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Jamie McIntyre


NextImg:China’s stranglehold on rare earth elements threatens America’s national security

At a recent hearing of the House Select Committee on Strategic Competition between the United States and the Chinese Communist Party, ranking member Rep. Raja Krishnamoorthi (D-IL) came prepared to show and tell “why rare earths are so important,” holding up a small metal object, the size of a thimble, between his thumb and forefinger.

“They are in something we take for granted every day, namely, rare earth magnets,” Krishnamoorthi said, putting down the magnet and placing a small spinning disc on the dais in front of him.

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“This is a simple motor that spins because of rare earth magnets. But it’s not just in this gadget. It’s in everyday items, including this toothbrush and even this drill,” he said, one in each hand. “It’s basically in everything you can possibly think of. These rare earth magnets power almost all items that involve motors in our daily lives.”

The market for rare earth magnets, which are 15 times stronger than old-fashioned steel magnets, has been growing exponentially for the past two decades. As Krishnamoorthi said, they are in everything that moves by electricity.

And China, he said, “produces 90% of the world’s rare earth magnets.”

In April, China cut off the export of rare earth elements to the U.S. in retaliation for President Donald Trump’s 34% “reciprocal” tariff on Chinese imports.

The effects were immediate.

Ford was forced to halt production of certain advanced vehicles at its Chicago facility, its oldest plant in the U.S.

But the shock to the U.S. defense industrial base was even greater.

China maintains a near monopoly on a slew of rare earth elements, including dysprosium, gadolinium, germanium, gallium, lutetium, scandium, ytterbium, and yttrium.

But one in particular, samarium, is perhaps the most vital to the U.S. defense industry.

Samarium is essential in making the heat-resistant magnets required for F-35 stealth fighters, which need magnets that can function at extremely high temperatures generated by jet engines.

There are some 50 pounds of samarium magnets in a single F-35, and according to one estimate cited by RAND, each plane has a total of 920 pounds of various rare earth elements.

As a result of recent trade negotiations, China has since relaxed restrictions on some rare earth elements used for non-military purposes, but it’s maintaining a chokehold on anything related to national security.

This has forced defense manufacturers to scramble for alternate, and far more expensive, sources of rare earth minerals, which are needed for everything from drone motors and night-vision goggles to microelectronics and missile-targeting systems.

The Wall Street Journal reported that one U.S company was quoted a price for samarium 60 times the going rate.

As the Trump administration works to reach a trade deal with China, the ban on magnets is a key sticking point.

“I won’t go into detail, because they’re confidential conversations between two governments, but they are really focused on rare earth magnets and minerals,” U.S. Trade Representative Jamieson Greer said on CBS’s Face the Nation.

“China has put a global control on the world, and so for the United States, we’re focused on making sure that the flow of magnets from China to the United States and the adjacent supply chain can flow as freely as it did before the control,” Greer said. “And I would say we’re about halfway there.”

You might think that China’s chokehold on critical supply chains is because rare earth elements are hard to find, difficult to mine, and mostly in China.

But it turns out that while they are rare, they’re not that rare. They’re also not hard to mine, so long as you don’t care about the effects on the environment.

It wasn’t that long ago that the U.S. was the primary source of samarium magnets, a result of research by General Motors in the 1980s.

By the 1990s, the U.S. was manufacturing the magnets in Indiana and mining the rare earth elements in the desert at Mountain Pass, California, near the Nevada border.

The mine violated environmental restrictions, and the cost of cleanup made it unprofitable, so it shut down.

Meanwhile, China, unencumbered by environmental concerns, began to realize it was sitting on a gold mine.

As then-Chinese Finance Minister Deng Xiaoping famously said in 1992, “The Middle East has oil, China has rare earths.”

“These rare earths are not that hard to mine. It doesn’t take lots of big, sophisticated equipment,” Keith Bradsher, Beijing bureau chief for the New York Times, said in a recent podcast. “It’s called bucket chemistry. It doesn’t take a lot of resources to do it. All it really takes is a corrupt local politician willing to look the other way as you start digging holes in public lands, and dumping chemicals in them, and pumping out what comes out of the bottom of the hillside.”

Rare earth exports from China became plentiful and cheap until a spat between China and Japan underscored the problem of overreliance on Beijing as the sole source for rare earth elements.

In 2010, tensions over ownership of a group of uninhabited islands near Taiwan prompted Beijing to cut off Japan’s supplies of rare earth minerals for two months.

Seeking a more stable supply chain, Japan subsidized a mine in Australia.

The U.S. also began to seek to lessen its dependence on China and invested roughly a billion dollars to address the environmental concerns at Mountain Pass and reopen the mine.

But the flood of cheap rare earth minerals from China cut global prices and forced the mine into bankruptcy in 2015 after operating for only one year.

While causing near-term shortages, the current crisis may have a long-term positive effect if it results in the U.S. making a new commitment to developing a domestic rare earth industry.

“Our country, with the largest economy in the world, sits atop many rare earth minerals vital to our future prosperity, but China has a near monopoly, 90%, on the ability to process them,” Rahm Emanuel, former U.S. ambassador to Japan, told the House committee last month.

“We must answer CCP coercion with resolve, unity, and resilience. That means building a collective defense among the democratic nations against coercion. It means investing at home and diversifying our supply chains,” he said.

The Pentagon has already taken a major step, entering into a multibillion-dollar public-private partnership with MP Materials, operator of Mountain Pass, to build a new rare earth separation facility and a second domestic magnet manufacturing plant at the site.

China’s actions have given the mine, the world’s second largest, a new lease on life.

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The 10-year agreement will make the Defense Department the company’s largest shareholder with an investment of $400 million in newly created preferred stock, and will cement the company’s status as a national strategic asset.

“This initiative marks a decisive action by the Trump administration to accelerate American supply chain independence,” James Litinsky, founder, chairman, and CEO of MP Materials, said in a press release.