LONDON, Aug 28 (Reuters) - U.S. government-backed

investment vehicle TechMet is launching a trading arm for

critical minerals to specialise in the burgeoning market for

Western supplies of materials in which China is dominant, its

CEO said on Thursday.

The United States, Europe and many Asian nations are

scrambling to boost domestic output of critical materials such

as rare earths and cut dependence on China.

A new trading unit, TechMet SCM, will focus on speciality

metals, from both its portfolio companies and third parties.

"We're aligned with the re-shoring of the supply chains

towards the West and I think you can't have a better

differentiator than having this U.S. DFC anchorage," said

Quentin Lamarche, CEO of the new trading unit.

The U.S. government's International Development Finance Corp

is one of TechMet's biggest investors.

Asked if the new trading arm would do deals with U.S.

agencies, Lamarche said the names of customers would be

confidential, adding: "It's not a hidden secret that we want to

play a role, right? And an active role."

A new employee is due to join TechMet SCM in the next few

weeks in Washington D.C., one of three locations for the trading

arm, he said.

Lamarche is based in Brussels and the other office is in

South Korea, which is important due to the battery sector there.

TechMet SCM is focusing on battery metals lithium, cobalt

and nickel, but wants to expand to other critical minerals,

possibly rare earths, Lamarche said.

Privately-held TechMet has stakes in 10 companies, including

Brazilian Nickel, Cornish Lithium, Rainbow Rare Earths

and Momentum Technologies, which developed a process to recycle

EV batteries and rare earth permanent magnets.

Previously, TechMet had a trading joint venture with one of

its biggest shareholders, commodity trading house Mercuria, but

the new structure where the trading arm is wholly owned by

TechMet will be more flexible, Lamarche said.

"Mercuria remains a shareholder in TechMet and we will still

do operations with them, but we'll be more agile going forward."

Lamarche previously worked for Specialty Metals Resources in

Hong Kong and for Umicore in Belgium.

Other major TechMet shareholders are the Qatar Investment

Authority, S2G Investments and Lansdowne Partners.