India, Nov. 11 -- For decades, it was just waste. Bright red, caustic and piling up beside aluminum plants around the world.

Now Washington wants to mine it!

The U.S. Department of Energy has committed $134 million to projects that pull rare earths out of industrial waste. The biggest, about $67 million, goes to the Colorado School of Mines and ElementUSA. They're building a facility in Louisiana to extract and refine rare earths from bauxite residue, better known as red mud. The plant is designed to produce between 150 and 1,000 metric tons of rare earths a year. A second project, in Oklahoma, pairs Phoenix Tailings with MIT.

Why does this matter? Because China dominates the world's rare-earth supply. And, every ton America can make a...