Section 232 National Security Investigation on NdFeB Permanent Magnets Initiated by Commerce | Akin Gump Strauss Hauer & Feld LLP

• The Department of Commerce initiated a Section 232 national safety investigation into NdFeB permanent magnets used in combat aircraft, missile guidance systems, electric vehicles, wind turbines, computer hard drives, audio equipment, and MRI equipment.
• The Department of Commerce requested comments on the Section 232 investigation no later than November 11, 2021.

On September 21, 2021, the US Department of Commerce (“Commerce”) initiated a new Section 232 national security investigation to determine the impact of imports of Neodymium-Iron-Boron (NdFeB) permanent magnets on US national security. This action was originally recommended in June 2021 as part of the Biden-Harris government’s 100-Day Supply Chain Review Report. This report detailed the government’s investigations into potential weaknesses in the supply chain of NdFeB permanent magnets and found that only China maintains all major supply chain stages for the magnets, while a limited number of other countries have only a “nominal capacity” at certain stages . The NdFeB permanent magnet investigation is the first Section 232 investigation by the Biden-Harris administration.

The subject of the investigation are NdFeB permanent magnets due to their use in “[n]numerous critical national security systems. . . Including fighter jets and missile guidance systems. ”In addition, Commerce noted that NdFeB permanent magnets are“ essential components of critical infrastructure, including electric vehicles and wind turbines, ”and can also be found in computer hard drives, audio equipment and MRI machines. The 100 Day Supply Chain Report also identified the use of NdFeB permanent magnets in general in industrial engines and automotive parts. If Commerce determines that NdFeB permanent magnets are being imported into the United States in such quantities or under such circumstances that national security is compromised or threatened to be compromised, the Secretary will inform the President in her report of the results of the investigation.

Accordingly, Commerce issued an advance notice on September 24, 2021 requesting public comments on the Section 232 investigation. In particular, Commerce requests comments on the following points:

• Quantity or other circumstances related to the import of NdFeB permanent magnets
• Domestic NdFeB Permanent Magnet Production and Production Capacity Required to Meet Projected National Defense Requirements
• Existing and expected availability of personnel, products, raw materials, production systems and facilities for the manufacture of NdFeB permanent magnets
• NdFeB permanent magnet industry growth requirements to meet national defense requirements and / or the supply and service requirements necessary to support such growth, including investment, exploration and development
• The Impact of Foreign Competition on the Economic Wealth of the Domestic NdFeB Permanent Magnet Industry
• The relocation of domestic production of NdFeB permanent magnets resulting in significant unemployment, decline in government revenues, loss of investment or specialized skills and production capacity, or other serious impact
• Relevant factors that cause or will weaken our economy
• All other relevant factors including the use and importance of NdFeB permanent magnets in the 16 critical infrastructure sectors listed in Presidential Policy Directive 21 of February 12, 2013.

The comment period is open for 45 days, starting with the publication of the announcement by the federal register on Monday, September 27, 2021. The deadline for comments is therefore expected to be November 11, 2021.