Congress introduced a bill Wednesday that would establish a U.S. stockpile of rare earths (NYSE:REMX) for national defense purposes. The bill, introduced by U.S. Rep. Mike Coffman (R-CO), comes as a reaction to Chinese (NYSE:FXI) plans to “cut exports of rare earth metals by 35 percent in the first half of 2011,” according to a recent press release.
The Chinese currently supply about 95 percent of the world’s rare earth metals, used in everything from wind turbines to advanced weapons systems, and roughly 5% of the world rare earth use is for U.S. military purposes. Coffman’s bill would provide for a Defense Logistics Agency that would be in charge of the acquisitioning of rare earth stockpiles as well as their appropriation to various federal government contractors.
The news is sending shares of the following rare earth stocks higher: Molycorp, Inc. (NYSE:MCP), China GengSheng Minerals (AMEX:CHGS), Rare Element Res Ltd Ordinary Shares (AMEX:REE), China Shen Zhou Mining & Resources Inc. (AMEX:SHZ), and Market Vectors Rare Earth Strat Met ETF (NYSE:REMX).
Among others, one of the key provisions of the legislation would be the establishment of a multi-agency Task Force that would “expedite the permitting process in order to increase the exploration and development of domestic rare earth elements,” according to the release.
“Our nation must act to protect our security interests with regard to rare earth elements,” Coffman said. “China (NYSE:FXI) is neither an ally of the United States nor is it a reliable trade partner when it comes to these strategic metals.”