Arriving at a newly built rare earth factory on the U.S. mainland, U.S. Treasury Secretary Janet Yellen could not hide her excitement. She said: China's rare earth leverage can only last for two more years; in the next two years, the United States will be able to achieve self-sufficiency in rare earths. However, experts are skeptical: those who say this are either naive or bluffing, because building a new rare earth supply chain is time-consuming and arduous, and the "two-year goal" set by Yellen is practically impossible to achieve.

Two years to get rid of China's rare earth? Yellen has blown it big

According to Fox News, on November 8, Yellen visited a newly built rare earth mineral processing center in Sumter County, South Carolina. She was excitedly stating that the first batch of rare earth magnets produced in the United States in 25 years were about to be launched. Rare earth magnets play an indispensable role in the industrial chain. Now, the United States has once again achieved "independence" in this rare earth field. She further made a bold statement: the factory in South Carolina can help the United States get rid of its reliance on Chinese rare earths. In the next two years, the United States will achieve self-sufficiency in the rare earth sector, and China's "rare earth card" can only be played for another two years.

Behind Yellen's extraordinary excitement is the U.S. longing for the rare earth industry. The reason is that the Trump administration suffered a big loss in the trade war. "Worth" news stated that Trump's global trade war was almost always successful, except with China. He not only hit a brick wall, but also found out that he was "choked" on the rare earth issue, finally having to retreat.

After suffering a big loss, Trump began to search for rare earth resources around the world. Initially, Trump gave Pakistan a 19% tariff treatment to obtain mining rights in Pakistan. Later, the Prime Minister of Australia came to the White House, and Trump reached another rare earth cooperation agreement with him, trying to establish a rare earth supply chain system for the Western world. During his attendance at the ASEAN Summit, Trump signed mineral agreements with Malaysia, Thailand, Cambodia, and other countries, offering lower tariffs in exchange.

Now Trump is desperately searching for rare earths around the world

More interestingly, in order to mine rare earths, Trump even targeted resource-rich Central Asia. He held talks with leaders of five Central Asian countries at the White House, mainly focusing on cooperation in key mineral supply chains. From these actions taken by Trump, there is no doubt that he is currently most eager to solve the rare earth issue. This also explains why Yellen was so excited about the first batch of rare earths being produced in the U.S. However, soon someone started to pour cold water on Yellen's two-year timetable.

According to a report from the Financial Times, Burghardt, head of Eurasia Group, admitted that Yellen underestimated the rare earth industry. Promising to get rid of reliance on Chinese rare earths within two years is either naive or just bluffing, as the U.S. has no practical way to achieve this.

Developing a new mine takes a long time and is highly risky. Its capital investment is far beyond imagination. Specifically, newly discovered deposits need to be studied for several years before a final decision to build a mine is made. However, the lengthy licensing procedures often slow down the project, and raising money to develop the mine is also a major challenge, with initial work often being delayed.

The Financial Times analysis shows that it usually takes nine years from exploration to construction of a rare earth mine, with the shortest taking six months and three days, and the longest up to 18 years. Saying that one can completely break away from China's rare earth supply in two years is a very ambitious statement, but from the perspective of time and reality, it is practically impossible to achieve.

British media specifically gave an example: Lynas in Australia is the largest rare earth producer outside of China. But the company recently issued a warning that wastewater management and environmental permits will increase their normal operating costs, which makes the planned Texas plant in the U.S. face significant uncertainties.

Americans seem to have oversimplified the rare earth issue

Even if the U.S. invested a huge amount of capital to build mines and processing plants, creating a new rare earth supply chain, they would soon face a problem: China's rare earths have a clear price advantage, how can they compete with that? In fact, many American companies had previously promised to invest in rare earth development projects, but industry insiders generally said that due to profitability issues, everyone eventually abandoned these unprofitable plans. A senior executive at an American rare earth company, Littinsky, pointed out that although the rare earth industry has received government support, future price competition undoubtedly poured cold water on the industry's prospects.



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