China Dominates Rare Earth Mineral Production. But Could the U.S. Actually Hold a Competitive Advantage?

The mineral Bastnäsite is one of the largest sources of cerium and other rare earth elements. | Getty Images

The need for domestic mineral production is critical now more than ever.

Earlier this week, we took at look at the electric vehicle (EV) industry, arguing that it is time for the United States to get serious about EV production –because if we don’t, China will.

One thing we didn’t bring up? Rare earth minerals.

Rare earth minerals are critical components in a number of military uses, especially advanced technology. But they also are used in clean energy technology like EVs, wind, solar and geothermal power – and there is a growing demand for them.

The World Bank Group has estimated that the production of minerals such as graphite, lithium and cobalt could increase by nearly 500% by 2050 to meet the growing demands for clean energy technologies. More than 3 billion tons of mineral and metals will be needed, including minerals like copper and silver for energy storage.

And yet the United States remains almost entirely dependent on potential adversaries like China for its rare earth minerals, something that China’s authoritarian regime views as leverage. China controls up to 90% of the global supply of rare earth minerals.

“We’re losing to China. We’re losing to China on intellectual property theft. We’re losing on currency manipulation, steel dumping and, of course, economic espionage. But one area where we can catch up relatively quickly is the reliance that we have on rare earth elements in the United States,” said Rep. Eric Swalwell (D-Calif.), during a digital event Thursday on minerals. “A large percentage of the rare earth elements that we rely upon are coming from China, and they continue to gauge when it comes to pricing.”

RealClearPolitics and the National Mining Association hosted the virtual webinar “Reinventing Our Domestic Minerals Supply Chain in a Post-Pandemic World,” to discuss several issues with America’s overreliance on mineral imports and challenges with U.S. domestic mineral production.

Joining the discussion were Swalwell and Rep. Guy Reschenthaler (R-Pa.), the co-chairs of the House Critical Materials Caucus; Jane Nakano, senior fellow for the Center for Strategic and International Studies; Joe Bryan, senior fellow for the Atlantic Council Global Energy Center; and Morgan Bazilian, director of the Payne Institute and professor of Public Policy for the Colorado School of Mines.

U.S. mineral reliance has more than doubled over the past 25 years, but the need for minerals for key industries such as EVs is rapidly growing. But it isn’t just things like consumer vehicles we should worry about. The United States is more vulnerable because it lacks its own supply of the minerals needed for emerging technology, energy, medical and manufacturing supply chains (along with all of those military uses).

The United States actually holds a lot of strength and valuable assets in its mineral supply chain, panelists noted.

“We have to stop thinking about this as a static list of rare earth elements,” Reschenthaler said. “We have some regulatory burdens that we have to overcome. It takes 7 to 10 years typically to get a permit to mine rare earth elements that by comparison Australia and Canada, which have very similar environmental standards as we do, it takes them 2 to 3 years. That’s something that we need to overcome.”

Some action is happening in Washington to address this issue. President Trump on Wednesday signed an executive order to declare a national emergency in the mining industry, directing key cabinet secretaries to study the matter. That could lead to things like government grants to boost domestic production or tariffs or quotas against China and other countries with non-market economies.

And just last week, the House passed legislation that would create a program at the U.S. Department of Energy that would look at investments that we could take on to seek and reclaim rare earth minerals.

Meanwhile, the House Critical Materials Caucus will continue to work to find ways for the United Sates to compete with our foreign counterparts and is a good first step in fixing a lot some issues with U.S. mineral production, panelists said.