China’s Monopoly on Rare Earth Elements Tightens With Purchase of US Mine

While rare earths aren’t actually that rare — there are more REEs in the ground than copper or lead — they are extremely difficult to mine economically. China has dominated rare earth mining since the 1990s, extracting 85 to 95 percent of the world’s REEs from large clay deposits in the country’s south. When China cut back sharply on REE exports in 2010, it triggered a global price spike, exposing the superpower’s monopolistic grip on materials that are critical to dozens of high tech industries.

Now a Chinese-led coalition threatens to further tighten control of the rare earths trade with the purchase of the only operational REE mine in America. The Mountain Pass Mine in the California desert south of Las Vegas was a powerhouse producer of REEs from 1965 to 1985, at which point China took over global production and never looked back. Mountain Pass was shuttered from 2002 to 2012 because it couldn’t compete with the low prices coming out of China. After a brief revival from 2012 to 2015, Mountain Pass closed for good in 2016 and its owner, Molycorp, filed for bankruptcy.

This past June, an investor group with alleged ties to the Chinese government bought the mine for $20.5 million, beating out American bidders including entrepreneur Tom Clarke of ERP Strategic Minerals.

“I think it would be extremely foolhardy to let a Chinese-linked organization go ahead and buy this mine,” said Jeff Ferry, research director with the Coalition for a Prosperous America. Ferry’s group is calling on the US government to block the Mountain Pass sale on both national security and economic grounds.

It’s true that rare earths are critical to US military technology. Elements like yttrium are used in the atomic batteries that power guided missiles. The electrical systems in manned and unmanned aircraft are powered with rare earth magnets. And the lightweight, space-age materials used to make modern jet engines and rocket noses all rely on compounds stabilized with REEs.

CIA director Mike Pompeo told a Senate committee in May that foreign control of REEs was “a very real concern.”   

Ferry says that the federal government should act “right now” to block the Mountain Pass deal through the Committee on Foreign Investment in the United States, better known as Cfius (pronounced sih-fee-us). Cfius is an interagency committee charged with protecting vital national security interests from foreign control. It recently blocked the sale of an American semiconductor company to Chinese investors and is considering taking similar action with the Chinese purchase of MoneyGram.

If the government doesn’t stop the Mountain Pass deal on national security grounds, Ferry thinks that Cfius should expand its mandate to protect American industries from the potential economic harm created by foreign monopolies on these essential raw material.    

“The fact is, rare earths are used in almost every form of modern electronics, whether it’s smartphones, large motors in wind turbines, or small motors in the latest generation of electric cars,” said Ferry. “We’re talking about tens if not hundreds of billions of dollars worth of industries that are potentially affected by rare earths.”

Rare earths are prized for a host of unique properties including magnetism, luminescence, and lightweight strength. Ana de Bettencourt-Dias is a rare earth chemist at the University of Nevada, Reno, where she studies the light-emitting properties of REEs. The very first color TVs used rare earths like europium and terbium to create red and green light, and today’s LED and OLED displays are built with REEs that emit light efficiently and with very high color purity.

But Bettencourt-Dias says that the biggest and most important industrial application of REEs has to do with magnets, particularly neodymium-based magnets, which are the strongest in the world. Wind turbines use huge neodymium magnets for their power generators, and smaller neodymium magnets are found in computer hard drives and just about every part of your car, from electric windows to audio speakers.

There are alternatives to REEs for high-tech industrial applications, but they’re less efficient and more expensive. Bettencourt-Dias said that large-scale recycling of electronics could be an alternative source for rare earths, but the cost of physically disassembling smartphones and TVs, and the difficulty of chemically separating rare earths, is still far greater than buying raw materials from China.

The reality is that too many current and future technologies rely on rare earths  — particularly the engines and batteries for electric vehicles — to put the genie back in the bottle.  

“If people stop wanting to use things that are powered by electricity, then yes, we can stop using rare earths,” said Bettencourt-Dias, “but I don’t think that’s going to happen.”

According to the US Geological Survey, America imported around 12,600 metric tons of rare earth compounds and metals in 2016, and nearly all of it originated in China. Although the US buys certain compounds and components from countries like Japan and France, the raw minerals for most of those imports come from China.

Global mining production of rare earths in 2016 was 126,000 metric tons. The USGS reports that China mined at least 105,000 metric tons or 83 percent of the total. But that doesn’t take into account illegal — and environmentally destructive — REE mines operating all over China. Of the official tally, Australia comes in (a distant) second at 14,000 metric tons or 11 percent of total production.

When the Mountain Pass mine was operational in 2015, the US extracted 5,900 metric tons, less than 5 percent of global REE production. But even that small fraction of rare earth production could give the US the independence it needs to protect the vital defense and economic interests of itself and its allies, said Ferry, if the Mountain Pass mine is in American hands.

“I don’t think the one mine solves all of our problems,” said Ferry, “but it’s a step in the right direction.”