Trump Leads Global Rush for Rare-Earth Elements
Rare-earth elements (RREs), often called rare-earth metals, are a group of 17 elements that have become the focus of intense international debate and negotiation. Unless you majored in science or carry a periodic table in your wallet or pocketbook, it’s highly unlikely you’ve heard of them before. The more commonly used elements include Cerium, Lanthanum, Neodymium and Praseodymium.
The term rare-earth element is a bit of a misnomer. They are actually quite abundant within the earth’s crust. Instead, they are called “rare” because they are typically found in low concentrations and mixed with other minerals. The refining process to extract and purify the REEs from other materials is a highly complex, time-consuming and expensive process.
REEs are used in the manufacture of military fighter jets, submarines, missiles, radar systems and other advanced defense systems. Roughly a third of all REEs are used to create magnets. In dollar terms, rare-earth magnets account for roughly 80% of the total value of the REE market. The strongest magnets are created using Neodymium and Samarium. More specialized magnets include Dysprosium and Terbium to enhance performance and resistance to heat. They serve as key components within electric vehicle motors, generators for wind turbines, MRI machines and many consumer products such as smartphones and computer hard drives.
For many nations around the world, demand for REEs for both military and civilian applications have soared in recent years. According to the U.S. Department of the Interior (USDOI), in 2024, global production of REEs reached 390,000 metric tons. That’s up threefold from the 132,000 metric tons produced in 2017.
The challenge, however, is that most of that production is heavily concentrated in China. Last year, China mined 270,000 metric tons of REEs, accounting for 70% of the world’s total production. The U.S. was a distant second, producing just 45,000 metric tons, or 12% of global production. Myanmar accounted for 8% of global REE production while Australia and Nigeria tied for fourth with 3% each.
Perhaps more important are the estimated global reserves of REEs that remain unmined. The USDOI estimates 90 million metric tons of REEs have yet to be mined. Unfortunately, 49% of those untapped reserves are in China. The U.S. has just 1.9 million metric tons of unmined REEs – just 2% of the world’s total reserves.
For decades, the Mountain Pass Mine in California has served as the sole operational REE mine in the U.S. In July, the Brook Mine in Wyoming became America’s first new REE mine to be opened in 70 years. President Trump has made it a priority to further expand U.S. production of REEs.
But mining the REEs is just half the challenge global leaders are facing. Ultimately, once mined, the REEs must be processed and refined to their desired level of purity. This is a highly technical and complex process that China maintains a stranglehold on. According to the International Energy Administration, China accounts for 91% of the world’s refinement of REEs. Here in the U.S., more than 95% of all the REEs we mine must then be shipped overseas – primarily to China – to be refined and processed.
Consequently, China’s abundance of REEs, combined with its expertise and technology to refine and process them, have created a virtual monopoly in the global supply chain of REEs. For China, it’s created a tremendous amount of leverage in global trade and foreign policy negotiations. In April, China imposed severe restrictions on the export of certain REEs and magnets to the European Union that heavily targeted their defense, energy and automotive industries. The restrictions quickly forced many European Union manufacturing and production lines to a grinding halt.
Trump has signed executive orders to boost domestic production of REEs. He’s also worked to secure American access to REEs from key foreign producers. But this is not an overnight fix. In his ongoing negotiations with China, Trump must address China’s unfair trade practices as well as China’s close relationships with both Russia and North Korea. Each side has its strengths and weaknesses it must try and negotiate from. But when it comes to REEs, China has a very large negotiating chip in its back pocket.
Mark M. Grywacheski, Investment Advisor
Quad Cities Investment Group is a Registered Investment Adviser.
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