In May 2019, amid the escalating U.S.-China trade war, the Chinese Communist Party’s official newspaper published a warning that its government might cut off all exports of rare earth minerals to the United States.
In 2010, it had already followed up on a similar threat, that time temporarily cutting off Japan over a minor diplomatic dispute. The United States Geological Survey reports that China not only holds 35 percent of the world’s entire rare earth supply, but it’s also been turbocharging production, now accounting for 70 percent of global production. Crucially, China directly supplies 80 percent of the U.S.’s rare earth imports. The geopolitical, economic and environmental risks of this status quo can no longer be ignored. The inclusion of a “proposal to make us less dependent on China and other unstable, unreliable and hostile regimes for critical minerals” in the most recent Senate Energy Committee COVID-19 relief package offer is therefore very welcome.
Rare earth minerals consist of a variety of 17 different mineable natural elements, which can be extracted from the earth’s crust. They make up crucial components of many modern technological innovations, from electric cars and solar panels to fighter jets and satellites. The worldwide rare earth industry is therefore expected to nearly double from $8.1 billion in 2018 to $14.4 billion in 2025, as demand for cell phones, microchips and electric vehicles increases dramatically. In short, they are what drives the modern, technologically-advanced economy. President-elect Joe Biden’s promise to install 500,000 new electric charging stations around the country by 2030 therefore only makes sense if we can reliably supply the critical minerals needed to power these electric vehicles in the first place.
This is why the U.S. must preempt Chinese threats. When China briefly blocked all rare earth exports to Japan in 2010, the policy backfired because Japan retaliated by building a new supply chain outside of China and expanding domestic mineral research and development. As a result, China’s global market share dropped from 95 percent to 70 percent. The U.S. now finds itself in a unique position to further dent China’s control of the global market, and move toward rare earth independence. Of particular importance is ensuring that the U.S. military does not continue its reliance on Chinese rare earth imports, which are now used for lasers, night vision systems, missile guidance, radar and sonar and more.
The rare earth industry is also crucial to the United States’ clean energy future. As Manish Negam, an analyst at Credit Suisse, emphasizes clean technologies such as solar panels and wind turbines, as well as electric vehicles, would be the worst hit by any supply chain disruptions. If the U.S. is serious about transitioning to a low-carbon economy, as it should be, then we must realize that doing so without a reliable supply chain of rare earth minerals is literally impossible. Mark Mills of the Manhattan Institute recently published a study outlining the material requirements of the clean energy transition; he found that any major expansion of clean energy technologies will require an unprecedented increase in rare earth mining, yet the U.S. is 100 percent reliant on imports for some 17 critical minerals, and 50 percent reliant for a further 29.
Aside from the recent relief package proposal, there are other encouraging signs of a political evolution on this matter. For example, the bipartisan Reclaiming American Rare Earths (RARE) Act, introduced in the House on Sept. 1, offers a comprehensive framework of tax incentives to stimulate more investment into the U.S.-based rare earth reserves and mineral production, as well as a series of grants for mining and mineral recovery projects. Similarly, Sen. Lisa Murkowski’s (R-Alaska.) American Mineral Security Act is another step in the right direction, and is likely what the Senate Energy Committee relief package is referring to. Meanwhile, entrepreneurs are also playing an important role. From Alaska to Texas, companies and startups are advancing mining development, and a site in Colorado will be the first non-China facility for refining rare earth ores, a crucial process that has been outsourced to China for decades. The latter in particular, a joint venture between Japan, Australia and the U.S., also shows the potential for international collaboration with like-minded countries on rare earth exploration. Moreover, a mountain in Wyoming called Bear Lodge is America’s largest known deposit of rare earth minerals, with approximately 18 million tons that could supply the U.S. for years to come, although extraction has proven a challenge.
Ultimately, however, more can and must be done. As Mills reports, the permitting process in the U.S. is ridiculously long, taking up to three decades where Australia and Canada only require two years. A regulatory minefield of labyrinthine local, state and federal rules precludes much-needed investment from taking place, stifling mining companies compared to their Chinese competitors. Meanwhile, mineral exploration and development on federal lands have been all-but-banned.
These rules and regulations are absurd not only from an economic perspective, but also from environmental and geopolitical ones. The current situation forces the U.S. to rely on countries like China for our long-term economic development, clean energy transition and military innovation. If we are to stand up to China, recover the American economy and play our role in combating climate change, the U.S. must rapidly find a way to become rare earth independent — or, at least, non-China dependent.
Christopher Barnard is the national policy director at the American Conservation Coalition (ACC). Follow the organization on Twitter @ACC_National.