quite ingrained in the technological economy of the United States.

But an investigation can be useful even if it ultimately does not lead to tariffs.

“A [Section] Investigation 232 really refines the problem, ”said McGroarty of USA Rare Earth. This can encourage industry players to collect and share useful information with government, whether that is because they want more favorable policies or fear that the policies are unintentionally counterproductive. “So everyone’s out of the woods… it’s an increased level of attention. “