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Import reliance said harming defense

Keywords: Tags  Mo Brooks, Tim Ryan, Chris Murphy, industrial defense, raw materials, rare earths, Samuel Frizell

NEW YORK — Several congressmen and a retired U.S. Army brigadier general are calling on the federal government to reduce its dependence on foreign-sourced raw materials used in defense equipment, arguing that defense-related metals should be produced in the United States for reasons of national security.

In a May 8 press conference on Capitol Hill, a panel of speakers that included Sen. Chris Murphy (D., Conn.), Rep. Mo Brooks (R., Ala.), Rep. Tim Ryan (D., Ohio), and retired Brig. Gen. John Adams released a report prepared by the Alliance for American Manufacturing that claims U.S. national security is threatened by a "dangerous reliance" on imported raw materials, parts and finished products used in defense equipment.

The U.S. military depends on foreign-sourced raw materials like rare earths, specialty metals and finished equipment for many of its security capabilities, with products like lithium-ion batteries, lanthanum and high-technology neodymium-iron-boron magnets increasingly produced overseas, particularly China, the report claims.

"We incur unacceptable national security risks as we outsource key sectors of our material base," Adams said during the conference. "Foreign control over U.S. supply chains ... puts the United States at risk."

Some components of crucial defense equipment like night-vision devices, missiles and battleship parts are also sourced overseas, the panel said.

Rare earth metals are a particular area of concern for report author Adams, president of Tucson, Ariz.-based consulting firm Guardian Six Consulting LLC. According to the report, as demand for rare earths for use in electronics, communications and green technologies has surged, U.S. production of these materials has plummeted.

"For (rare earth elements), the result of reduced U.S. production and increased global demand is that the United States now relies on imports for at least 60 different elements, with a total lack of domestic production for 19 of them," the report claims.

There are some domestic producers of rare earths, with Greenwood Village, Colo.-based Molycorp Inc. producing a number of rare earths at its flagship mine in Mountain Pass, Calif., and a handful of exploration and development companies looking to ramp up their own domestic mining or leaching operations. Heavy rare earths exploration company Texas Rare Earth Resources Corp., for example, announced May 8 the recovery of beryllium and lithium at its early-stage Round Top project in Sierra Blanca, Texas, where it is based. This marks another would-be domestic producer making a step toward commercial production.

Nonetheless, supply concerns remain. "The U.S. government, the defense establishment and analysts have raised alarm about the (rare earth) situation and encouraged the reopening of (rare earth) mining in the United States. ... At this point, there is sufficient supply of (rare earth elements) on the market, but the fabrication and manufacturing of defense items and gadgets continues to take place outside the United States, in China," the report said.

In addition to more domestic production of metals and related parts, the country also needs stronger trade laws, the panel said.

Murphy, for example, warned that exceptions to Buy America Act  provisions in American Recovery and Reinvestment Act of 2009 are chipping away at the law and making it easier for importers to source defense-related materials from overseas.

"(The Buy American Act) has atrophied over the years," Murphy said. "It’s been rendered almost useless. Now is the time to put the teeth back into the law."

Ryan noted that unfair trade practices put U.S. businesses, as well as the U.S. military, at a competitive disadvantage. He pointed specifically to China’s alleged currency manipulation and its effect on the steel business in his home state of Ohio.

"Because of currency manipulation, Wheatland Tube (Co.)’s raw material costs are the same cost as Chinese finished product landing in the United States," Ryan said, advocating for a law to halt currency manipulation. "If we are going to have an economic renaissance in the United States, it’s going to be because of manufacturing."

Adams’ report calls for new legislation and long-term federal investment to support the U.S. industrial base.

"Without a healthy defense industrial base, the United States will be unable to supply the weapons and equipment our warriors need to defend this country," Adams said at the conference.

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