It will be a long time, if ever, before the U.S. catches up to China in rare earth mining and processing. From Portia Roberts and Peter Byrant at realclearwire.com:
China’s latest squeeze on mineral exports––and Washington’s threat of retaliation––ends any illusion that critical minerals are a niche matter. They are the scaffolding of modern society. A nearly bewildering array of minerals are essential for everything from defense technologies to EV dreams to the great race for “dominance” in artificial intelligence. Neither America, nor our allies, extract and refine enough key minerals.
The United States depends on imports for most (in some cases all) key minerals including copper, lithium, nickel, cobalt, graphite, and especially the 17 vital rare earth elements. Without foreign suppliers, we face a shock of varying degrees, from serious to catastrophic, across all industries and services. COVID-driven supply chain disruptions provided a glimpse of what could come.
The International Energy Agency (IEA) is one of a handful of non-aligned entities that looks at and advises about global critical minerals. Unfortunately, it appears that the IEA either ignores or is naïve about market-shaping realities, including those put in play last week by China. This matters because IEA’s genesis was the 1970s oil shock, tasked with brokering facts to anticipate, if not prevent another such catastrophic event in the future. Instead, IEA’s Global Critical Minerals Outlook 2025 should earn a Pollyanna award; it assumes the kinds of needed cooperation, innovation, and capital flows are happening or will. If policymakers mistake that analysis as a blueprint, or as a rationale for inaction or action––as was done by the Biden Administration to justify the LNG-export pause—we could well learn what mineral scarcity looks like.
China is, as is now well-known, the dominant energy minerals market-shaper. It doesn’t merely mine and refine; it finances, secures offtakes, standardizes chemistries, and wields export controls. It commands a variety of chokepoints that differ for each mineral. In other words, it wields a monopolistic-like ability to manipulate markets. Dominance in the activities that make minerals useful neutralizes efforts to diversify the sources of various minerals. It doesn’t matter if a new mine opens in the US, or a different hemisphere or continent if one country’s investment can control a significant proportion of supply. And as a result China can “dump” so much supply, long enough, into the market to collapse prices that bankrupt competition, cause unprofitable mines to be mothballed, or make planned projects infeasible.
We could plant some more Magic Soil.
Ukraine has some rare earths.
So cute the belief that China would do nothing.