The United States is heavily reliant on China for rare earth elements (REEs), a group of 17 critical minerals essential for various technologies, including electric vehicles, wind turbines, defense systems, and consumer electronics. China’s dominance in the REE market poses a significant economic and national security risk for the U.S.. However, a “poisoned pit” and other potential mining sites across the US could fuel a push to break China’s rare earth monopoly.
China’s Grip on Rare Earths: A Cause for Concern
China has near monopolistic control over the production of separated heavy rare earth elements (HREE) and the production of standard and high-operating-temperature rare earth (REE) magnets. In 2023, China accounted for approximately 69% of the world’s rare earth ore production and 92% of their processing. The country also controls access to other REE metals, alloys, and garnets used in U.S. defense systems, medical treatments, nuclear reactors, and consumer, commercial, and industrial products.
Several factors contribute to China’s dominance in the REE market:
- Abundant Resources: China holds over 30% of the world’s REE reserves.
- Complete Value Chain: China has built an entire ecosystem around REEs, from mineral production and processing to manufacturing finished products.
- Technological Advancement: Chinese engineers have perfected the solvent extraction process to refine REEs.
- Lower Costs: China’s lower labor and environmental compliance costs have allowed it to undercut competitors.
China’s REE monopoly gives it significant leverage against the economic and national security interests of the U.S. and allied nations. The country has, in the past, restricted exports of REEs in response to trade disputes.
The U.S. Response: Reviving Domestic Rare Earth Production
The U.S. is taking steps to reduce its reliance on China for REEs and revitalize its domestic rare earth industry. These efforts include:
- Government Funding: The U.S. Department of Defense (DOD) has committed over $439 million since 2020 toward building domestic REE supply chains.
- Developing New Mines: Several companies are exploring and developing new REE mines in the U.S..
- Investing in Processing Capacity: The U.S. is investing in building domestic REE processing and refining capabilities.
- Supporting R&D: The U.S. is supporting research and development to improve REE extraction and processing technologies.
Promising U.S. Rare Earth Projects
Several rare earth projects in the US could challenge China’s monopoly:
- Mountain Pass Mine, California: The Mountain Pass mine is the only active rare earth mine in the U.S.. MP Materials, the mine’s operator, is ramping up production of REEs and constructing a new plant in Texas to manufacture magnets.
- Round Top Project, Texas: USA Rare Earth is developing the Round Top rare earths project near El Paso, Texas. The company has successfully produced dysprosium oxide, a heavy rare earth element critical for defense applications, from Round Top ore.
- Halleck Creek Project, Wyoming: American Rare Earths is developing the Halleck Creek project in Wyoming, which has the potential to be among the largest REE deposits in the U.S..
- Bear Lodge Project, Wyoming: Rare Element Resources controls 100% of the Bear Lodge mineral rights in Upton, Wyoming, and is investing $44 million in its mining process.
- Sheep Creek Mine, Montana: US Critical Materials announced that their find in a 50-year old abandoned mine at Sheep Creek in Ravalli County, Montana holds the highest reported grades of any known deposit in the United States.
The “Poisoned Pit” Potential
The “poisoned pit” refers to legacy mining sites that, while environmentally challenging, may contain significant REE deposits. These sites present both opportunities and challenges:
- Opportunity: Re-processing waste from old mines could provide a valuable source of REEs.
- Challenge: Extracting REEs from these sites can be complex and require environmentally sound remediation technologies.
Challenges and Opportunities for the U.S. Rare Earth Industry
Despite the promising developments, the U.S. rare earth industry faces several challenges:
- Environmental Regulations: Stringent environmental regulations can increase the cost and time required to develop new mines and processing facilities.
- Technological Gap: China has a significant lead in REE processing technologies.
- Skilled Workforce: The U.S. needs to develop a skilled workforce in REE mining, processing, and manufacturing.
To successfully break China’s REE monopoly, the U.S. needs to:
- Streamline Permitting Processes: Expedite the permitting process for new REE mines and processing facilities while maintaining environmental standards.
- Invest in R&D: Support research and development to develop more efficient and environmentally friendly REE extraction and processing technologies.
- Promote Collaboration: Foster collaboration between government, industry, and academia to accelerate the development of a domestic REE supply chain.
- Address Environmental Concerns: Develop and implement sustainable mining and processing practices to minimize environmental impacts.
By addressing these challenges and capitalizing on its abundant resources and technological innovation, the U.S. can revitalize its domestic rare earth industry and reduce its reliance on China. This will not only strengthen U.S. economic and national security but also create new jobs and opportunities in the domestic mining and manufacturing sectors.
