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The Pentagon is scrambling to find a way to develop the United States’ rare earths mining capability as the trade war with China threatens to disrupt the flow of the critical minerals to the United States, according to a Reuters exclusive.
At present, about 85% the world’s rare earths mining and refining capacity is in China, and because of this, the United States finds itself in a risky position. This position was made even risker when just weeks ago, China threatened to restrict rare earths exports to the United States. If that happened, production of items that require the minerals would be disrupted, which include iPhones and other consumer electronics, lasers, electric vehicles, and much more.
The United States imports 80% of the rare earths it used between 2014 and 2017, with the United States being the home only to one rare earths mining operation: Mountain Pass. But while Mountain Pass can mine the minerals, it doesn’t have the power to process them. So, it ships the minerals to China to be refined. Ring the alarm bells.
On top of that, the owner of Mountain Pass, MP Materials, is backed in part by a Chinese company, who holds a minority, non-voting stake in MP Materials. Ring ring.
To stave off what could be a disastrous situation, Washington is finally ready to act, asking miners to come up with plans to develop rare earths on US soil, including both the mining and the processing facilities, according to Reuters. The Pentagon is asking for a quick response from interested miners—just a few weeks, in fact, by July 31.
Along with the request for interested miners, the Pentagon also asked manufacturers to detail their future demand for rare earths to better assess the country’s need for the minerals going forward.
Even if the Pentagon is successful in developing rare earth minerals in the United States, it will be years before the United States can shake its China minerals habit.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.
The reason the Pentagon is getting involved is that at present, about 85% the world’s rare earths mining and refining capacity is in China, and because of this, the United States finds itself in a risky position. This position was made even riskier when just weeks ago, China threatened to impose an embargo on the supply of rare earth metals to the United States if President Trump continues to escalate the trade war and tries to push China into a corner. That could potentially cripple large swathes of US industry from smartphones, turbines, lasers, missiles, advanced weapon sensors, stealth technology and jamming technology to name but a few. By the time the United States has found alternative supplies, the damage would have been done.
The United States is reported to import 80% of the rare earths it uses. And while the United States is home to a rare earths mining operation at Mountain Pass, that operation can only mine the minerals but it doesn’t have the ability to refine them. They have to be shipped to China to be refined.
China has shown its mettle during the trade war with the United States when President Trump blinked first by easing restrictions on Huawei, the Chinese tech giant, in a bid to get trade talks moving again.
Washington had earlier announced a ban that restricts Huawei’s ability to do business with US firms due to national security concerns.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London