Key Takeaways
During his recent trip to the Middle East, President Trump secured a deal with Saudi Arabia regarding minerals and energy cooperation.
Trump is concerned about the U.S.’s dependency upon China for important minerals for military, industrial, medical, and other uses. The Saudis are expanding and diversifying their economy, including mineral development.
The agreements also cover civilian nuclear energy and uranium mining.
China controls many of the world’s minerals, including rare earths, and has used its dominance as part of its negotiating strategy on tariffs.
Saudi Arabia is developing new processes for producing and refining minerals, and the United States is also pursuing goals of increasing mineral production and processing.
The Saudi cooperative agreements allow the nations to work together to reduce China’s control of the world market for these essential products, while strengthening both.
Secretary of Energy Chris Wright signed a Memorandum of Understanding on energy cooperation and a Memorandum of Cooperation on critical minerals during a visit by President Trump. The deals strengthen global energy security, promote technological innovation, and secure essential mineral resources vital for emerging industries. The agreements outline plans to promote collaboration in petroleum refining, electricity generation technologies, energy storage systems, and innovation in the energy industry through artificial intelligence (AI). Furthermore, the agreement emphasizes expanding access to clean cooking solutions in developing nations and developing energy infrastructure across both countries. The two nations also agreed to cooperate on civil nuclear energy, covering safety, security, nonproliferation, next-generation reactor technologies, and uranium mining.
One of the most important issues they discussed is securing critical mineral resources. China currently controls 90% of the world’s rare-earth supplies, used in weapons and electric vehicle manufacturing, among other uses. Dysprosium, for example, is used in medical equipment and for magnets that power electric vehicle motors. In retaliation for President Trump’s tariffs, China limited exports of seven critical minerals in April. While China has paused some export restrictions implemented in response to Trump’s original 145% tariffs after they were reduced to 30%, it has kept limits on foreign companies’ access to some rare earth minerals, including dysprosium. Under the new Chinese rules, U.S. companies must apply for a license to export the minerals, a monthslong process.
Not only does President Trump want to produce these minerals in the United States, declaring domestic mineral production a national security priority, but he is also looking to allies to help in the effort. The United States and Saudi Arabia intend to explore opportunities for joint ventures in mining, refining, and processing critical minerals. The agreement also supports investment in research institutions and workforce training programs to foster innovation and ensure a steady supply of materials crucial to modern technologies.
Saudi Arabia’s Push for Mineral Mining
Saudi Arabia is aggressively expanding its mining sector to diversify its economy under Vision 2030. The kingdom has upgraded its mineral resource estimates to about $2.5 trillion (up from $1.3 trillion in 2016). Saudi Arabia is looking at building local industries (e.g., electric vehicles, renewable energy, high-tech manufacturing) instead of mainly exporting oil, and needs rare earth minerals to do so. The Saudis recently announced the development of a new mineral investment project valued at $100 billion, of which $20 billion was already in the final engineering phase or under construction. They want to expand the country’s exploration for lithium and other critical minerals, including rare earths, copper, gold, zinc, phosphate, and nickel.
Lithium production in the kingdom could begin as soon as 2027 with possible collaborations. Saudi Arabia also wants to become a hub for processing critical minerals. About two-thirds of the lithium processing market is currently controlled by China. In December, Saudi Arabia announced the successful extraction of lithium from brine samples in Aramco’s oilfields.
U.S. Reliance on China for Critical Minerals
China accounted for 70% of U.S. rare earth imports between 2020 and 2023. Malaysia, Japan, and Estonia were the other three leading suppliers of rare earths to the United States. Between 2020 and 2023, 93% of Yttrium compounds brought into the United States came from China. According to the U.S. Geological Survey, the U.S. is 100% import reliant for Yttrium, used in catalysts, ceramics, electronics, lasers, metallurgy, and phosphors. Samarium and its compounds are used in aerospace manufacturing and defense, and gadolinium is used in MRI scans. Heavy rare earths are crucial for producing magnets capable of maintaining their properties under high temperatures or electrical fields. In 2024, the United States was 80% reliant on net imports of rare earths.
China had been producing 99% of the world’s heavy rare earth metals until 2023 and still manufactures 90% of rare earth magnets globally, with the remaining production coming from Japan and Germany, both of which are reliant on Chinese raw materials. China has rich heavy rare earth deposits near Longnan in Jiangxi Province, where mines extract the heavy rare earths through chemical-intensive processes. Refineries near Longnan process the ores and send them to magnet factories in Ganzhou, which supply major electric vehicle manufacturers such as Tesla and BYD. Processing rare earths is very energy-intensive, and China’s large coal-fired generating fleet provides cheap energy.
A lack of magnets will result in the inability to assemble cars and other products containing electric motors, which are crucial components of electric vehicles, drones, robots, missiles, and spacecraft. Gasoline-powered cars also use electric motors with rare earth magnets for critical tasks like steering. These rare earth metals also go into manufacturing jet engines, lasers, car headlights, and certain spark plugs. They are also used in capacitors, which are electrical components of the computer chips that power AI servers and smartphones.
From 1940 to 1990, the United States produced and mined its own rare earth minerals at the Mountain Pass mine in California. Until the 1980s, the United States was one of the world’s largest producers, but China usurped it due to its substantial deposits, cheap labor, and lax environmental standards. Even today, the Mountain Pass mine is the only U.S.-based source of rare earths. The mine closed in the fourth quarter of 2015 due to China’s competitive prices, opposition from environmentalists, and U.S. environmental regulations escalating the cost of production. Still, it returned to production in 2018 during President Trump’s first term. Molycorp ran it before it went bankrupt and was then bought by MP Materials, which is partially owned by a Chinese company, in 2017. In 2024, the United States produced an estimated 45,000 metric tons of rare earths, up from 18,000 metric tons in 2018 — a 150% increase. The rare earth ore that the United States mines at Mountain Pass gets shipped to China to be upgraded into compounds and products, which are then shipped back to the United States.
Conclusion
The United States signed agreements with Saudi Arabia on energy and minerals, including rare earth minerals, an area dominated by China. The United States is highly dependent on China for rare earths, which have numerous uses, including in weapons, electric vehicles, and medical equipment. In retaliation for Trump’s tariffs, China has restricted exports of these minerals and is restricting U.S. companies from accessing them. The United States needs to develop its own mineral industry, which President Trump wants to do, and work with allies to circumvent China’s stronghold on these minerals. The Saudi cooperative agreements allow the nations to work together to reduce China’s control of the world market for these essential products, while strengthening both.
