What’s in the FY2024 NDAA for Critical Minerals?

What’s in the FY2024 NDAA for Critical Minerals?
https://bipartisanpolicy.org/blog/whats-in-the-fy2024-ndaa-for-critical-minerals/

As Congress works to pass the fiscal year 2024 National Defense Authorization Act (NDAA) this year, both House and Senate bills incorporate measures to reduce U.S. dependence on foreign mineral supply chains. This focus on securing critical mineral supply chains is essential to fortify the country against future domestic and geopolitical challenges. This blog is your guide to the critical mineral provisions in the House and Senate versions of the FY2024 NDAA.

Dependence on fragile critical mineral supply chains dominated by adversarial sources threatens national defense, economic growth, and the energy transition.

Recognizing this pressing challenge, Congress in previous legislative sessions worked across the aisle to bolster domestic critical mineral production and diversify sourcing through key provisions in the Energy Act of 2020, the Bipartisan Infrastructure Investment and Jobs Act (IIJA) and the CHIPS and Science Act.

Breakdown of the critical mineral provisions in the IIJA and CHIPS and Science Act:

• Getting Serious About Critical Materials: the IIJA and Energy Act of 2020
• Deploying a Domestic Mining Workforce with the CHIPS and Science Act

The FY2024 NDAA House and Senate provisions further strengthen supply chain security by leveraging the Department of Defense. This blog identifies key provisions related to the National Defense Stockpile, DOD procurement, critical mineral R&D, and long-term supply chain strategy.

• Senate Bill Text
• Senate Report Language
• House Bill Text
• House Report Language

National Defense Stockpile

Background: The DOD-managed National Defense Stockpile stores strategic materials for military, industrial, and civilian use, safeguarding against foreign supply chain disruptions. It aims to boost domestic sources, like critical mineral production and processing. In 2022, the DOD agreed to allow the Department of Energy to tap the stockpile for minerals vital to the electrical grid and clean technologies.

FY2024 House NDAA Bill Provisions

Multi-year Procurement Authority for Domestically Processed Rare Earth Elements (Sec. 181)

• Allows the National Defense Stockpile to enter into long-term procurement contracts with domestic rare earth element (REE) processing and recycling projects.
• Gives the stockpile advance procurement authority, allowing it to pay projects prior to delivery.

Report on critical mineral storage and public-private partnerships (House Report pg. 115)

• Requires a report on DOD’s process for storing critical minerals, improvements that could be made, and the viability of storage facilities within the Joint Munitions Command.
• Requires report to identify public-private partnership opportunities that would increase the diversity of sources for critical mineral stockpiles, including through recycling.

Additions to the National Defense Stockpile (House Report pg. 120)

• Requires a report on the feasibility of adding Terbium Oxide, Beryllium, and Gallium to the National Defense Stockpile.

Report on Domestic Capacity for Mining and Processing Graphite (House Report pg. 232)

• Requires a report on DOD’s reliance on graphite, graphite supply chain vulnerabilities, and current efforts to mitigate short-term supply disruption, including whether the National Defense Stockpile should plan acquisitions and subsequent disposals of amorphous graphite.

Reports on Critical Mineral Supply Chains (House Report pg. 250-253)

• Requires DOD to submit reports to the House Committee on Armed Services regarding supply chain vulnerabilities, strategic planning, and sourcing diversification regarding boron and rhodium.

Briefings on Critical Mineral Supply Chains (House Report pg. 251-252)

• Requires the Administrator of the National Defense Stockpile to provide a briefing to the House Committee on Armed Services regarding DOD’s efforts to ensure adequate feedstocks of tungsten from non-China based suppliers, the stockpile’s five-year plan for tungsten acquisitions and disposals, and DOD’s plans to support domestic production of tungsten.
• Requires DOD to brief the House Committee on Armed Services on supply chain vulnerabilities, strategic planning, and sourcing diversification niobium oxide and magnesium metal, including public and private sector efforts to develop carbon-neutral magnesium production.

