This summer, President Donald Trump announced crippling tariffs on imports from the People’s Republic of China, a laudable effort to end the Chinese Communist Party’s exploitation of America’s market economy.
Beijing, however, levied a painful retaliation, restricting the flow of rare earth minerals to U.S. defense companies.
China controls 85 percent of rare earth processing, and an estimated 78 percent of Department of Defense weapons systems depend on critical minerals, meaning defense contractors are scrambling to acquire minerals used in everything from infrared sensors in missiles to rare earth metals in drones while emergency stockpiles dwindle.
Resurrecting domestic rare earth mining and refining is a national security imperative that requires robust federal action now before our defense systems are further compromised.
Looking ahead for solutions, however, will require policymakers to examine the past. For the second half of the 20th century, America was the only major global supplier of rare earth minerals.
The story of how we lost that dominance can help us act wisely today.
The Mountain Pass mine in California was a global powerhouse until it shut down in 2002, unable to remain financially solvent in the face of stringent environmental regulations in the U.S.
At that time, China stepped in and began to accumulate a larger and larger share of the rare earth market.
Ironically, for the sake of environmental protection, the U.S. sacrificed its domestic rare earth production capacity to the worst polluter in the world.
Private investors and the Pentagon attempted to bring Mountain Pass back online in later years through a business called Molycorp, but the new owners were unable to stay above water. By 2015, Molycorp went bankrupt.
Today, America is reaping the fruits of this failure as U.S. security is dependent on the good graces of the Chinese Communist Party.
To end this vulnerability, policymakers must rapidly develop an entire domestic rare earth ecosystem, including everything from extracting raw material to bringing final products to market.
The Trump administration took a heartening first step a few months ago by inking a multi-billion-dollar deal with MP Materials, which now operates Mountain Pass.
But unlike the previous attempt to revive America’s only rare earth mine, this time the Department of Defense is guaranteeing a minimum price floor and has agreed to a 10-year purchasing agreement to protect this vital project from Chinese price manipulation.
China doesn’t play by market rules, and we cannot afford to let American producers lose in an unfair global fight.
Likewise, it was later reported that the Trump administration is working to expand the price floors to other U.S. rare earth companies.
These moves are a great start, but they will mean nothing without similarly rebuilding America’s rare earth refining capabilities. Like mining, U.S. rare earth refining was also undercut by low-cost Chinese operations.
Increasing domestic refining is a part of the White House’s rare earth strategy, and the administration has reportedly explored novel approaches like conducting refining on military bases to boost production.
But just like with the MP Materials agreement, a domestic rare earth ecosystem requires certainty, which means government support to keep facilities online no matter what tricks China tries to pull.
Efforts to strengthen U.S. mining and refining will also benefit from a bipartisan Biden-era policy that requires removing Chinese rare earths from U.S. weapons systems by 2027.
The Pentagon is far from the only purchaser of rare earth minerals but guaranteeing that non-Chinese producers have a monumental consumer will buttress an alternative ecosystem.
The final puzzle piece is bolstering U.S. manufacturing of final products that rely on critical minerals, especially clean energy technology. Solar, electric vehicles, batteries and other clean tech markets are growing exponentially.
It would be a pyrrhic victory if U.S. rare earth miners and refiners helped our defense industry on the one hand while being driven by an unfair market to enrich Chinese manufacturers on the other, because we don’t have an adequate U.S. manufacturing base.
Right now, China controls more than 80 percent of the world’s solar manufacturing capacity and accounts for more than 70 percent of global electric vehicle sales.
Beijing has a vertically integrated near monopoly from raw resource extraction to the final consumer product — made possible in large party by slavelabor in China, particularly in Xinjiang where China is carrying out a genocide against Uyghurs.
China’s dominance in clean energy technology is not only morally offensive but deeply ironic. China portrays itself as an environmental champion by producing clean tech even while building more coal power plants than the rest of the world combined.
The leading countries in clean energy technology should actually respect the environment. For these reasons, America needs domestic producers of clean tech that will purchase critical minerals from U.S. refiners.
U.S. national security demands nothing less. In the face of Chinese rare earth export restrictions, restoring Mountain Pass is a good start, but not enough. Washington must build a comprehensive domestic marketplace of miners, refiners, and manufacturers that can break China’s monopoly and keep America safe.