The race to reduce America's reliance on Chinese rare earths is on, and it's a complex and challenging journey. Imagine a world where the very foundation of our technological advancements, from semiconductors to electric vehicles, is at the mercy of a single nation. That's the reality the US is striving to change.
Last week, Scott Bessent, the US Treasury Secretary, made a bold statement, showcasing a rare-earth magnet, the first of its kind made in the US in 25 years. He declared it as proof that the US is breaking free from China's grip on its supply chain. But here's where it gets controversial: China has a significant head start in this industry, with an estimated 70% of global mining and over 90% of global processing capacity.
The Trump administration has made a bold move, betting on tariffs and other economic tools to bring this industry back to American shores. However, this is no easy feat. The US Geological Survey reports that in 2024, the US imported a staggering 80% of the rare earths it utilized.
For some rare earth minerals, the situation is even more dire. China's dominance in refining processes for minerals like dysprosium and samarium stands at a staggering 99%. These minerals are crucial for chip production and military applications, and their scarcity highlights the urgency of the situation.
Adam Webb, head of energy raw materials at Benchmark Mineral Intelligence, emphasizes the versatility of rare earths, stating, "Anything that has a decent magnet in it uses rare earths." He also sheds light on the misconception surrounding their name, explaining that "'rare earths' is somewhat of a misnomer" as they are not as scarce as their name suggests.
Trump's efforts to reduce US dependence on Chinese rare earths are a long-term battle. While deposits exist in countries like Ukraine, Greenland, and Brazil, and even within the US, the process of extraction and refining is complex and time-consuming.
The Pentagon's recent move to become the largest shareholder in MP Materials, the operator of a rare earths mine in California, is a significant step. The department plans to establish a "mine-to-magnet" supply chain, aiming to produce magnets crucial for advanced military technologies.
North America holds promising rare earth resources, with the US and Canada estimated to have 3.6m and over 14m tons, respectively. However, this pales in comparison to China's estimated 44m tons.
The US is exploring direct investments in critical mineral companies, mirroring its approach in the steel industry and with chipmaker Intel. Doug Burgum, the US Secretary of the Interior, suggests utilizing a sovereign wealth fund to accelerate production, questioning why the wealthiest nation shouldn't have the largest such fund.
The US's past efforts to support domestic production have faced challenges when China lowered prices, making unsupported rare earth development uneconomical. This highlights the need for a long-term, strategic approach.
Simon Moores, managing director of Benchmark Mineral Intelligence, testified before the US Senate committee five years ago, emphasizing the urgency of the situation: "Those who invest in battery capacity and supply chains today are likely to dominate this industry for generations to come."
The race to secure rare earths is heating up, with the US forming trading alliances to reduce its reliance on China. Trump's ambitious goal of having "so much critical mineral and rare earths that you won't know what to do with them" in a year's time is a bold statement.
But can the US truly catch up and loosen China's grip on this critical industry? Adam Webb believes the US has made significant strides, but acknowledges the challenges of becoming self-reliant in the short term.
The future of this strategic resource is uncertain, and the world watches with bated breath to see if the US can reshape the rare earths landscape.