FY24 Senate NDAA Bill Provisions

Recovery Of Rare Earth Elements and Other Strategic and Critical Materials Through End-Of-Life Equipment Recycling (Sec. 1411)

• Requires DOD to identify opportunities for recovering REEs and other critical minerals from end-of-life equipment owned by DOD and then establish policies and procedures for recovering and reusing such metals.

Improvements to Strategic and Critical Materials Stock Piling Act (Sec. 1412)

• Requires the stockpile to seek to achieve positive cash flows, reducing reliance on annual appropriations.
• Establishes a new 5-year pilot program using “commercial best practices” for acquiring and disposing of critical materials.
• Amends the stockpile’s approach to develop “reliable sources” instead of “domestic sources,” allowing contracts with facilities located in and owned by the U.S. and select allied nations, rather than being limited to those solely within the U.S.
• Extends the stockpile’s contract duration authority to 10 years and permits the stockpile to co-fund bankable feasibility studies for the development of new critical mineral projects located in or controlled by a reliable source.

DOD Procurement

FY2024 House NDAA Bill Provisions

Modification to Procurement Requirements Relating to Rare Earth Elements and Strategic and Critical Materials (Sec. 865)

• Requires that, to be eligible for procurement by DOD, any contractor that provides advanced batteries or advanced battery components (as defined by the Bipartisan Infrastructure Law) must follow the same supply chain disclosure requirements as are already in place for rare earth magnets, which can be waived for national security and commercial practicality purposes.
• Requires contractors that provide advanced batteries and components to DOD to disclose the countries in which the lithium, nickel, cobalt, manganese, and graphite used in the battery were mined and processed as well as the countries in which the battery cells were manufactured.

Prohibition on availability of funds for procurement of certain battery technology (Sec. 183)

• Prohibits the DOD from procuring battery technology produced by Contemporary Amperex Technology Co., Limited (CATL) or any subsidiary or affiliate of CATL.

Securing Defense Supply Chains From the People’s Republic of China for Critical Minerals (House Report pg. 251)

• Requires DOD to produce a report that outlines the department’s current requirements for contractors to disclose critical mineral sourcing in their supply chains, the feasibility of improving data regarding critical mineral supply vulnerabilities, and efforts underway to increase diversification for critical mineral sourcing.

Critical Mineral R&D

FY2024 Senate NDAA Bill Provisions

University Affiliated Research Center for Critical Minerals (Sec. 865)

• Requires DOD to develop a plan to establish a new or expand an existing University Affiliated Research Center to increase DOD’s ability to conduct research, development, engineering, or work force expansion related to critical minerals for national security needs.
• Authorizes $8 million to be appropriated for the University Affiliated Research Center for FY2024.

Defense Production Act

FY2024 Senate NDAA Bill Provisions

Domestic Manufacturing of Strategic and Critical Materials (Senate Report pg. 368)

• Supports DOD’s ongoing utilization of Defense Production Act authorities to create domestic critical mineral processing capacity.
• Encourages DOD to review the need to utilize Defense Production Act authorities to establish domestic processing capacity for niobium, tantalum, and scandium.

DOD Supply Chain Independence Strategy

FY2024 Senate NDAA Bill Provisions

Strategy to Achieve Critical Mineral Supply Chain Independence for the Department of Defense (Sec. 1057)

• Requires DOD to establish a classified strategy to develop its critical mineral supply chains to not be dependent on adversarial “covered nations” by 2035, prioritizing domestic production and processing while exploring international partnerships.
• Requires the strategy to analyze whether increased utilization of the Defense Production Act and the National Defense Stockpile is needed to support domestic and allied critical mineral supply chains.

Overlapping Provisions

The following provisions appear in both the House and Senate FY2024 NDAA bills.

Authorization of Appropriations for FY24 (House Report pg. 422/Senate Report pg. 614)

• Authorizes $7.629 million to be appropriated for the National Defense Stockpile Transaction Fund for FY2024.

Alternate Extraction and Processing Methods (House Report pg. 224/Senate Report pg. 367)

• Encourages DOD to pursue domestic partnerships and invest in R&D related to the use of biology to develop scalable and economically viable processes for the extraction and processing of critical minerals.

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