US plans to rival China's dominance in rare earth industry

NEW YORK • At a time of frequent geopolitical friction, the United States and Europe want to avoid a scenario in which China cuts them off from access to rare minerals essential to electric vehicles, wind turbines and drones.

Washington and Brussels are investing in the market for 17 minerals with unique properties that today are largely extracted and refined in China.

"The expected exponential growth in demand for minerals linked to clean energy is putting more pressure on the US and Europe to take a closer look at where the vulnerabilities are and the concrete steps these governments can take," said Ms Jane Nakano, a senior fellow at the Washington-based Centre for Strategic and International Studies.

In 2019, the US imported 80 per cent of its rare earth minerals from China, according to the US Geological Survey. The European Union gets 98 per cent of its supply from China, the European Commission said last year.

Amid the transition to green energy in which rare earth minerals are sure to play a role, China's market dominance is enough to sound an alarm in Western capitals.

Rare earth minerals with names like neodymium, praseodymium and dysprosium are crucial to the manufacture of magnets used in industries of the future, such as wind turbines and electric cars. They are already present in consumer goods such as smartphones, computer screens and telescopic lenses.

Others have more traditional uses, like cerium for glass polishing and lanthanum for car catalysts or optical lenses.

Last week, the US Senate passed a law aimed at improving American competitiveness. It includes provisions to improve critical minerals supply chains, following a similar executive order issued by President Joe Biden in February.

Washington aims to boost production and processing of rare earths and lithium, another key mineral component, while "working with allies and partners to increase sustainable global supply and reduce reliance on geopolitical competitors", deputy director of the National Economic Council Sameera Fazili said last Tuesday.

The best hope for boosting American production can be found at the Mountain Pass mine in California.

Once one of the major players in the sector, the mine suffered as China rose and ate up its market share, aided by Beijing's heavy government subsidies.

MP Materials relaunched the mine in 2017 and aims to make it a symbol of the US' industrial rebirth, saying the concentration of rare earths at its site is one of the world's largest and highest-grade rare earth deposits, with soil concentrations of 7 per cent versus 0.1 to 4 per cent elsewhere.

The company's aim is to separate rare earth minerals from one another via a chemical process, and then by 2025 manufacture the magnets that industry uses - as market-leading Chinese firms currently do.

The project is supported by the US government, while a Chinese firm is a minority shareholder.

Elsewhere, Australian firm Lynas has won several contracts in the US, including an ore refinery in Texas for the military that is supported by the US Defence Department.

In Europe, Mr Bernd Schafer, chief executive and managing director of rare earth mineral consortium Eit Raw Materials, said this month that an action plan will soon be presented to the European Commission on how to boost production.

But Europe faces a more complicated path to achieving this goal, said Mr David Merriman, a specialist in batteries and electric cars for London-based consultancy Roskill.

"Europe is expected to rely on importing raw materials or semi-processed materials and become more of a processing base or recycling base," he said.

China is expected to remain dominant for some time to come, but Mr Schafer said that if recycling is scaled up, "20 to 30 per cent of Europe's rare earth magnet needs by 2030 could be sourced domestically in the EU from literally zero today".

The desire to accelerate rare earth production comes amid a shortage of semiconductors, which are essential for the computing and automotive industries and mostly manufactured in Asia.

The scarcity "has caused global manufacturers to think about their supply chain in a new way, and think about vulnerabilities", a spokesman for MP Materials said, adding that several European automotive and wind power firms are already in contact with the company.

AGENCE FRANCE-PRESSE