Hard Rock Act set to shake up rare earths sector

Bipartisan legislation just introduced into the US Congress could put another rocket under the fortunes of Australian based small cap American Rare Earths.

As the US puts the pedal to the metal to secure its own supply of rare earths and other critical minerals, Senators from both sides of the aisle have introduced the Hard Rock Act (formally titled Homeland Acceleration of Recovering Deposits and Renewing Onshore Critical Keystones).

The legislation aims boost what’s known as the National Defense Stockpile (NDS) while urging the Pentagon to work with American collaborators and allies to guarantee access to the critical materials.

During national emergencies or wartime, the NDS allows defence and essential civilian producers immediate access to the raw materials they need.

However, the US Geological Survey reported last year that the nation was 100% reliant on 14 minerals on the critical minerals list from other countries and more than 75% import-reliant on another 10 critical minerals.

Making the most of being in the right place at the right time, American Rare Earths (ASX:ARR) is taking big steps towards becoming a leading supplier of the critical minerals in the US.

Earlier this week the company announced it was accelerating plans to expand and upgrade the resource at its flagship La Paz project after receiving highly encouraging assay results from the new Southwest zone.

The results were the first from a drilling campaign targeting an additional 742 – 928 million tonnes (MT) of rare earths mineralised rocks to add to the 170MT resource in Arizona.

ARR is also advancing Halleck Creek after seeing exciting results from the high-grade Wyoming project last month.

Notably, both sites contain the high value magnet rare earth elements neodymium and praseodymium (NdPr), plus dysprosium and terbium.

These are the key ingredients in the permanent magnets used in large capacity batteries that power electric vehicles, wind turbines and other energy technology, as well as modern communications and defence.

A White House report last year forecast global demand for such batteries to increase threefold from 2020 to 2025.

This makes magnet rare earth elements pivotal to broader national security concerns and is why they are among the elements on the US list of critical minerals.

Chair of the Senate Energy and Natural Resources Committee Democrat Senator Joe Manchin said:

“I am proud to introduce our bipartisan Hard Rock Act which would strengthen US critical mineral infrastructure and invest in domestic defence and technological capabilities.

Co-sponsor of the Act and a fellow member of the Senate Armed Services Committee Joni Ernst stressed the strategic risk of allowing China to continue to dominate the supply chain of these increasingly vital materials.

“It’s past time we take seriously the risk we face if we fail to make important investments in securing critical and strategic minerals immediately,” the Republican Senator said.

Shoring up supplies

The US recently passed another bipartisan bill, Restoring Essential Energy and Security Holdings Onshore for Rare Earths Act of 2022.

This sets out to block defence contractors from using Chinese rare earths and calls on the Pentagon to build a permanent stockpile of the strategic minerals.

It also helped to more than double ARR’s share price when it was introduced in January.

Reflecting the importance of domestic rare earths supplies to both sides of politics, that bill was sponsored by Arizona Democrat Mark Kelly and Arkansas Republican Senator Tom Cotton.

Securing links in US supply chain

As well as advancing its projects, American Rare Earths is also collaborating with top-tier US Government backed R&D initiatives on clean and green rare earths processing technologies.

These include one with the Department of Defense and earlier this year the Aussie miner was invited to become a member of the Critical Materials Institute (CMI), a consortium backed by the United States Department of Energy.

This article was developed in collaboration with American Rare Earths, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.