DearColleague.us

Letter

 

From: The Honorable Duncan Hunter
Sent By:
Peter.Davidson@mail.house.gov

Date: 3/8/2017

 

Dear Colleague:

I write to request your support for the “Materials Essential To American Leadership and Security Act of 2017 (METALS Act)”. This bill will promote the development of a domestic industrial base for the production of strategic and critical materials.

At present, the United States and much of the world relies on foreign sources of strategic and critical materials; this includes materials such as rare earth elements that are contained within crucial components of numerous defense-related end items. Specifically,
the People’s Republic of China (China) controls more than 90 percent of global production of rare earth elements. This is not a new problem and was first brought to our attention seven years ago when China enacted a defacto embargo of all rare earth elements
after a dispute with the nation of Japan. Although relations have since normalized, the problem still exists today, imposing undue risks on the supply chain of materials essential to the proper functioning of advanced defense applications such as the Joint
Strike Fighter.

Compounding the problem, the only major domestic producer of certain rare earth products, a major publically traded United States Corporation, filed for bankruptcy in 2015 after compiling more than $1 billion in debt. The company subsequently shuttered and
disassembled its U.S. mining facility and sold a portion of its assets to China to pay creditors. Thus, the United States was left with no domestic production capacity for certain strategic and critical materials. Any restriction on access to foreign rare
earth elements would leave the U.S. without the ability to produce a host of defense-related components and in a risky and precarious security situation.

The METALS Act would establish a fund, the Strategic Materials Investment Fund, within the Department of Defense to promote investment in domestic production of strategic and critical materials and support U.S. national security. This fund would leverage
just 1 percent of the internal programmatic administration costs, Department of Defense overhead costs, of certain major defense weapons systems most reliant on strategic and critical materials in order to solve the supply chain issues facing our country.

The primary function of the fund is to provide 5-year, interest-free loans to companies who succeed in developing new production or manufacturing techniques for strategic and critical materials. All recipients of funding will be required to pay the loan
back in full at the end of the loan period, and these funds will subsequently be reinvested to address additional strategic and critical materials challenges faced by the Department of Defense. The fund will also reimburse weapons systems, in the case where
there are increased costs, for procuring domestically-produced strategic and critical materials.

The objective of this bill is to support and strengthen our domestic industrial base by providing the necessary capital to companies attempting to bridge the “Valley of Death” without reducing the quantities or capabilities of major defense acquisition programs.
Funding for the Strategic Materials Investment Fund is specifically derived from the Department of Defense’s internal programmatic administration funds to alleviate any impact on the procurement of weapons systems. The bill will not impact the quantities of
weapons systems to be procured. This bill is a means to ensure American independence from non-allied foreign powers and provide a safe and secure supply chain for the Department of Defense.

Also included in this bill is a provision prohibiting the foreign sourcing of ammonium perchlorate. This chemical is used extensively as a propellant for rockets and missiles used by the Department of Defense and for manned spaceflight. Procuring ammonium
perchlorate from domestic sources ensures the U.S. will have continued access to this essential chemical.

Lastly, the METALS Act would prohibit the acquisition of domestic rare earth mines by foreign investors as a means to protect America’s ability to mine and produce these critical elements.

I hope you will join me in offering this bill, a necessary step to safeguard American national security interests. For more information or to cosponsor this legislation, please contact Peter Davidson at
Peter.Davidson@mail.house.gov.

Sincerely,

 

Duncan Hunter

Member of Congress