As Deng Xiaoping, the then-Chinese Communist Party leader said in 1992, "The Middle East has oil: China has rare earth materials."
Yes, and the U.S. has abundant quantities of them also, but keeps them untapped subject to environmental opposition to mining them resulting in a regulatory minefield of local, state, and federal rules that has turned permitting into a costly decadeslong process.
Lawmakers have all but banned rare earth mineral exploration and development on materials-rich federal lands, and the few once-active mines have been shuttered largely due to compliance costs.
In addition, many of the rare earths mined in the U.S. continue to be processed in China because it's cheaper than having to pay American regulatory environmental and workplace safety costs.
Meanwhile, as America’s prospects for rare earth independence remains buried within chambers of myriad bureaucratic fiefdoms, Beijing uses their choke hold monopoly as a key weapon in achieving economic and military supremacy.
An F-35 fighter jet, for example, needs more than 900 pounds of rare earth elements, and a nuclear-powered attack submarine uses more than 9,000 pounds.
China has a long history of using strong-arm rare earth production and export trade tactics to kill foreign competition and manipulate to gain dominance as a geopolitical leveraging tool as they did in halting exports to Japan amid rising tensions in 2010.
This occurred after Deng’s rare earth production and export quotas grew China’s global market share from 27% in 1990, to 98% in 2010.
Then in 2015, after achieving global control, China retired its export quota causing prices to fall below 2010 levels and drive foreign competition out of business.
One of the U.S. casualties was Molycorp, a. company that owned a Mountain Pass rare earth mine in California’s Mojave Desert that filed for bankruptcy in June 2015 after the surge in Chinese rare earth exports tanked prices.
The mine was later purchased by the current owner, Las Vegas-based MP Materials, and resumed operations in 2018.
MP had struck a deal with a Chinese rare earth company, Shenghe Resources, to provide upfront financing in exchange for an ownership stake, and began selling ore to Chinese buyers to create magnets used in numerous applications such as electric motors for cars and cordless tools, hard disk drives, smartphones, and medical devices such as MRI machines.
Starting in 2022, a surplus in Chinese rare earths again imploded prices, part of a pattern of overproduction of critical minerals including nickel, lithium and cobalt that forced out Western miners around the globe.
MP needed a stable market, having invested in building a California plant filled with giant vats called settler-mixers that gradually winnow out the most valuable rare earths needed in creating magnets.
The company found GM, who also needed a reliable supplier, and by 2023, was the only remaining American company both mining and separating rare earths at a commercial scale able to bypass Chinee refiners and sell directly within the U.S. and to Japan and South Korea.
In 2023, MP Materials inked a deal with Sumitomo Corp. to supply the Japanese giant with some key elements, such as neodymium and praseodymium, helping the trading house circumvent China in rare earths needed for electric vehicle production.
Although Japan sought alternative sources of rare earths, the rest of the world returned to China which continues to refine 90% of the total global rare earth output today.
By contrast, MP currently accounts for approximately 15% of the total global output of rare earth oxides and sells most of its mining output to China for processing, accounting for 80% of its total corporate revenue.
Ironically, in 2023 the Biden administration blocked plans for a major mine in northern Minnesota containing an estimated 95% of the nation's nickel reserves and 88% of American cobalt, which could have helped supply minerals for its so-called "net-zero" environmental plans to push electric vehicles, wind energy and solar power virtue-signaling schemes.
This action occurred after President Trump signed an executive order in September 2020 declaring a national emergency and assigning responsibility to the Interior Department to increase domestic rare earth production in order to reduce America's dependence on China for these building blocks for 21st century technologies.
As a temporary and ultimately longer-term, inverse-benefit strategy, Trump administration "trade war" negotiations with Beijing encourage them to supply even more rare earths to world markets and thereby increase supply chain dependency and vulnerability.
Although uncertain and broadly unspecified, proposed deals appear to include Chinese agreements to export rare earths in exchange for reducing tariffs on some of their products along with other largely unspecified concessions.
Encouragingly, the Trump administration is again proceeding with deregulation and investment to nurture a domestic rare earth supply chain, since January of this year having issued 11 executive orders that provide permitting relief and funding to businesses involved in mining critical materials.
Meanwhile, MP Materials is now gearing up to go toe-to-toe with China on commercial scale magnet production.
After several years of testing, MP has developed a method to provide magnets with a superior coating surface and has built a new second plant in Fort Worth, Texas under a majority equity stake deal with the Pentagon that will triple its business.
There is no reason for U.S. dependency on China for materials and technologies we already have in abundance.
It’s urgently time to literally dig our way out of economic and national security dependency on our most dangerous adversary.
Larry Bell is an endowed professor of space architecture at the University of Houston where he founded the Sasakawa International Center for Space Architecture and the graduate space architecture program. His latest of 12 books is "Architectures Beyond Boxes and Boundaries: My Life By Design" (2022). Read Larry Bell's Reports — More Here.