Pentagon asks Congress to fund mining projects in Australia, U.K

By Ernest Scheyder

(Reuters) - The U.S. Department of Defense has asked Congress to let it fund facilities in the United Kingdom and Australia that process strategic minerals used to make electric vehicles and weapons, calling the proposal crucial to national defense.

The request to alter the Cold War-era Defense Production Act (DPA) came as part of the Pentagon's recommendations to Congress for how to write the upcoming U.S. military funding bill, known as the National Defense Authorization Act.

Congress may reject or accept the proposed changes when it finalizes the bill later this year.

Washington is trying harder to reduce America's dependence on China for lithium, rare earths and other minerals used to make a range of technologies. Existing law bars DPA funds from being used to dig new mines, but they can be used for processing equipment, feasibility studies and upgrades to existing facilities. Currently, only facilities in the United States and Canada are eligible for DPA funding.

Adding Australia and the United Kingdom, the Pentagon said in the request to Congress, would "allow the U.S. government to leverage the resources of its closest allies to enrich U.S. manufacturing and industrial base capabilities and increase the nation's advantage in an environment of great competition."

Relying only on domestic or Canadian sources, the Pentagon said, "unnecessarily constrains" the DPA program's ability to "ensure a robust industrial base."

A Pentagon official was not immediately available for additional comment.

The National Mining Association, a trade group for the U.S. mining industry, declined to comment.

RARE EARTHS

The United Kingdom refines nickel and has several proposed processing facilities for lithium and rare earths. Australia has mining and processing facilities for a range of minerals, including iron ore, lithium, copper and rare earths, a group of 17 metals used to make magnets that turn electricity into motion.

The Pentagon last year awarded a DPA grant worth $30.4 million to Australia-based Lynas Rare Earths Ltd to build a processing facility in Texas with privately held Blue Line Corp.

Last month, Lynas Chief Executive Amanda Lacaze complained that those funds have yet to be dispersed, citing ongoing negotiations over protection of her company's intellectual property.

The Pentagon has also granted at least $45 million to MP Materials Corp, which controls the only U.S. rare earths mine but depends on China for processing.

The funds are to help MP's efforts to resume U.S. processing of those strategic minerals. Las Vegas-based MP said last week that it has started receiving those funds and that the Pentagon will have "certain rights to technical data" because of the financial support.