As relations between the United States and China worsen, Washington is left vulnerable in one industry, namely rare-earth elements (REE). China has a commanding monopoly in producing and processing these minerals, including cobalt, lithium, and nickel. In escalatory fashion, China has decided to restrict gallium and germanium starting August 1. These materials are critical to producing technologies as varied and vital as semiconductors, missile systems, and solar cells. Given the inevitability that domestic demand for REE will increase over time, the United States must work quickly to secure access to them or else remain dangerously dependent on a strategic competitor for critical resources.

The United States Must Further Exploit Domestic Resources

The good news is that the United States has plentiful natural reserves of many of these minerals. The only problem is that they are not adequately exploited. Even though the country was once a leader in mining and refining REE into finished products, the United States is saddled with stringent regulations that make these practices exponentially more expensive.

The United States, while wholly reliant on foreign sources, was once the leader in mining and refining rare-earth minerals from the mid-1960s to the mid-1980s. Environmental concerns, including the leakage of toxic chemicals, led to onerous regulations on mining operations. The new laws made it unprofitable for companies to mine REE, and as a result, domestic production floundered. Currently, the Mountain Pass mine, a 400-foot pit in the foothills of California’s Clark Mountain Range, is the only remaining rare earth mine in the United States. Despite this, the federal government is starting to make extraction a priority.

In September 2022, the Department of Energy (DOE) announced up to $156 million in funding from President Joe Biden’s Bipartisan Infrastructure Law for a first-of-a-kind facility to extract and separate REE from unconventional sources like mining waste. The DOE built on this in April 2023 by allocating $16 million in funding to reshore critical mineral supply chains to America and reduce reliance on competitors like China. As part of President Biden’s Investing in America agenda, DOE has allocated $32 million for projects to help build facilities that produce REE and other critical minerals and materials from domestic coal-based resources. While these are positive and necessary developments, given the importance of economic independence from China, more resources must be devoted to these projects.

Expanding domestic REE projects will become more critical in a multipolar world. China has recently lashed out at the United States and its partners Japan and Australia, threatening to cut them off from mineral exports. China has mainly aimed to impose a chokehold on the U.S. defense industry by emphasizing its monopoly over REE. Through its actions, Beijing has shown that it is willing to apply maximum pressure on American access to these crucial commodities.

To ensure the expansion of REE excavation and processing, Washington must work to make these processes as environmentally friendly as possible to comply with regulations. While China has struggled to find clean methods to acquire these materials, the United States can do so by leaning more heavily on partners with developed expertise in advanced excavation and processing techniques via the U.S.-led Minerals Security Partnership (MSP), a multilateral initiative to bolster critical mineral supply chains.

Partners Provide Effective Examples

France, in particular, has rightly recognized the importance of reducing REE dependence on China and the need to find alternative supply sources. French geologists have been steadily finding more environmentally friendly approaches to extracting minerals through bacteria that digest mine slag heaps. France has also devoted billions of dollars to its innovative mining research. Washington should follow suit.

German companies are leading the charge in reopening mines to extract valuable materials like fluorspar for steel and gasoline production. German expertise and mining technology have advanced to the point where German companies like ThyssenKrupp Materials were able to snatch a REE deal from a Chinese company in Australia.

In terms of incentive structures, South Korea has shown its commitment to achieving mineral independence by providing its battery industry with tax credits on investments, augmented credit lines, interest rate reductions, and decreased insurance premiums. Seoul also aims to support research projects and offer tax incentives for businesses engaged in the rare metal industry, with a target of involving 100 firms by 2025.

Adopting partners' practices should be independent of relying on them as sources for REE. While friend-shoring may appear to be an appealing strategy for the United States, overreliance on other countries for resources is playing with fire, even if these countries are allies. Collaboration with partners will be necessary, but self-sufficiency will be essential for the United States to gain true independence from China in the REE arena.

Excavation and processing operations at the United States’ only existing rare earth mine, the Mountain Pass, should be expanded further. Companies capable of leading expansion efforts, like MP Materials, should benefit from incentives that improve the profitability of operations. Additionally, new mines can be opened in states like Wyoming, home to the Bear Lodge mountain range, which holds one of the country's richest and highest-grade rare earth deposits.

Now is the time for the United States to increase investment in cleaner extraction and processing methods. Learning what has worked in allied countries, including investing in research, expanding mining projects, and setting up profitable incentive structures, will be necessary for the national rare earth industry to flourish. Implementing these strategies will take time. However, the sooner the United States adopts these measures, the more likely it can gain more independence from China’s stranglehold on these strategic minerals.

Alex Little is an MS graduate of Georgia Tech and specializes in Russian and Central Asian affairs.

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