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US companies move to break China’s dominance of rare earth industry

Companies in California, Utah and Texas working to restore US rare earth supply chains

The United States was once the world's largest supplier of rare earth elements, but China has dominated the industry since the late 1990s. (Photo: Shutterstock)

In 2010, tensions flared between Japan and China over a fishing trawler incident in the East China Sea. The Chinese government reportedly blocked all exports of rare earth elements to Japan in retaliation for the detention of a Chinese fishing boat captain.

Japan at the time had grown almost entirely dependent on Chinese rare earth elements (REEs), importing more than 90% of the metals, which are used in everything from computers, smartphones and electric vehicles to wind turbines and even defense systems. 

Since then, Japan has worked to diversify its REE supply chain. While China still provides about 60% of REEs to Japan, the country also imports about 19% from Vietnam and 11% from France. Japan has also poured investment into domestic REE projects.

According to the Washington D.C.-based Centre for Strategic and International Studies, China is home to about two-thirds of the global supply of REEs and currently refines about 85% of REEs for the worldwide market.

The dispute between Japan and China showed how vulnerable a country can be when China blocks REE exports and could provide lessons for the United States, which wants to break China’s rare earths monopoly. 

The Biden administration and several global companies have taken steps to bring rare earth mining and processing back to the U.S., including the development of a rare earths magnet factory and a $120 million commercial heavy rare earths separation facility, both in Texas.

However, breaking China’s dominance of REE supplies won’t be easy, said Lewis Black, president and CEO of Almonty Industries, a Toronto-based global mining company.

“Now that Western governments are saying we need our own supply chains, you think China is just going to say, ‘Thanks for being a great customer for the last 30 years?’” Black said. “No. They are going to fight to protect their market share. The fact is they built their [REE] industry over 30 years and it is extremely efficient. They were able to offer something that nobody in the West really wanted to get involved in, an inventory of rare earth.”

China controls most of the world’s rare earth supply chain

The U.S. was once the world’s largest supplier of REEs, with the elements being mined and refined from the 1960s through the 1990s at Mountain Pass, California, located 53 miles southwest of Las Vegas, accounting for more than 60% of the global market.

The U.S. began outsourcing REE processing to China in the late 1990s for several reasons, including cost and environmental concerns. The processes used for getting REEs created harmful wastes.

“Firstly, most countries don’t have raw material [REE] supply chains because nobody wants these mines in their backyard,” Black said. “So you’re going to have a small number of countries that could actually strip mine for raw materials.”

The Chinese government saw long-term value in cornering the REE market and bankrupted almost every other REE producer. Within a few years, it controlled most of the world market. As China’s production increased, operations at Mountain Pass began declining until it, too, went bankrupt and closed in 2015.

“China didn’t create this monster in a week,” Black said. “China controls the price of multiple commodities of rare earths because they are by far the most dominant producer. They generally have a significant amount of overcapacity that they can call upon, to continue to control that price if prices are not where they would like them to be.”

Rare earth elements are actually not all that rare, they are just difficult and expensive to extract from the ground and process for use in various industries. Besides China, countries such as Vietnam, Brazil, Russia, India, Australia, and even the U.S. have large reserves of REE.

Processed REEs are a group of 17 elements — such as neodymium, praseodymium and lanthanum — used in almost all modern technology. 

Black believes it could take decades for the U.S. and other countries to create their own REE domestic supply chains and that China is not going to give up its global market share of REEs without a fight.

“We are still years away from even getting to that point, but if it does start to occur, what is China’s reaction going to be?” Black said. “They are going to cut their prices again, and unfortunately, in many democracies, we can’t resist the bargain.”

Bringing operations back to the US

One of the companies bringing back rare earth mining and processing to the U.S. is California-based MP Materials (NYSE: MP).

In April, the company began construction on a 200,000-square-foot REE magnet facility in Fort Worth, Texas, making it the first rare earths magnet manufacturing plant of its kind to be built in the U.S.

“Our target is to begin a gradual production ramp in late 2023, starting with neodymium alloys, then expanding into a finished neodymium magnet production around 2025,” Matt Sloustcher, senior vice president of communications at MP Materials, told FreightWaves.

MP Materials also announced an agreement with General Motors to supply magnets from the Fort Worth factory for up to 500,000 GM electric vehicle motors per year once the facility becomes operational.

The Fort Worth magnetics factory will source materials from the company’s mine in Mountain Pass.

“MP Materials produced 42,413 metric tons of [REE] in concentrate in 2021,” Sloustcher said. “This represents the highest rare earth production in U.S. and Mountain Pass history.”

The Biden administration also recently awarded a $35 million contract to MP Materials “to establish a full end-to-end domestic permanent magnet supply chain.” As part of the contract, MP Materials committed to investing an additional $700 million and creating more than 350 jobs in the U.S. by 2024.

Two other companies — Australia-based Lynas Rare Earths Corp. (ASX: LYC) and Utah-based Energy Fuels Inc. — have also taken steps to bring rare earth mining and processing back to the U.S.

Lakewood, Colorado-based Energy Fuels (NYSE: UUUU) began making shipments of a high-purity mixed rare earth carbonate to Europe last year.

Energy Fuels extracts the carbonate from a mine in southern Georgia, shipping it to a Utah processing plant and finally to a rare earth elements separation facility in Estonia.

“We are still receiving monazite sand from Chemours’ Georgia plant and processing it into a high-purity mixed rare earth carbonate at our White Mesa Mill in Utah, which we are shipping/selling to a plant in Estonia,” Curtis Moore, vice president of marketing and corporate development for Energy Fuels, told FreightWaves.

Moore also said Energy Fuels still plans to install commercial-scale rare earth separation infrastructure at the Utah mill in the next couple of years, a $100 million to $200 million investment.

“We are currently doing pilot-scale separations at the mill, producing about 2 kilograms of high-purity neodymium-praseodymium oxide per day,” Moore said.

Another big development for U.S. rare earths supply chains is the recent Department of Defense (DOD) award to Lynas to build a first-of-its-kind commercial heavy REE separation facility to be located within an existing industrial area on the Gulf Coast of Texas.

The $120 million DOD grant aims to provide REE raw materials for industries such as electric vehicles, wind turbines and electronics. It is scheduled to be open by 2025.

The most recent DOD award to Lynas follows a $30 million grant Lynas received last year to build a REE separation facility. Last year, Lynas was considering a site in Hondo, Texas, for an REE separation facility, according to a release.

Lynas said it will build both the commercial heavy REE plant and the light rare earths separation plant on the same site. The company will supply mixed rare earth carbonate feedstock from its Mount Weld mine in Western Australia but also plans to work with third-party suppliers.

“The development of a U.S. heavy rare earths separation facility is an important part of our accelerated growth plan, and we look forward to not only meeting the rare earth needs of the U.S. government, but also reinvigorating the local rare earths market,” Amanda Lacaze, CEO and managing director of Lynas Rare Earths, said in a statement.

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  1. Russ Ahearn

    Just saying thank you Messrs Mahoney & Black. Mr. Blacks comment “…can’t resist a bargain…”, quite telling, (see Russia discounts oil by $30/bl, and many countries purchasing despite sanctions 2° steep discount). Good piece. Thank you again.

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Noi Mahoney

Noi Mahoney is a Texas-based journalist who covers cross-border trade, logistics and supply chains for FreightWaves. He graduated from the University of Texas at Austin with a degree in English in 1998. Mahoney has more than 20 years experience as a journalist, working for newspapers in Maryland and Texas. Contact [email protected]