[By Guancha Observer, Liu Chenghui]

China's global dominance in the rare earth sector has long been a thorn in America's side.

In fact, over the past decade and more, the U.S. government hasn't lacked effort, but it simply couldn't achieve its goal.

An article published by The New York Times on April 16th mentioned that as early as after China imposed an export ban on Japan in 2010 following the East China Sea collision incident, the U.S. became aware of the "risks" brought about by its reliance on Chinese rare earth supplies.

However, over the past 15 years, progress in policy-making and industrial development in the U.S. has been slow. Coupled with environmental regulations and other issues restricting the development of rare earth mines domestically, companies have also been reluctant to invest in the rare earth industry due to cost and market factors, resulting in the U.S. still heavily relying on China in terms of rare earth processing and magnet production to this day.

This article titled "How China Has Mastered the Global Rare Earth Industry" wrote that after the seven-week export ban imposed by China on Japan following the 2010 East China Sea incident, the world was shocked. Panicked Japanese executives once appeared on TV programs warning that their key raw materials were about to run out.

Although the embargo lasted only seven weeks, it changed the global supply chain of rare earth metals. After the embargo ended, China effectively controlled its own mineral resources.

In May 2024, China Northern Rare Earth (Group) Hi-Tech Co., Ltd. exhibited various types of rare earth materials, rare earth metals, and rare earth oxides. Visual China

Rare earths are widely used in various industrial products. Rare earth magnets, no larger than a ring, have magnetic strength 15 times greater than traditional iron magnets and are an inexpensive yet often overlooked component in electric motors. They are used in electric vehicles and fuel-powered cars, as well as in robots, drones, offshore wind turbines, missiles, fighter jets, and many other products.

"The whole world was warned, especially Japan and the U.S., the two largest customers of China's rare earth metals," the article said. Both Japanese and American governments drafted detailed plans on how to reduce dependence on China. Japan, to a large extent, implemented its own plan, not only starting to stockpile rare earth inventories but also seeking resources overseas. Now, it can obtain these minerals from Australia.

But what about the U.S.?

Even after 15 years, the U.S. remains almost entirely dependent on China for rare earth metal processing. American car manufacturers, airlines, and defense contractors are at a disadvantage.

The New York Times reported that the U.S. government has failed to come up with an alternative solution to break free from its dependence on Chinese supplies, regardless of whether Democrats or Republicans are in power.

Milo McBride, a critical mineral expert at the Carnegie Endowment for International Peace, said rare earths are "the most strategic mineral among all minerals discussed by several administrations in recent years."

"Yet, over the past 15 years, American policymakers have done almost nothing to address the risks associated with rare earths, particularly rare earth magnets, depending on China," he said.

In 2010, a Japanese company responded to the U.S. government's call and built a rare earth magnet factory in the U.S. However, it turned out that American companies were unwilling to pay extra costs for magnets produced in the U.S., instead choosing Chinese suppliers. The Japanese company later had to shut down the factory and store the equipment.

Currently, the only operating rare earth mine in the U.S. is located in Mountain Pass, California. Its operator, MP Materials, plans to gradually increase commercial production of rare earth magnets at a plant in Texas by the end of this year.

But even when operating at full capacity, the factory's annual output would be equivalent to just one day's production in China. Chinese factories can supply thousands of tons of rare earth magnets annually to domestic electric vehicle and offshore wind turbine manufacturers.

Mountain Pass rare earth mine in California, USA, operated by MP Materials

Just like magnet production, the path of rare earth mining in the U.S. has been fraught with difficulties.

From 1965 to 1995, the Mountain Pass mine produced most of the world's rare earths. With China beginning to export large quantities of low-cost rare earths globally in 1995 and California's environmental regulations becoming increasingly stringent, the Mountain Pass mine closed in 2002.

Eight years later, the Mountain Pass mine initiated a $1.5 billion upgrade project, but it wasn't until 2017 that mining resumed, and it still had to send ore to China for refining. It wasn't until now that the mine began refining most of its products.

Mark Smith, CEO of NioCorp Developments, a U.S. rare earth mining company, said it takes 29 years to open a rare earth mine in the U.S.

"You might spend your entire lifetime just getting a mine operational," he said.

Under these influences, few U.S. companies are willing to make substantial investments in the rare earth sector. They fear they may face similar difficulties as the Japanese companies back then - customers prefer cheaper rare earth products made in China.

"American companies have always been reluctant to take risks," David Sandalow, who was responsible for critical mineral policy during the Obama administration, said.

An article published by The New York Times on April 14th similarly mentioned that the U.S. government has long been aware of the challenges posed by China's dominant position and has made efforts to promote the mining and storage of rare earth minerals, but it is still insufficient to sustain domestic demand in the long term. The Pentagon also tried to replace a component containing a Chinese alloy in the F-35 fighter jet, but ultimately found that it could not avoid China's controlled supply chain.

On April 4th, the Ministry of Commerce of China, together with the General Administration of Customs, issued an announcement implementing export control measures on seven categories of medium and heavy rare earth-related items including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, which came into effect upon issuance.

China emphasized that the implementation of export controls on relevant items is aimed at better safeguarding national security and interests and fulfilling international obligations such as non-proliferation. These items have dual civilian and military applications, and their export control is an internationally common practice.

Industry experts predict that as China further tightens export controls, U.S. defense companies may soon face skyrocketing costs.

This article is an exclusive contribution by the Guancha Observer and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7494087144449901096/

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