The new US plan to rival China and end cornering of market in rare earth metals

The United States has made previous attempts to reemerge as a dominant player in a rare earths supply chain that is responsible for some of the most important materials involved in electric vehicle production, battery making, renewable energy systems and technology manufacturing.

It follows Biden signing an executive order in February designed to review gaps in the domestic supply chains for rare earths, medical devices, chips and other key resources, and in March the Department of Energy announcing a $30 million initiative that will tap into researching and securing the U.S.

“It’s technically possible to try and rebuild the entire supply chain because we once had it,” says Jane Nakano, a senior fellow at the Center for Strategic International Studies’ Energy Security and Climate Change Program.

Then rare earths are individually separated into oxides, metals and finally magnets that are used in everything from missiles to wind turbines, medical devices, power tools, cellphones and motors for hybrid and electric vehicles.

Rare earth metals are actually more abundant than their name suggests but extracting, processing and refining are tricky for a myriad of technical and environmental reasons.

Demand for them exploded in recent years with the growth of technology and will continue to climb amid the ongoing race to create a large electric vehicle market.

According to one 2018 report from the Department of Defense, China “strategically flooded the global market” with rare earths at cheaper prices to drive out and deter current and future competitors.

Trade wars and retaliatory tariffs can leave many companies sourcing these crucial materials in limbo, even if they make up just a small portion of a product.

Market dynamics can escalate so quickly that companies without a diversified supply chain bid aggressively, materials get scarce and prices go up, Kose said.

MP Materials bought the mine and restarted production in 2017.

In recent years, the Las Vegas-headquartered company received a myriad of grants and contracts from the Department of Defense and Department of Energy to research and improve domestic capabilities.

Ultimately, the company, which went public last year through a SPAC merger, plans to “restore the full rare earth supply chain” to the U.S., the spokesman said, including refining and separation, and magnet-making by 2025, as the domestic electric vehicle market ramps up production.

Another key player in the space is Lynas Corporation, one of the largest processors of rare earths outside China.

While companies like Lynas and MP Materials are eager to ramp up the domestic supply chains, extracting rare earths is a difficult process due to a combination of environmental, technical and political factors.

Many rare earth elements reside among mineral deposits with radioactive materials that can leach into the water table.

Lynas has said that the low-levels of radioactive waste were not dangerous and the Malaysian government ultimately renewed the license and green-lighted a construction plan for a permanent disposal and waste treatment facility in August 2020.

Some emerging battery recycling leaders include Redwood Materials, a start-up from former Tesla CTO JB Straubel, and Li-Cycle, which recently announced plans to go public through a SPAC-merger.

The Ames Laboratory in Iowa is one of the many Department of Energy’s national laboratories working on projects aimed at substituting rare earths or finding new, more eco-friendly methods to recover them.

In a recent interview with CNBC following the UAE’s Regional Climate Dialogue, Kerry addressed the president’s $2 trillion infrastructure proposal in relation to rivalry with China.

“I think that this is a huge economic opportunity, not just for the United States, with people all around the world,” Kerry said.

The pace of demand growth is expected to rise rapidly over the next few years as sales of electric vehicles are slated to reach 12.2 million in 2025, according to data from IHS Markit.

Building a strong U.S.

to reach “massive levels of production,” and build out an extraction and production chain that could take up to a decade, Nakano said.

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