Swalwell and Reschenthaler Introduce Bill to Incentivize American-Made Rare Earth Magnets Critical for a Modern, Clean Energy Economy
LIVERMORE, CA– Reps. Eric Swalwell (CA-15) and Guy Reschenthaler (PA-14) introduced a bipartisan bill Tuesday to help secure the domestic supply chain and stimulate production of rare earth magnets as part of a national initiative to strengthen the economy and combat climate change.
The Rare Earth Magnet Manufacturing Production Tax Credit Act would create a production tax credit for rare earth magnets that are manufactured in the United States; no domestic manufacture of them currently exists. These magnets are used in a wide variety of applications necessary for our modern economy, such as computer hard disks, cell phones, and MRIs. They are also critical for certain for clean energy uses. For example, 93 percent of all electric vehicles contain a powertrain driven by one of these magnets.
“President Biden nailed it last week when he tweeted, ‘The future of the auto industry is electric. There’s no turning back,” Swalwell said. “But, if America is to be a global leader on electric vehicles, we can’t let other nations like China control production of vital materials and components. By encouraging U.S. production of rare earth magnets, we’re shoring up our economy and also doing more to combat climate change.”
“I’m proud to join my Congressional Critical Materials Caucus co-chair, Rep. Swalwell, to introduce the Rare Earth Magnet Manufacturing Production Tax Credit Act. This bipartisan legislation promotes American ingenuity and reduces our nation’s reliance on Communist China for rare earth magnets; everything from defense systems to electric vehicles and cell phones rely on these magnets,” said Reschenthaler. “COVID-19 showed us the perils of relying on Chinese supply chains. This bill encourages the production of rare earth elements and manufacturing of rare earth magnets here in the United States and will spur new economic opportunities for American workers while enhancing national security and supporting American energy independence. I look forward to advancing the Rare Earth Magnet Manufacturing Production Tax Credit Act and urge my colleagues to support this commonsense legislation.”
Rare earth magnets are challenging to make and are not readily available in large quantities. Low-cost, high-quality magnets from China have squeezed the profitability of U.S. producers, and while industry sources estimate the global rare earth magnet market will nearly double by 2027, China could dominate the market because of low production costs.
The bipartisan bill creates a $20 per kilogram production tax credit for magnets that are manufactured in the United States, or $30 per kilogram for magnets that are both manufactured in the United States and for which all component rare earth material is produced and recycled or reclaimed wholly within the United States. To be eligible, the rare earth magnets may not include any component rare earth magnet material produced in non-allied foreign nations such as China, Iran, North Korea, and Russia.
This bill is especially timely as President Joe Biden on Thursday issued an executive order setting an ambitious new target to make half of all new vehicles sold in 2030 zero-emissions vehicles, including battery electric, plug-in hybrid electric, or fuel cell electric vehicles. And the Bipartisan Infrastructure and Investment Jobs Act reached by the Senate under the leadership of President Biden and Democrats in Congress includes $5.75 billion to replace thousands of transit vehicles, including buses, with clean, zero emission vehicles.
Swalwell and Reschenthaler launched the bipartisan Congressional Critical Materials Caucus last year to help the United States develop the technical expertise and production capabilities to assure a long-term, secure and sustainable supply of energy critical elements like those used in rare earth magnets.