As recently as 1991, the U.S. was the world’s leading supplier of rare earths, thanks to a large California mine called Mountain Pass. But China also had abundant rare earths, and its long-term strategy was becoming clear.
In 1995, Chinese state-linked companies received U.S. government approval to buy the rare-earth materials and magnet business started by General Motors , called Magnequench. In the following years, ownership shut down all its rare-earth plants in the U.S. and shipped the equipment to China. Top American engineers were offered opportunities to go to China and set up new plants there.
By the mid-2000s, the U.S. rare-earth industry had been all but wiped out. Mountain Pass, America’s major rare-earth mine, had been shut down, as had virtually all American facilities that processed rare earths and turned them into magnets.
Rare-earth production became so limited in the West that an American company, Molycorp, attempted to revive the Mountain Pass mine and make its own magnets. It called its plan “Project Phoenix,” but it was destined to fail.
In 2012, the Obama administration, alongside the European Union and Japan, launched a suit against China at the World Trade Organization, accusing it of improperly using export quotas to restrict rare-earth supplies abroad. China argued that its restrictions were intended to keep mining at sustainable levels and protect the environment.
In 2014, the WTO ruled against China, concluding its export quotas were unfair. China abandoned them, and sales to the U.S. surged
Molycorp went bankrupt as American rare-earth prices collapsed. For the second time in a little over a decade, cheap Chinese prices had contributed to shutting down America’s only rare-earth mine.
In July, the U.S. government said it would take a 15% stake in MP Materials, America’s flagship producer which took over Mountain Pass and is building out processing and magnet facilities. The government is also deploying new tools, such as instituting a price floor for the company’s rare earths, to help ensure it can withstand any future influx of low-price Chinese minerals.
“For 20, 25 years we haven’t been vigilant,” Treasury Secretary Scott Bessent said at an investment forum.
Still, China’s advantages can’t be undone overnight.
AI Overview
Yes, the U.S. has rare earth technology, including domestic mining and processing capabilities, though it is heavily reliant on China for the global supply chain. The U.S. has been working to rebuild its supply chain and is focusing on technological innovation to extract rare earths from new sources, like waste products and recycled materials.
U.S. rare earth capabilities
Mining: The U.S. has at least two domestic rare earth mining locations. One is in Mountain Pass, California, which was the world's leading producer in the 1960s and now produces about 15% of global rare earths. Another location in Georgia is producing rare earth concentrates as a byproduct of heavy mineral sand and kaolin mining.
Processing and Technology: There is a lack of domestic capacity to process and refine rare earths into the final components needed for products like electric vehicle magnets. However, the U.S. has developing technologies to process rare earths from new sources, such as bioleaching, ligand-based separation, and electrochemical separation.
Manufacturing: MP Materials is described as the U.S.'s only fully integrated rare earth producer, with capabilities from mining to advanced metallization and magnet manufacturing.
Challenges and strategies
China's dominance: China currently controls the majority of the global rare earth supply chain, from mining to processing.
Government initiatives: The U.S. government is actively supporting efforts to develop a more secure domestic supply chain through initiatives from the Department of Energy and the Department of Defense.
Diversification: The U.S. is exploring new ways to extract rare earths, including from legacy mine tailings and recycled magnets, to reduce its reliance on traditional mining and China's supply chain.
