Bill Would Give Tax Credits for Rare Earth Magnets Made in the U.S.

By Jessica Hill, Las Vegas Review-Journal (TNS)

Sen. Catherine Cortez Masto, D-Nev., reintroduced a bill Thursday aiming to build a domestic supply chain for rare earth magnets.

The Rare Earth Magnet Production Tax Credit Act, introduced alongside Sen. Markwayne Mullin, R-Okla., would provide a $20 per kilogram production tax credit for rare earth magnets made in the United States.

Reps. Guy Reschenthaler, R-Penn., and Eric Swalwell, D-Calif., introduced companion legislation in the U.S. House of Representatives.

The legislation also would increase the credit to $30 per kilogram for magnets manufactured in the U.S. whose components are either produced, recycled, or reclaimed domestically, according to a statement from Cortez Masto’s office.

Rare earth magnets are integral components of cellphones, computers, electric vehicles, and defense systems, but they are almost exclusively made in China, the statement says.

According to the statement, there is currently no manufacturing capacity in the U.S.

The Department of Commerce released a report last year warning that overreliance on China threatened U.S. national security. Cortez Masto first introduced the bill in July 2022, but it did not move forward.

“We can’t keep relying on China for components we need to power our defense systems and drive our clean-energy economy,” the senator said in a statement.

Mountain Pass, located about 50 miles southwest of Las Vegas, is the only rare-earth mine in the U.S.

Operated by MP Materials, the mine employs about 600 people who live in Nevada, according to Matt Sloustcher, senior vice president of communications and policy for MP Materials.

“Mining and processing rare earths domestically is important, but that alone still leaves our supply chain vulnerable,” said James Litinsky, chairman and CEO of MP Materials, in a statement. “American industry must convert these essential materials into the permanent magnets that are utilized in components across our economy, including for national security applications.”

According to federal campaign finance data, Litinsky donated nearly $6,000 to Cortez Masto’s campaign in 2022. Cortez Masto raised $64 million last cycle from 500,000 donors.

“Senator Cortez Masto is proud to lead legislation to protect 600 good-paying jobs for Nevadans,” said Lauren Wodarski, spokesperson for Cortez Masto, in a statement.

Sloustcher said that in the 1980s there was significant manufacturing of rare earth materials, but since then the industry has been systematically hollowed out and sent overseas.

He said low costs and lost standards of overseas production made it difficult to be competitive.

The bill would accelerate investments in domestic manufacturing and recycling of rare earth minerals, Sloustcher said. MP Materials is building a factory in Fort Worth, Texas, that will make magnets for GM, he said.

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