Sec. 203. Onshoring Rare Earths Act

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Section 168(k) of the Internal Revenue Code of 1986 is amended by adding at the end the following: In the case of any qualified property which is substantially involved in mining, reclaiming, or recycling critical minerals and metals from deposits in the United States, the applicable percentage shall be 100 percent. For purposes of this paragraph, the term critical minerals and metals means cerium, cobalt, dysprosium, erbium, europium, gadolinium, graphite, holmium, lanthanum, lithium, lutetium, manganese, neodymium, praseodymium, promethium, samarium, scandium, terbium, thulium, ytterbium, and yttrium. .

The amendment made by this subsection shall apply to property placed in service after December 31, 2019. Section 168 of the Internal Revenue Code of 1986, as amended by this Act, is further amended by adding at the end the following new subsection: In the case of any qualified real property— if such property is placed in service on or after the date of enactment of this subsection, the depreciation deduction provided by section 167(a) for the taxable year in which such property is placed in service shall include an allowance equal to 100 percent of the adjusted basis of such property, or if such property was placed in service before the date of enactment of this subsection, the depreciation deduction provided by section 167(a) for the first taxable year beginning after such date shall include an allowance equal to 100 percent of the adjusted basis of such property, and the adjusted basis of such property shall be reduced by the amount of such deduction before computing the amount otherwise allowable as a depreciation deduction under this chapter for such taxable year and any subsequent taxable year.

For purposes of this subsection, the term qualified real property means any nonresidential real property which is substantially involved in mining, reclaiming, or recycling critical minerals and metals (as defined in subsection (k)(11)(B)) from deposits in the United States. . The amendment made by this subsection shall apply to taxable years beginning after December 31, 2019. Part VI of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 176 the following new section:

There shall be allowed as a deduction for the taxable year an amount equal to 200 percent of the cost paid or incurred by the taxpayer for the purchase or acquisition of critical minerals and metals (as defined in section 168(k)(11)(B)) which have been mined, reclaimed, or recycled from deposits in the United States. No deduction shall be allowed under any other provision of this chapter with respect to any expenditure with respect to which a deduction is allowed or allowable under this section to the taxpayer. .

The table of sections for part VI of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 176 the following new item: Sec. 177. Deduction for purchase of critical minerals and metals mined, reclaimed, or recycled within the United States. . The amendments made by this subsection shall apply to amounts paid or incurred after December 31, 2019. Subsection (a)(1) of section 2533c of title 10, United States Code, is amended by striking melted or produced and inserting mined, refined, separated, melted, or produced .

Subsection (c)(3)(A)(i) of such section is amended by striking 50 percent or more tungsten and inserting 50 percent or more covered material . The Secretary of Defense, in consultation with the Secretary of the Interior, shall establish a grant program to finance pilot projects for the development of critical minerals and metals in the United States. A grant awarded under paragraph

(1)may not exceed $10,000,000. In awarding grants under paragraph (1), the Secretary of Defense shall give priority to projects the Secretary determines are likely to be economically viable over the long term. In awarding grants under paragraph

(1)during a fiscal year, the Secretary of Defense shall seek to award not less than 30 percent of the total amount of grants awarded during that fiscal year for projects relating to secondary recovery of critical minerals and metals. There are authorized to be appropriated to the Secretary of Defense $50,000,000 for each of fiscal years 2021 through 2024 to carry out the grant program established under paragraph (1). In this section: The term critical minerals and metals means cerium, cobalt, dysprosium, erbium, europium, gadolinium, graphite, holmium, lanthanum, lithium, lutetium, manganese, neodymium, praseodymium, promethium, samarium, scandium, terbium, thulium, ytterbium, and yttrium. The term secondary recovery means the recovery of minerals and metals from discarded end-use products or from waste products produced during the metal refining and manufacturing process, including from mine waste piles, acid mine drainage sludge, or byproducts produced through legacy mining and metallurgy activities.