Battle for rare earth minerals

Picture of John Denslinger
John Denslinger is a former executive VP Murata, president SyChip Wireless, and president/CEO ECIA, the industry’s trade association. His career spans 40 years in electronics

To some, ‘battle’ might be overkill describing the outlook for rare earth minerals. Afterall, these minerals are actually abundant and found on every continent. Like most battles though, engagement with opposition occurs on multiple fronts. Such is the case for rare earth: trophy minerals are seldom extracted from a single, concentrated deposit; mineral processing entails a complex and expensive transformation to a useful alloy; and unfortunately, the US finds itself in a weak starting position with just a single operating mine and zero refining. Three massive fronts to remedy if we are serious about restoring one of America’s vital supply chains.

While 17 elements are classified as rare earth, neodymium (Nd) may epitomize America’s rare earth saga. NdFeB magnets are the devices that power motion. They are synonymous with innovative technology such as EVs, wind turbines, robots and a host of strategic defense applications. More than a dozen countries have documented reserves including the US and Canada. Brazil and Vietnam have huge reserves but mine just a tiny fraction. The rare earth powerhouse is definitely China with 40 per cent of the identified world reserves according to the last DoE published assessment. As for mine production, China leads again with 58 per cent of global output, 91 per cent of worldwide refining and 87 per cent of the oxide separation. And China excels at manufacturing too, producing a mind boggling 92 per cent of the world’s magnets. 

By comparison, the US has but one mine: MP Materials operating in Mountain Pass, CA. Even more troublesome, all of the mine’s output is shipped to China for processing. It seems every aspect of our rare earth supply chain starts with China and ends with China. This is not the best scenario given today’s geopolitical theatrics. No wonder rare earth production is now a Federal priority.

Domestic sourcing is limited to MP Materials which has no local rivals and no near-term competitive threats. With federal money readily available and EV manufacturers desperate for local sourcing, MP Materials announced plans to spend $700M building a complete end-to-end supply chain that adds refining, metal extraction, alloying and magnet manufacturing to its mining expertise. Recycling capability may also be included. The additional processing will take place in Fort Worth, TX with production start-up slated for late 2023. Another encouraging sign, GM recently formalized a long agreement with MP for alloy and finished magnets for GM’s EV programs. Having the financial backing of a Fortune 25 company almost assures the venture’s success. 

Will we see additional onshore mining anytime soon? It’s not likely within the continental US unless national security concerns prevail over a NIMBY regulatory history. On one hand, the Bureau of Land management is reluctant to grant surface mining permits on federal land. As for non-federal land, endless legal challenges by local communities and environmental groups effectively delays large scale domestic projects for years. 

As mentioned, neodymium (Nd) is just one of 17 rare earth minerals, but the hardship story for each is much the same. For example, the Inflation Reduction Act set forth new sourcing conditions. It subsidized consumers based on US content with specific reference to mineral content in batteries. Qualifying mineral content could be US or from countries having a free-trade agreement with the US, but such agreements have yet to be negotiated with any western ally or resource rich country. So, America’s businesses can only look to near-shore USMCA partners Mexico and Canada for sourcing. In the meantime, China dominates the battle in rare earth minerals.