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How rare earths became rare in the U.S.

A trade war plus increasingly bellicose rhetoric coming from China has elevated the priority of a Trump initiative to bring back rare earth mining, processing and production to the U.S., but the plan has its naysayers.

On Friday, the New York Times cast doubt on President Trump’s rare earth strategy:

“The Trump administration is encouraging development of a domestic industry to produce critical metals now dominated by Chinese companies, but few players show clear long-term promise,” reported the Times.

Twenty-three years ago, the U.S. mined and produced over ninety percent of its own rare earths, metals critical to high-technology and, more importantly, essential to America’s most advanced weapons systems. Before the COVID-19 pandemic revealed weaknesses in the U.S. industrial manufacturing supply chain with regard to medical equipment and pharmaceuticals, the Trump administration had launched a plan to reestablish domestic rare earth production.

A Commerce Department report, “A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals,” was released in response to an executive order signed by President Trump in 2017, and described the problem of importing critical minerals, such as rare earths, from foreign sources:

“The United States is heavily dependent on foreign sources of critical minerals and on foreign supply chains resulting in the potential for strategic vulnerabilities to both our economy and military. Mitigating these risks is important and consistent with our country’s National Security Strategy and National Defense Strategy to promote American prosperity and to preserve peace through strength.”

Prior to the U.S. importing rare earths, the Mountain Pass mine located in the Mojave Desert in California produced enough to fulfill all domestic needs, and also supplied most of the rest of the world’s as well. In 1997, all that came to a screeching halt when the mine reported to authorities that it had accidentally spilled fresh water into the surrounding desert while cleaning its wastewater pipeline. The company’s report drew the attention of more than two dozen federal, state and local environmental agencies that immediately descended on the mine and effectively shut it down. After an extensive clean-up that took over two years and millions of dollars spent by the mine, no contamination was found. However, vindication was not enough to save the mine, as environmental regulations raised the cost of doing business and drove the mine to shut down.

Before the mine had closed, Baotou Rare Earths, a Chinese company, opened an office in San Francisco. In an interview with this reporter in 1998, Wiji Cui, a representative of Baotou said that his state-owned company was prepared to take over the global market for rare earths. Baotou succeeded, and for years, the U.S. imported most of its rare earths from China. Now the Trump administration is out to reverse course by encouraging domestic companies to mine, manufacture and provide the U.S. with its own supply of rare earths. By using the Defense Production Act to provide seed money to corporations, the administration hopes, among other things, to “advance transformational research, development and deployment across critical mineral supply chains” and “strengthen America’s critical mineral supply chains and defense industrial base,” according to the commerce department.

Critics, such as the New York Times, say the challenges are too great to overcome. Others are more optimistic about American ingenuity. Shubho Chatterjee, a corporate strategy and supply chain executive, explained last month in the business publication SupplyChainBrain how it can be done:

“The U.S. needs to treat the REE resource holistically, as a national economic and security issue. It must develop, based on national policy, an REE supply chain, starting with raw materials, sourcing, refining, distribution, fabrication, and recycling. Downstream users of these raw materials and alloys, including component manufacturers, must be part of the chain. And it must be accomplished by a government-led effort.”

PHOTO: Steve Marcus/Reuters

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