The Biden administration has pledged to transition America from gasoline cars to electric vehicles (EVs). To fulfill this promise, the U.S. would need ten times the amount of rare earth metals it currently possesses or is able to produce, solely for EVs.
If the additional demand for rare earth metals is necessary for manufacturing strategic military, communication, and guidance equipment, then the shortage of rare earth metal supply in the U.S. may become unsustainable.
Today, China still almost monopolizes the global supply and processing of rare earth metals. The U.S. is completely reliant on China, its global competitor, to provide the rare earth metals needed for maintaining and manufacturing strategic weaponry to defend itself and its allies from adversaries. It’s no wonder the Pentagon has pointed out that the shortage of rare earth metals in the U.S. is a matter of national security.
The national security implications of America’s dependency on China for strategic rare earth metals are not new nor sudden. This situation has been known for years. In fact, in October 2020, then-President Donald Trump issued an executive order instructing his cabinet to explore ways to eliminate reliance on China for rare earth metals.
Frankly speaking, how did this absurd dependence on strategic rare earth metals from China come about?
The discussion is almost embarrassing, yet it’s the truth.
In all honesty, it wasn’t always like this in history. In 1980, the U.S. produced almost all rare earth metals in the world. Even into the 1990s, according to some reports, the U.S. maintained a monopoly on global rare earth metal mining and processing, all done through mining operations in the Mohave desert in California. Rare earth metals were just byproducts of mining for minerals like titanium, phosphates, and zirconium. In fact, this single mine was the primary source of rare earth metals globally.
Then, Americans handed over this industry to the Chinese. This was achieved through several key events. Firstly, the largest rare earth mining and processing company in the U.S., Molycorp based in Colorado, gradually transferred its industrial technologies and assets to China due to close business interests with the Chinese. When Molycorp announced bankruptcy, Neo Materials, a company associated with China headquartered in Toronto, acquired it immediately.
Another factor was driven by environmental laws that had unnecessary connections with the nuclear fuel industry, forcing mining operations to cease. This prompted the U.S. to outsource mining and processing operations to China, which didn’t have such environmental restrictions.
The result is that the U.S. willingly handed over mining technology, intellectual property, and expertise in producing strategically valuable metals to China. In other words, the U.S. voluntarily transferred the global monopoly on rare earth production to a foreign country that ideologically stands as a competitor, making it a strategic adversary. The consequences of this extend far beyond electric vehicles and military weapons, also affecting the medical industry, emerging technologies, employment, and the vulnerable critical supply chain issues.
Furthermore, mistakes were made, resulting in severe penalties. For instance, in 1995, the U.S. Congress approved the sale of Magnequench, the only magnet producer in the U.S., which was crucial for the country’s advanced guidance missile systems. Another rare earth magnet powder producer, GA Powders, was also sold.
The late former Chinese leader Deng Xiaoping’s family was the one acquiring Magnequench. Seven years later, the company’s U.S. production facilities were closed and moved to China. This made the U.S. entirely dependent on China for the key magnets needed for missiles and other weapons, as well as wind turbines and other technologies.
In 1998, the U.S. Department of Defense decided that the U.S. didn’t need any strategic reserve of rare earths, including all rare earths previously held by the Department of Energy, and sold them off. That same year, the last U.S. rare earth metal and alloy producer, Rhodia Incorporated, shut down its rare earth processing plant in Texas to build a new rare earth processing plant in China.
The rare earth metal landscape couldn’t be clearer. Decisions made by U.S. policymakers not only damaged U.S. strategic preparedness, technological and medical advancements, and supply chains but also openly assisted the Chinese regime.
Today, China’s dominant position in the global rare earth metal supply is not only evident in controlling about 80% of the raw material share but also nearly monopolizing the processing plants that transform rare earth elements into crucial alloys, magnets, and more.
As expected, China is leveraging its various advantages over the U.S. It has reduced the overseas supply of rare earth metals, only meeting domestic needs and halting all exports. Prices of some rare earth metals are expected to double within a few years. In essence, China’s new restrictions aim to weaken U.S. defense capabilities.
So, how can this entirely avoidable but strategically significant rare earth metal gap be resolved?
The good news is that the U.S. is moving in the right direction, at least in one instance. In 2022, the U.S. Department of Defense awarded a $35 million contract to MP Materials based in Nevada to construct a large rare earth metal processing plant at the same location in Mountain Pass for producing high-performance magnets. This contract supplements MP Materials’ $700 million investments in various related projects in California and Texas.
On the flip side, the Biden administration rejected the approved Ambler Access Road project by the previous Trump administration on environmental grounds. This road could have helped expand mining operations, providing reliable resources like copper, zinc, lead, gold, silver, and cobalt domestically. Secretary of the Interior Deb Haaland conspicuously mentioned that the environmental studies during the Trump era were “not thorough enough.”
Undoubtedly, America’s rare earth metal policy has once again harmed the U.S. while advancing the competitor, China.
(Note: The author’s name and affiliation have been removed as per your request.)