China dominates the production and export of rare earth elements and other critical metals needed for renewable energy (solar and wind technology), electric car manufacturing and batteries, defense weapons, cell phones and other electronics. China has 80 to 90 percent of the global rare earth market. Further, over 70 percent of all mined cobalt needed in the electric vehicle industry comes from the Democratic Republic of the Congo, and most of that cobalt is controlled by China. Without access to these minerals in abundant supply and at reasonable cost, dreams of reducing the use of fossil fuels are just that.

The United States lacks resources in 14 key rare earths—out of the 35 overall types of rare earth elements. For example, China supplies half of the barite used in hydraulic fracturing that has revolutionized the U.S. oil and natural gas production industry, making the United States number one in the world.

China implemented its new Export Control Law on Tuesday, December 1, 2020. The law stipulates that the state will implement export control on dual-use items such as military products, nuclear, and other goods, technologies, services, rare earths and other items related to national security and interests, and fulfilling international obligations such as non-proliferation. That means China now has an official mechanism to further reduce rare earth exports. And, as the global supply of rare earth elements shrink, their prices will rise. In fact, the price of these mineral elements has already risen as their demand has increased.

In November, the prices of all major Chinese-sourced rare earths increased. In particular, neodymium, which is the most common rare earth used in making magnets, increased in cost by 27 percent since early November, up over 50 percent year to date. Several other key rare earths also increased in November, including dysprosium, up 17 percent, gadolinium, up 9 percent and terbium, up 27 percent. From late November, the three main types of rare earths—terbium oxide, praseodymium oxide and dysprosium oxide—rose to 8-year, 3-year, and 5-year highs, respectively.

More daunting, however, is that many market participants believe the new law will lead to a restriction of rare earth-based exports from China to key partners including the United States and Japan on the basis of safeguarding national security. The surge in the price of Chinese rare earth metals in November is a reflection of the geopolitical tensions between China and the developed world. Rare earths are regarded as strategic materials due to the Sino-US technology war, which is a key factor in why rare earths face export controls and why the price for these elements has soared.

What’s Being Done

Currently, the United States has only one rare earth production mine, the Mountain Pass rare earth mine in California, and no processing plant.  In fact, product from the mine has to be shipped to China for processing, and the company is now partially owned by the Chinese.  Unfortunately, it will take decades for the United States to catch up to China on rare earth mining and processing.

In November 2018, the United States and Australia, which has about a sixth of the world’s rare earth reserves, agreed to cooperate on this issue and identified 15 mineral development projects that include rare earths. In May 2019, U.S. senators introduced legislation to encourage the development of domestic rare earth supplies, and the Department of Defense asked for additional federal funds to bolster domestic production of rare earths. In 2019, the United States allocated $209 million for the development of its rare earth industry.

In April, 2020, the Pentagon awarded funding to Australian miner Lynas Corp. and Nevada-based MP Materials for rare earth separation facilities in Texas and California, respectively. And by late September, President Donald Trump signed an executive order declaring a national emergency in the mining industry. The U.S. Department of Commerce recommended that the United States establish partnerships with Canada and Australia in order to secure greater access to rare earths and other critical minerals.

In August 2020, the Canadian government of Saskatchewan committed C$31 million ($24 million) for the construction of the country’s first rare earth processing facility, which is planned to be operational by the end of 2022.


If the United States is serious about implementing Biden’s climate plan to make the generating sector carbon free by 2035 and the entire economy carbon free by 2050, it will need rare earths and other critical metals to accomplish those goals, as well as enormous amounts of copper. With the United States being decades behind China in the production and processing of rare earths and other minerals, the United States will become dependent on China for those resources, meaning that instead of being reliant on OPEC for oil, which the United States has overcome through the shale oil renaissance, the nation will be reliant on China for rare earths instead. China’s dominance has enabled it to enact its new export control law that allows it to limit the export of rare earths for national security reasons.

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