Bill Would Establish Incentives for Rare Earth Manufacturing Capabilities, Lessen Dependence on China

WASHINGTON, D.C. – U.S. Senator Cindy Hyde-Smith (R-Miss.) today joined U.S. Senator Marco Rubio (R-Fla.) in introducing legislation to incentivize the development of rare earth metallurgy manufacturing facilities in the United States and lessen the nation’s dependence on China for specialized electronics that rely on rare earth elements.

The Obtaining National and Secure Homeland Operations for Rare Earth (ONSHORE) Manufacturing Act would create a financial investment program within the U.S. Department of Energy (DOE) to help standup rare earth manufacturing capabilities in the United States.

“The United States must rebuild its rare earth capacity or face worse economic and national security risks.  China’s growing confrontational stance toward the United States, combined with the disruptions to our economy from Putin’s invasion of Ukraine, should serve as a stark wakeup call.  The ONSHORE Manufacturing Act would help set a foundation for proactively doing what we must to protect our nation and its long-term interests,” Hyde-Smith said.

“The United States is dangerously dependent on China’s rare-earth manufacturing industry,” Rubio said.  “Rare earths are used in everything from batteries to advanced weapons systems. Relying on a hostile regime in Beijing for these critical products poses a serious national and economic security problem.  We need to take immediate action to onshore these operations.” 

Virtually all advanced electronics contain rare earth components from China, including defense-critical weapons systems, advanced aeronautics, and renewable energy technologies.  The United States has acknowledged the lack of strong rare earth manufacturing capabilities is a significant vulnerability.

The ONSHORE Manufacturing Act, which is fashioned after the CHIPS for America Act that became law with the 2021 National Defense Authorization Act, would:

  • Establish a financial investment program within DOE to provide funding assistance to private entities specifically for the purpose of developing rare earth metallurgical/manufacturing facilities, where final products are produced.
  • Establish a multilateral investment fund for the Secretary of State to coordinate with U.S. allies to establish secure international rare earth supply chains.  
  • Direct the U.S. Department of Labor to establish a workforce development initiative to facilitate workforce training programs and apprenticeships relating to all steps of the rare earth production process.  
  • Direct the President to submit a plan of action, in coordination with relevant federal agency heads and industry stakeholders, for enhancing the domestic production of products and the development of technologies through the Defense Production Act.  
  • Prohibit “foreign entities of concern” from receiving funds under the program, including entities owned, controlled, or influenced by China, Russia, Iran, or North Korea, as well as entities considered to be engaged in conduct that is harmful to U.S. national security or foreign policy.
  • Allow DOE to claw back funds from a recipient if they conduct joint research or share intellectual property with a foreign entity of concern.  

Congressman Tony Gonzales (R-Texas) is the lead sponsor of companion legislation in the House of Representatives.