The United States is implementing strategies to increase domestic production and processing of rare-earth elements, aiming to reduce reliance on foreign supply, primarily from China. These efforts involve significant government investment, the development of new technologies, and public-private partnerships. The initiative addresses the critical role of rare earths in modern technology and military applications, while confronting challenges such as complex extraction processes, environmental concerns, and geopolitical considerations in regions like Greenland.
Importance of Rare Earth Elements
Rare-earth elements are vital components in modern technologies, including smartphones, electric vehicle (EV) motors, wind turbines, and military aircraft. Elements such as neodymium and dysprosium are crucial for high-torque, compact EV motors, with demand for these motors increasing by approximately 33% annually. Military applications also depend heavily on these materials; for example, an F-35 aircraft may contain over 900 pounds of rare-earth materials in its engines and electronics.
Global Supply Landscape
China currently controls approximately 90% of global rare-earth processing and refining output and about 60% of global rare-earth substance production. It holds an estimated 34% of the world's proven rare-earth ore reserves. China's market share in rare-earth production increased significantly from the 1980s. Beijing has also implemented export controls requiring licenses for products containing Chinese-sourced rare earths. According to the Center for Strategic and International Studies, China imports raw ore from various regions, including Southeast Asia and Africa, as part of a strategy to establish itself as a global rare-earth refining hub. While rare-earth elements are not inherently scarce, their extraction and refinement are challenging.
U.S. Domestic Initiatives and Investments
The U.S. government has initiated a public-private approach to foster self-sufficiency in rare-earth production. This strategy involves federal loans and stakes in key mining operations and startups.
- The Pentagon's Office of Strategic Capital (OSC) announced a partnership between Indiana-based ReElement Technologies and Vulcan Elements, a North Carolina firm producing rare-earth magnets for military applications.
- The U.S. government became the largest shareholder in MP Materials with a $400 million investment from the Pentagon's OSC. MP Materials operates the Mountain Pass mine in California, previously the only major U.S. rare-earth mine. The company is now increasing its on-site processing capabilities, having previously sent its ore to China for refining.
- Financial commitments include a $620 million loan from the Pentagon's OSC to Vulcan Elements, an additional $50 million from the Department of Commerce under the CHIPS and Science Act, and an $80 million loan to ReElement Technologies for expanding recycling and processing operations. These investments are part of a broader $7.5 billion allocation towards securing critical minerals.
Technological Approaches
ReElement Technologies states it has developed a more efficient and environmentally sustainable method for rare-earth processing and recycling, utilizing chromatography. The company operates a commercialization facility in Noblesville, Indiana, with a larger production site in Marion, Indiana, projected to begin operations next year.
ReElement Technologies CEO Mark Jensen states the company aims to be the largest producer of rare earth oxides in the United States by the end of 2026. In partnership with Vulcan Elements, ReElement aims to produce 10,000 metric tons of neodymium-iron-boron magnets within the next few years. This target represents a fraction of the approximately 230,000 tons produced globally in 2024, according to the Institute of Electrical and Electronics Engineers (IEEE). Research analyst Bert Donnes of William Blair notes that ReElement's current operations are compact compared to traditional processing facilities. The company's method, developed at Purdue University, uses large columns in a specialized filtration process to extract and purify metals from raw ore and recycle rare earths from old magnets.
Challenges and Geopolitical Considerations
The development of rare-earth production globally faces multiple challenges:
- Environmental Concerns: Historical environmental concerns at the Mountain Pass mine in California, including spills of radioactive and toxic wastewater, contributed to production halts. Aaron Mintzes, deputy policy director and counsel at Earthworks, advocates for processing methods that reduce energy and water intensity and toxicity. China itself implemented new environmental and safety regulations for rare-earth processing last year.
- Geological and Processing Complexity: Rare-earth elements are inherently challenging to extract and refine. Simon Jowitt, director of the Nevada Bureau of Mines and Geology, highlights the complexity of developing rare-earth deposits, which require a source, transportation, concentration, and specific extraction methods.
- Greenland's Obstacles: Despite U.S. interest, rare-earth mining in Greenland faces severe environmental conditions, limited infrastructure (lacking roads, railways, and local power generation), and challenging geology. Rare earths in Greenland are frequently found in eudialyte rock, for which a profitable extraction process has not yet been established, unlike carbonatite formations found in other regions. Operations in Greenland also entail substantial investment, specialized personnel requirements, and long development timelines.
- Geopolitical Interests: The United States has expressed significant interest in Greenland, partly aimed at reducing China's dominance in the global rare earth supply. Former President Donald Trump vocalized his intent regarding Greenland, stating, "We are going to do something on Greenland whether they like it or not," and noting concerns about Russia or China potentially establishing a presence there. He also reportedly threatened to seize Greenland with military power if Denmark did not agree to sell it.
- Economic Viability: Developing rare-earth production is economically challenging, partly due to China's historical practice of influencing market prices by increasing supply.
Brent Elliott, a research associate professor of geology at the University of Texas, suggests the U.S. possesses sufficient resources but faces challenges in environmentally and socially responsible extraction and processing. He observes that China's historical processing capabilities scaled faster due to differing regulatory environments. Many industry experts suggest that the U.S. should prioritize supporting existing rare earth projects in more accessible locations within the U.S. and allied nations like Australia, considering them more viable for quickly expanding the rare earth supply chain. Mr. Elliott views current grants and critical-mineral-focused funding as potentially positioning the U.S. for success in this sector.