Rare earth elements (REEs) are a group of 17 elements that are critical components in a wide range of modern technologies, including smartphones, electric vehicles, wind turbines, and military equipment. Despite their name, rare earth elements are not actually rare; they are relatively abundant in the Earth’s crust. However, they are dispersed in low concentrations and often found in geologically complex deposits, making their extraction and refining costly and environmentally challenging.
China has dominated the global rare earths market for decades, accounting for more than 80% of the world’s rare earths production in 2020. This dominance has allowed China to control the supply and prices of these critical elements, posing potential risks to the United States and other countries that rely on imports for their high-tech industries.
In recent years, however, the United States has stepped up its efforts to secure a more diversified supply of rare earths and reduce its dependence on China. This article will explore the race for rare earths, the challenges faced by the United States, and the country’s progress in catching up in the global rare earths supply chain.
The Importance of Rare Earth Elements
Rare earth elements are essential materials in the production of various high-tech products and critical defense systems. Neodymium, for example, is used in the powerful magnets found in electric motors and generators, while samarium is used in the manufacturing of permanent magnets for wind turbines. Lanthanum is a key component in the production of high-performance glass, including camera lenses and night-vision goggles.
In the defense industry, rare earth elements are critical components in advanced radar systems, missile guidance systems, and stealth technology. For example, the F-35 Lightning II fighter jet, which relies on stealth technology to evade detection, uses rare earth elements in its radar-absorbing coating and other components.
The importance of rare earth elements in modern technology and defense systems underscores the strategic significance of securing a reliable and diversified supply of these critical materials.
China’s Dominance in the Rare Earths Market
China has been the world’s leading producer of rare earth elements for decades, accounting for more than 80% of global production in 2020. This dominance can be attributed to several factors, including favorable geological conditions, low labor costs, and government support.
China’s rare earths reserves are estimated to account for around 36% of the world’s total reserves, according to the United States Geological Survey (USGS). Additionally, China’s low labor and environmental regulation costs have made it a cost-competitive location for rare earths mining and processing.
The Chinese government has also played a significant role in promoting the country’s rare earths industry through policies such as resource export quotas, tax incentives, and investment in domestic rare earths projects. These policies have helped to attract foreign investment and technology transfer, further strengthening China’s position in the global rare earths market.
The Challenges Facing the United States
The United States has historically been a significant producer of rare earth elements, accounting for more than 30% of global production in the 1990s. However, a combination of factors, including environmental regulations, high production costs, and competition from China, led to a decline in the U.S. rare earths industry. By 2018, the United States was estimated to have accounted for only 1% of global rare earths production, according to the USGS.
The dependence on China for critical rare earth elements has raised concerns in the United States about the potential risks to its high-tech industries and national security. In 2018, the U.S. Department of Defense (DoD) identified rare earth elements as one of the 35 minerals critical to national security and vulnerable to supply disruptions.
The challenges facing the United States in the race for rare earths include:
1. Limited domestic production: The United States has significant rare earths reserves, but domestic production has declined due to environmental regulations, high production costs, and competition from China. In 2020, the United States was estimated to have produced only 15,000 metric tons of rare earth elements, accounting for less than 1% of global production, according to the USGS.
2. Dependence on imports: As a result of declining domestic production, the United States has become increasingly reliant on rare earth imports, primarily from China. In 2020, the United States was estimated to have imported more than 160,000 metric tons of rare earth compounds and metals, with China accounting for over 70% of those imports, according to the USGS.
3. Environmental and regulatory challenges: Rare earth mining and processing can have significant environmental impacts, including the generation of hazardous waste and the use of large amounts of water and energy. Strict environmental regulations in the United States have contributed to the decline of the domestic rare earths industry by increasing production costs and making it less competitive with China, where environmental standards are often less stringent.
4. Lack of domestic processing and refining capacity: The United States has limited domestic capacity for rare earths processing and refining, which are critical steps in the supply chain between mining and the production of finished rare earth materials. In 2020, the United States was estimated to have processed only a small fraction of its rare earths domestically, with the majority being exported for processing in China and other countries, according to the USGS.
Despite these challenges, the United States has recently taken steps to diversify its rare earths supply chain and reduce its dependence on China.
The United States’ Progress in the Race for Rare Earths
In response to the growing concerns about its reliance on China for rare earth elements, the United States has implemented several initiatives aimed at diversifying its supply sources, supporting domestic production, and investing in recycling and substitution research.
1. The Defense Production Act (DPA): In 2019, President Donald Trump invoked the DPA to prioritize the development and domestic production of rare earth elements critical to national defense. The DPA authorizes the U.S. government to invest in domestic rare earths projects, including mining, processing, and recycling, to reduce dependence on foreign sources.
2. The Critical Minerals Policy Act: In December 2020, President Trump signed the National Defense Authorization Act (NDAA) for Fiscal Year 2021, which included the bipartisan Critical Minerals Policy Act. This legislation aims to strengthen the U.S. rare earths supply chain by directing the Secretary of Defense to create a rare earths strategy, investing in domestic rare earths projects, and supporting research into recycling and substitutes for critical minerals.
