It is expected that the production of key components such as electric vehicles, smartphones, and fighter jets in the United States will rapidly expand in the coming years, as the Trump administration intensifies efforts to establish key mineral industries in the country to break China's control over global supply chains.
The federal government has injected hundreds of millions of dollars into American companies, reaching agreements with one company to set minimum prices for some key minerals produced in the U.S., and investigating foreign-supplied supplies. "This is the Manhattan Project moment for rare earths," said Joshua Ballard, CEO of an American rare earth company, which plans to start producing rare earth magnets used in many products next year.
The White House has prioritized reviving the domestic critical minerals industry, which became urgent after Beijing used its near-monopoly on products to force the U.S. back to the negotiating table during the trade war. President Trump said this week that China "cleverly took over the monopoly on global magnets," but he expressed confidence in securing supplies, as the U.S. has "bigger and better chips." "In a relatively short time, we will have a lot of magnets, actually, we will have so many that we won't know what to do with them," he said, while hosting South Korean President Yoon Suk-yeol.
Industry insiders, analysts, and lawmakers have long warned that the U.S. reliance on China for critical minerals—a list of 50 minerals including 17 rare earth elements in high demand—constitutes national vulnerability. These hard-to-pronounce elements are needed in smartphones, wind turbines, robots, as well as missiles, submarines, and fighter jets. In a March executive order, Trump stated, "Our national and economic security is now seriously threatened by the production of minerals by hostile foreign powers." It was not until Beijing imposed export restrictions on several rare earths in April—causing Ford's electric vehicle production to temporarily halt—that Gracelin Baskaran, director of the Critical Minerals Security Program at the Washington-based Center for Strategic and International Studies, said, "This seemingly distant issue over the past decade has now directly affected us."
Trump said on Monday that if Beijing does not export magnets to the U.S., he might impose 200% tariffs on Chinese goods, but noted, "this may have already passed." Instead, he said he might withhold aircraft parts to make China's Boeing planes manufactured in the U.S. grounded. When asked about this leverage, Chinese Foreign Ministry spokesperson Guo Jianming said on Tuesday that Beijing "follows the principles of mutual respect, peaceful coexistence, and win-win cooperation" when dealing with relations with the U.S. Guo said, "We hope the U.S. works with us to promote the stable, good, and sustainable development of bilateral relations."
The Pentagon is investing $400 million in rare earth producer MP Materials. This month, it provided the U.S. company with a $150 million loan and committed to ensuring that every magnet produced by its new large-scale factory would be purchased, setting a ten-year minimum price for its neodymium and praseodymium products. "It looks like we finally have taken action to address this issue and make these projects a reality," said Mark Smith, CEO of NioCorp, an American company raising $1.2 billion to produce niobium, titanium, bauxite, and rare earth elements in Nebraska.
Smith said that for four decades, he had watched the U.S. hand over this industry to China, which dominated the supply chain by ignoring environmental issues, investing in mines globally, developing advanced processing technologies, and undercutting competitors with low prices. U.S. companies have previously struggled to create viable business models in this field, but these efforts were ineffective against the impact of China's low-priced products, forcing potential investors to retreat.
NioCorp recently received up to $10 million in funding from the Pentagon to help cover summer exploration drilling costs. Although it is unclear whether the government will extend the minimum price agreement to other U.S. companies, Smith said that the current support is "unbelievable" compared to the past. He said that the price floor "completely broke the long-standing operational model of China."
Approximately 220 miles from MP Materials' magnet factory under construction in Fort Worth, Texas, the only U.S. factory currently manufacturing rare earth magnets, Noveon Magnetics, is also located near South Austin. The factory is increasing production and plans to produce 2,000 tons of magnets annually. Scott Dunn, CEO of Noveon Magnetics, spoke about the Pentagon's partnership with MP Materials, saying, "I do hope and believe that this is not the last effort by the U.S. government."
According to analysts at Benchmark Mineral Intelligence, even if all new capacity comes online in the coming years, U.S. companies will still be unable to meet the annual demand of approximately 35,000 tons of magnets in North America. And within the next decade, demand could double. Ballard said that its U.S. rare earth plan will start producing around 600 tons of magnets in Oklahoma next year, and the government can provide incentives to prevent U.S. buyers from choosing cheaper Chinese products once these products become widely available again.
This year's massive tax cut and spending bill includes $2 billion for the Pentagon to increase the stockpile of important minerals in the U.S., and an additional $5 billion investment to develop these supply chains by 2029.
The Pentagon said that between 2020 and 2024, it has awarded more than $439 million to establish a domestic rare earth supply chain. In addition to domestic investments, Trump has tried to ensure access to key minerals outside the U.S., including from Greenland and Ukraine. A peace agreement between the Democratic Republic of Congo and Rwanda facilitated by the government may offer opportunities to access key minerals, but it is too early to judge whether these efforts will succeed.
Derek Scissors, a senior researcher at the American Enterprise Institute, expressed concern that if Trump secures a guarantee from China on rare earth supply in trade negotiations, he might consider it a success. "I don't think such a deal will be reached, or even if it is, it won't last," Scissors said. "But this poses a threat to U.S. economic independence." Rare metal expert David Abraham, in his book "The Elements of Power," mentioned that new U.S. mines will take years to come online. "Everyone agrees that the U.S. still needs to reach an agreement with China because the amount of rare earths and special magnets required by U.S. companies exceeds domestic production capacity," he said.
Original article: https://www.toutiao.com/article/7543389299387974159/
Statement: This article represents the views of the author. Please express your opinion by clicking on the 【top/foot】 buttons below.