The United States is at a breaking point as it relates to the security of rare earth elements (REEs). This panic comes on the heels of China’s new export restrictions on seven key REEs, which account for about 90% of rare earth processing globally. Far rarer dysprosium, gadolinium, lutetium, samarium, scandium, terbium, and yttrium are essential to modern defense and energy technologies. All these elements are essential for energizing their smart phones to electric vehicles. The new controls not only impact US industries that were cut off from their technology but have significant implications for global supply chains.
Currently, the US is almost entirely dependent on China for these elements. Experts say this reliance puts the country at risk of continued trade escalations. Nicole Richards, CEO of Allonnia, highlighted the urgency of this situation, stating that the US is “still playing catch-up when it comes to rare earth supply.” Despite these daunting hurdles, the US government is just starting to invest in the production and processing of REEs on domestic soil.
Domestic Efforts to Enhance Production
In response to growing concerns about reliance on foreign sources, the US has initiated several strategies to secure a domestic supply of rare earth elements. The federal money is already committed. Through these public-private partnerships, we’re here to roll up our sleeves and work to reopen or expand mines all over this great country. MP Materials currently is the only significant US producer of rare earth elements. They just acquired MP Materials, which operates the Mountain Pass mine in California.
Lynas Rare Earths, an Australian company, is making its own big move into the US market. To strengthen its position Lynas is investing heavily in downstream processing capabilities. Second, they’re going for broke on the potential of their Mount Weld mine in Western Australia. The company is in the process of developing a light rare earth elements (LREE) separation facility in the US. They have designated a $258 million investment towards a heavy rare earth processing hub in Texas.
US President Donald Trump signed a series of executive orders. His vision was to invigorate American mining and production of rare earth minerals. The Department of Defense has recently awarded REEcycle a $5.1 million award. This funding will significantly improve recovery procedures for e-waste. Through this effort, we are shining a spotlight on recycling as the smart, more sustainable source for these key materials.
Global Impact of China’s Export Controls
The most immediate and significant downstream impact will be on the US. Second, they will hit our international trade partners even harder. According to Isabel Al-Dhahir, principal analyst at GlobalData, “Given the sprawling nature of supply chains, these restrictions will have a global impact, affecting trade partners and customers worldwide, not just those in the US.”
The new controls come right as the US is on pace to import $170 million worth of rare-earth compounds and metals in 2024. To date, the vast majority of these imports have originated from China. This dependency places outsize burdens on the American industries that depend on these materials. Martina Raveni, strategic intelligence analyst at GlobalData, explains how difficult it would be to establish secure, stable REEs supplies, independent of China. The high costs and market volatility associated with REE extraction further complicate this objective.
The recent developments in Vietnam provide even more context to the global REE scene. Vietnam is estimated to have a proven 22 million tonnes of rare earth reserves. This value accounts for nearly 20% of the total worldwide and underscores the country’s increasing dominance in the REE economy. Nicole Richards remarked that “as foreign investors grow interested in this supply, Vietnam’s separation and processing capacity will follow.”
The Role of Recycling and Future Prospects
Recycling rare earth elements is a bright spot and a great opportunity to further reduce supply chain vulnerabilities. Despite current recycling rates being only around 5%, there is a growing recognition of its importance in reducing dependency on mining and foreign sources. Nathan Ratledge, co-founder and CEO of Alta Resource Technologies, emphasized that “e-waste is a more immediate way to blunt the spear point of economic and national security concerns.”
Investments in REE recycling facilities are surging. Businesses including Cyclic Materials and MP Materials have been helping to pave this road. Collectively, these efforts aim to establish a more sustainable approach to sourcing the critical materials that go into our clean energy technologies. They even address the environmental concerns associated with conventional mining methods.
Martina Raveni pointed out that employing recycled materials helps mitigate risks associated with mining output and geopolitical tensions. “Employing recycled materials reduces the dependency on issues such as mining output, ore grade, regional export quotas, geographic and political monopolies, and other unpredictable factors that make the market volatile.”