3. The REE Act: In May 2021, bipartisan legislation known as the Rare Earths Elements (REE) Act was introduced in the U.S. Senate. The REE Act aims to further diversify the U.S. rare earths supply chain by requiring the Secretary of Defense to establish a rare earths stockpiling program and invest in domestic rare earths projects. The bill also calls for the establishment of a rare earths research and development program to develop more efficient extraction and processing technologies.
4. Investment in domestic rare earths projects: The U.S. government has been investing in domestic rare earths projects through the DPA and other initiatives. In 2020, the Department of Defense awarded $30 million in DPA funding to MP Materials, a Nevada-based rare earths mining company, to restart and expand operations at the Mountain Pass rare earths mine in California. The funding will also support the development of a rare earths processing facility in Texas, which could help reduce the United States’ reliance on Chinese processing facilities.
5. Research into recycling and substitution: The U.S. government and private sector are investing in research to develop more efficient recycling technologies for rare earth elements and identify potential substitutes for these critical materials. In 2020, the Department of Energy (DOE) announced $10.6 million in funding for 13 research projects focused on rare earths recycling and substitution.
Conclusion
The race for rare earths has significant implications for the United States’ high-tech industries and national security. As the world’s leading consumer of rare earth elements, the United States has become increasingly reliant on imports, primarily from China, which dominates the global rare earths market.
In response to the risks posed by this dependence, the United States has begun to take steps to diversify its rare earths supply chain and reduce its reliance on China. These efforts include investing in domestic rare earths projects, supporting research into recycling and substitution, and promoting the development of a domestic rare earths processing industry.
While the United States has made progress in the race for rare earths, significant challenges remain. The country must continue to invest in research and development, support domestic rare earths projects, and work with allies to diversify the global supply chain and reduce dependence on China. By prioritizing rare earths security, the United States can strengthen its position in the global high-tech economy and mitigate the strategic risks associated with its dependence on rare earth imports.
FAQs
1. What are rare earth elements (REEs)?
Rare earth elements (REEs) are a group of 17 elements that are critical components in a wide range of modern technologies, including smartphones, electric vehicles, wind turbines, and military equipment. They are called “rare earths” because they were originally thought to be rare in the Earth’s crust, but they are actually relatively abundant, although they often occur in low concentrations and are geologically complex to extract.
2. What are some common applications of rare earth elements?
Rare earth elements are essential materials in the production of various high-tech products and critical defense systems. Neodymium, for example, is used in the powerful magnets found in electric motors and generators, while samarium is used in the manufacturing of permanent magnets for wind turbines. Lanthanum is a key component in the production of high-performance glass, including camera lenses and night-vision goggles. In the defense industry, rare earth elements are critical components in advanced radar systems, missile guidance systems, and stealth technology.
3. Which country is the largest producer of rare earth elements?
China is the world’s largest producer of rare earth elements, accounting for more than 80% of global production in 2020. China’s dominance in the rare earths market can be attributed to favorable geological conditions, low labor costs, and government support through policies such as resource export quotas, tax incentives, and investment in domestic rare earths projects.
4. Why is the United States concerned about its dependence on rare earth imports from China?
The United States is concerned about its dependence on rare earth imports from China due to the strategic importance of these elements in high-tech industries and national defense. The U.S. Department of Defense has identified rare earth elements as critical minerals vital to national security and vulnerable to supply disruptions. As a result, the United States has been working to diversify its rare earths supply chain and reduce its dependence on China by investing in domestic rare earths projects, supporting research into recycling and substitution, and promoting the development of a domestic rare earths processing industry.
5. What steps is the United States taking to diversify its rare earths supply chain?
The United States is taking several steps to diversify its rare earths supply chain and reduce its dependence on China. These efforts include:
* Invoking the Defense Production Act (DPA) in 2019 to prioritize the development and domestic production of rare earth elements critical to national defense.
* Passing the bipartisan Critical Minerals Policy Act in 2020, which aims to strengthen the U.S. rare earths supply chain by directing the Secretary of Defense to create a rare earths strategy, investing in domestic rare earths projects, and supporting research into recycling and substitutes for critical minerals.
* Investing in domestic rare earths projects through the DPA and other initiatives, such as the $30 million in DPA funding awarded to MP Materials in 2020 to restart and expand operations at the Mountain Pass rare earths mine in California and support the development of a rare earths processing facility in Texas.
* Supporting research into recycling and substitution of rare earth elements through initiatives such as the Department of Energy’s $10.6 million in funding for 13 research projects focused on rare earths recycling and substitution in 2020.
6. What challenges does the United States face in the race for rare earth elements?
The United States faces several challenges in the race for rare earth elements, including:
* Limited domestic production: The United States has historically been a significant producer of rare earth elements, but a combination of factors, including environmental regulations, high production costs, and competition from China, has led to a decline in the U.S. rare earths industry.
* Dependence on imports: As domestic production has declined, the United States has become increasingly reliant on rare earth imports, primarily from China.
* Environmental and regulatory challenges: Rare earth mining and processing can have significant environmental impacts, leading to strict environmental regulations in the United States that have contributed to the decline of the domestic rare earths industry by increasing production costs and making it less competitive with China.
* Lack of domestic processing and refining capacity: The United States has limited domestic capacity for rare earths processing and refining, which are critical steps in the supply chain between mining and the production of finished rare earth materials.
Despite these challenges, the United States is taking steps to diversify its rare earths supply chain, invest in domestic production, and support research into recycling and substitution.