In recent developments, America’s sole rare earths mine has become a focal point of concern for numerous companies following China’s response to President Donald Trump's tariffs. This response includes limiting exports of essential minerals that are crucial for military applications and various high-tech devices. Matt Sloustcher, spokesperson for MP Materials, the operator of the Mountain Pass mine located in California’s Mojave Desert, noted, “Based on the number of phone calls we’re receiving, the effects have been immediate.”
The ongoing trade war between the United States and China poses a significant risk of a critical shortage of rare earth elements if China decides to maintain or expand its export controls as a strategic maneuver in trade negotiations. Currently, the Mountain Pass mine is unable to fulfill the entire U.S. demand for these essential minerals, which has prompted Trump to advocate for the establishment of new mines across the country.
Rare earth elements are vital components in a variety of products, including electric vehicles, advanced fighter jets, submarines, smartphones, and television screens. Despite their designation as "rare," the 17 elements are not actually scarce; rather, they are difficult to extract in sufficient concentrations that justify mining investments.
MP Materials, which took over the dormant Mountain Pass site in 2017, announced that it would cease exporting its ore to China for processing due to the newly imposed export restrictions and the staggering 125% tariffs on U.S. imports. The company has committed to processing nearly half of its mined material on-site while storing the remainder as it works to enhance its processing capabilities. “Selling our valuable critical minerals under 125% tariffs is neither commercially rational nor aligned with America’s national interests,” MP Materials stated.
Experts predict that manufacturers dependent on rare earth elements and other critical minerals will soon face price hikes. However, there is currently enough global supply to keep factories operational, at least in the short term. The Mountain Pass mine primarily produces neodymium and praseodymium, the lighter rare earths integral to the production of permanent magnets used in electric vehicles and wind turbines. Nonetheless, some heavy rare earths, restricted by China, such as terbium and dysprosium, are essential to ensure that these magnets can endure high temperatures. The price of terbium has surged by 24% since March, reaching $933 per kilogram.
China holds substantial power over the global rare earths market, producing 270,000 metric tons of minerals last year compared to the mere 45,000 tons mined in the United States. With nearly 90% of the world’s rare earths supply, China also possesses most of the processing facilities. Recent restrictions implemented by Beijing require exporters of seven heavy rare earths and certain magnets to acquire special licenses, emphasizing the urgent need for the U.S. to establish additional mines and decrease its reliance on Chinese materials.
In an attempt to secure a steady supply of rare earths, Trump has sought to persuade Greenland and Ukraine to provide more resources to the U.S. In a bid to streamline mining permits, he signed an executive order aimed at encouraging investments in new mining projects. Companies like NioCorp and U.S. Critical Minerals are attempting to develop new mines in Nebraska and Montana, respectively, hoping that federal support will facilitate fundraising and approval processes.
NioCorp has been working diligently to raise $1.1 billion to establish a mine in southeast Nebraska. CEO Mark Smith emphasized the necessity of producing heavy rare earths domestically to counter China’s leverage in the market. Meanwhile, MP Materials is accelerating its processing capabilities, partly aided by approximately $45 million in funding from the previous Trump administration. However, despite investing nearly $1 billion since 2020, MP Materials lacks the capacity to process the heavy rare earths that are currently restricted by China.
Big U.S. automakers have remained tight-lipped about their dependency on rare earths and the repercussions of China’s export limitations. Major defense contractors, including Boeing and Lockheed Martin, also refrained from commenting, despite being directly affected by China's restrictions. Military technology, while a smaller segment, relies significantly on rare earths.
In light of these challenges, Trump has initiated an investigation into the national security risks associated with U.S. reliance on China for these critical elements. The executive order aims to assess the implications of this dependency on the nation’s defense capabilities.
Battery manufacturers may begin experiencing shortages of crucial elements within weeks, according to Steve Christensen, executive director of the Responsible Battery Coalition. Already, the price of antimony, a mineral used to prolong the life of lead-acid batteries, has more than doubled since China tightened its export restrictions last year. Although not classified as one of the 17 rare earths, antimony is among the critical minerals that the Trump administration aims to produce domestically.
Initially, automakers might absorb the rising costs of batteries without passing them on to consumers, but this approach may not be sustainable if China's restrictions persist. Additionally, a 25% tariff imposed on imported automobiles and auto parts could further escalate costs, although Trump hinted at a possible temporary reprieve for the industry.
Historically, the U.S. met its rare earths needs through domestic sources until the late 1990s, when production declined significantly due to a surge of low-cost Chinese ores in the global market. Technologies such as robots and drones have rapidly increased the demand for these essential raw materials.
NioCorp is set to conduct further exploratory drilling this summer to demonstrate to the Export-Import Bank that sufficient rare earth minerals reside underground near Elk Creek, Nebraska, to justify an $800 million loan for financing the project. However, establishing a new rare earths mine in the U.S. is a lengthy process; NioCorp estimates that with successful fundraising, production at its site could potentially commence by the end of Trump’s presidency.
Meanwhile, U.S. Critical Minerals plans to excavate several tons of ore in Montana this summer to test various processing methods they have developed. Although the Sheep Creek project is not as advanced as the Nebraska initiative, its director, Harvey Kaye, remains optimistic about the promising ore deposits with high concentrations of rare earths.
