While China has slapped an 80 per cent tariff on Australian barley imports, the world’s largest rare earths producer’s move to remove a 25 per cent tariff on rare earths from the US is due to take effect today.

China imported 7,352 tonnes of rare earth ore from the US in March, up by 403 per cent from a year earlier and the removal of the tariff is expected to increase Chinese imports of US rare earth ores.

Despite the tariff, which has been in place since June last year, China increased its imports of ores from the US in 2019 by 67 per cent to 46,149 tonnes compared to 2018.

This was due to demand from domestic rare earth separation plants and magnetic material manufacturers.

Shanghai Metals Markets projected that while the removal of the tariff would reduce production costs for most rare earth separation and processing plants and boost supply, the price of praseodymium-neodymium oxide is unlikely to change due to recent demand recovery.

Oddly, the end of the tariff comes at the same time the US Department of Defense proposed legislation to end America’s reliance on China for rare earth minerals critical for defence applications.

The proposed legislation would raise spending caps under the Defense Production Act to enable government to spend up to $US1.75bn ($2.7bn) on rare earth elements in munitions and missiles and $US350m for microelectronics.

It would also eliminate caps when it comes to hypersonic weapons, Defense News reported.

“To me, this is the biggest thing that has happened to rare earths in a decade,” defence industry consultant Jeffrey Green said.

“The policy shift is the government realising they have to put serious bucks into this.”

The Pentagon’s move is the latest effort worldwide to build supply chains — particularly rare earths — that are secure from disruptions.

While supply chain concerns have led protectionists to call for a return to Australian manufacturing, economic realities mean that globally, diversification of supply is a more likely outcome in the bid to ensure security.

This gels neatly with the US and Australian partnership on critical minerals that could see Australian rare earth ores processed in the US.

READ: Could the coronavirus fuel development of non-Chinese rare earth projects?

Australian rare earths explorers are well placed to take advantage of this increasing move towards supply diversification.

Arafura Resources (ASX:ARU) is progressing pre-front end engineering and design activities for its Nolans neodymium-praseodymium (NdPr) project in the Northern Territory.

The project has an ore reserve of 29.5 million tonnes grading 2.9 per cent total rare earth oxides, with NdPr making up 26.4 per cent of the rare earths content.

This is expected to produce about 4,325 tonnes of NdPr oxide over 39 years at an operating cost of less than $US24 per kilogram of NdPr oxide.

Last month, drilling by Hastings Technology Metals (ASX:HAS) extended known mineralisation at its Yangibana rare earths project in Western Australia along strike and at depth beyond the current resource.

It also received Commonwealth environmental approvals including for the construction and operation of an open pit rare earths mine, processing facility and associated support infrastructure for the project.

Hexagon Energy Materials (ASX:HXG) is focused on its RapidSX rare earths separation tech, a “turbocharged” form of solvent extraction that promises to extract rare earths at a lower cost.

It also offers the next generation of miners the option of capturing more downstream value from their operations.

Ionic Rare Earths (ASX:IXR) recently increased its ownership interest in the Makuutu rare earths project in Uganda to 31 per cent.

Makuutu is one of very few ionic adsorption clay-hosted projects outside of China.

Initial metallurgical test work has already indicated that up to 75 per cent of the rare earths at Makuutu can be extracted through the simple, low-cost method of salt desorption – literally washing the rare earths from the clay using a salt solution.

Last month, Northern Minerals (ASX:NTU) completed the first tranche of a $22m placement to repay convertible notes and continue development of its Browns Range pilot project.

The pilot is currently on care and maintenance due to the COVID-19 pandemic.

Pensana Rare Earths (ASX:PM8) was granted a new exploration licence prospective for NdPr that is adjacent to its existing Longonjo project in Angola.

The award of the 7,456sqkm Coola project comes just a week after it was awarded the mining title for Longonjo.

RareX (ASX:REE) owns the Cummins Range project in Western Australia that is believed to contain a significant percentage of NdPr.

The project is drill ready with all government approvals in place and heritage clearance currently being completed.

In March, RareX signed up Talaxis, a specialist rare earths project developer and wholly owned subsidiary of Noble Group, as a strategic partner to help drive development of the project.

At Stockhead, we tell it like it is. While Arafura Resources, Hexagon Energy Materials, Ionic Rare Earths and RareX are Stockhead advertisers, they did not sponsor this article.