Unlocking the Future: How China’s Export Limits on Rare Earths are Boosting America’s Quest for Domestic Mining

OMAHA, Neb. (AP) — Recently, the only rare earths mine in America has been feeling the heat from companies eager to understand the impact of China’s new export limits. These minerals are crucial for both military uses and numerous high-tech devices. With tensions ramping up between the U.S. and China, this situation has become quite urgent.

"Companies are reaching out to us left and right,” said Matt Sloustcher, a spokesperson for MP Materials, the operator of California’s Mountain Pass mine. The trade war could potentially lead to a severe shortage of these essential elements if conditions do not change quickly.

Rare earth elements are not as rare as their name implies. They are vital in the production of electric vehicles, smartphones, advanced military aircraft, and more. However, extracting them in profitable concentrations is challenging. The current demand for these elements is so high that the Mountain Pass mine can’t satisfy all U.S. needs.

Due to recent tariffs and export restrictions, MP Materials is halting ore shipments to China—a direct response to these policies. "Selling our critical minerals at 125% tariffs isn’t sensible,” the company stated. Many manufacturers using these materials might face rising costs. Still, some experts believe the current market can handle demand for now.

The main products from the Mountain Pass mine are neodymium and praseodymium, essential for making powerful magnets used in electric vehicles and wind turbines. However, heavy rare earth elements like terbium and dysprosium, which are crucial for high-temperature applications, are harder to come by. Prices for these elements are starting to skyrocket; for instance, terbium’s price has surged by 24%, hitting $933 per kilogram recently.

China plays a pivotal role in the rare earth market, producing about 270,000 metric tons last year, compared to just 45,000 tons from the U.S. This heavy reliance on Chinese supplies prompted Trump’s administration to push for additional U.S. mining efforts. As part of this strategy, two companies aim to develop new mines in Nebraska and Montana, with hopes that government support will ease their fundraising challenges.

NioCorp, one of those companies, has been working tirelessly to secure the necessary funds for their Nebraska project. "We’ve got to address the leverage situation China holds over these critical minerals,” said NioCorp’s CEO Mark Smith, advocating for domestic production.

Meanwhile, MP Materials is scrambling to enhance its processing abilities to mitigate the impact of China’s restrictions. They received $45 million in support previously and have already invested nearly $1 billion since 2020. However, they still lack the capability to process some of the heavy rare earths China restricts.

Automakers, who heavily rely on these materials, are currently tight-lipped about their dependence and plans to adjust to rising costs from these tariffs. Defense contractors like Boeing and Lockheed Martin are also watching the situation closely as they are among the companies affected by China’s limits.

Manufacturers are already feeling pressure. Some battery producers may run low on essential elements soon. Prices for certain materials have doubled, and automakers are considering absorbing these costs temporarily. A 25% tariff on car imports has been expected to inflate prices further, though the president hinted at a possible reprieve for the industry.

Historically, the U.S. was self-sufficient in rare earths until the late 1990s when cheaper Chinese imports changed the landscape. With innovations in technology and a rising demand for electric vehicles, the need for these materials has escalated.

NioCorp, in a positive turn, has started exploratory drilling to substantiate claims of significant rare earth mineral reserves in Nebraska, necessary for securing funding. However, establishing a new mine will take years. A similar effort in Montana is underway, showcasing the potential in both states.

As the U.S. looks to reduce its dependence on Chinese rare earths, the next few years will likely serve as a pivotal moment. Continued innovation and government support could reshape the landscape of rare earth production, lessening the nation’s reliance on its largest geopolitical rival.

For those interested in deeper insights on rare earth elements, Benchmark Mineral Intelligence provides valuable analysis and updates on global trends.

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