Recently, China limited its exports of rare earth minerals, which are crucial for military uses and many high-tech devices. Soon after, companies in the U.S. started calling Mountain Pass, America’s only rare earth mine located in California’s Mojave Desert. “The calls we’re getting have been immediate,” said Matt Sloustcher, a spokesperson for MP Materials, the company running the mine.
The trade war between China and the U.S. could lead to a shortage of rare earth elements if China keeps these export limits in place or expands them. These elements are needed in products like electric vehicles (EVs), fighter jets, smartphones, and wind turbines. Although the 17 rare earth elements aren’t really rare, they are difficult to find in large enough quantities to make mining them worthwhile.
MP Materials, which took over the Mountain Pass mine in 2017, announced that it would stop sending ore to China for processing because of the new export limits and the 125% tariffs the U.S. faces on Chinese imports. The company is now focusing on processing about half of what it mines on site and is working to expand its processing capabilities.
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Rare earth elements, like neodymium and praseodymium, are important for making strong magnets used in EVs and wind turbines. But there are also small amounts of heavy rare earths, like terbium and dysprosium, which China is restricting. These are key for making the magnets heat-resistant. Since March, the price of terbium has jumped by 24%.
Experts say there’s enough stockpiled material for now, but shortages might happen later this year. China dominates the global rare earth market, producing 270,000 metric tons in 2023, compared to the U.S. which produced only 45,000 tons. China also has most of the processing plants.
In response, President Trump signed an executive order last month to speed up approval processes for new mines and encourage investment in rare earth projects. Two companies are trying to develop mines in Montana, while NioCorp is working to raise money for a mine in Nebraska.
MP Materials is also trying to expand its processing capacity with help from a $45 million investment from the government. However, despite investing nearly $1 billion, the company can’t yet process all of the heavy rare earths needed to meet U.S. demand.
The new restrictions on rare earths are also impacting big U.S. companies like Boeing and Lockheed Martin, which rely on these materials for military technology. These companies are staying quiet about the issue for now.
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Trump also ordered an investigation into the national security risks of relying on China for rare earths. Some battery makers may soon face shortages of important materials. For example, the price of antimony, a mineral used in car batteries, has already doubled because of China’s export restrictions.
Although automakers may try to absorb the rising costs of materials for now, if China’s restrictions stay in place, car prices may eventually rise. The U.S. used to get all of its rare earths from domestic sources until the late 1990s, when cheap Chinese materials flooded the market.
NioCorp is working to prove there are enough rare earth minerals under its site in Nebraska to justify building a new mine. However, a new mine in the U.S. could take years to start. Meanwhile, U.S. Critical Minerals is testing out its project in Montana, but it is still in the early stages.
In short, the U.S. is trying to reduce its dependence on China for rare earth elements by boosting domestic production, but it will take time before new mines can help meet demand.
