Earlier this year, the White House issued a Fact Sheet entitled: “Securing a Made in America Supply Chain for Critical Minerals”. It was a message to China that the U.S. is serious about re-investing in mining rare earth and other critical minerals such as cobalt, graphite and lithium.
In the 1990s, the U.S. was a major producer of these minerals. But strict environmental regulations and economic factors resulted in the U.S. shutting mines and purchasing processed minerals from other countries, including China. Today, the U.S. government regards these minerals as an “urgent matter of national security” because of the crucial role they play in the manufacturing of semiconductors, magnets for electric car and wind turbine batteries, and weapons for the US Defense Department. It is also urgent because of the mounting tension between the U.S. and China over the future of Taiwan.
“Just as the production of high-value electronics systems can be stalled due to lack of a low-cost component, supply of electronics components can be stymied due to an inability to source essential raw materials such as rare earth minerals and other metals,” said Dale Ford, chief analyst, ECIA.
The last rare earth mining company left in the United States was Molycorp, which owned the Mountain Pass mine in California. Molycorp declared bankruptcy in 2015 and was sold at auction in 2017 to MP Materials Corp. The partially state-owned Chinese mining company, Shenghe Resources, owns 7.7 percent of MP Materials. In early 2021, Shenghe Resources was the sole buyer of the raw materials mined by MP Materials at Mountain Pass, all of which were sent to China for processing.
Today, China dominates the market. It mines 54 percent of the world’s rare earth minerals and processes 85 percent. In processing, it is followed by other Asian and Oceana nations, including Myanmar, Australia and Thailand, which process 13 percent and Europe, which processes 2 percent , according to Wood Mackenzie.
Demand for many of these metals is projected to surge over the next couple of decades as countries around the world strive for net zero carbon emissions by 2050. While not a rare earth metal, the global demand for lithium, which is crucial for electric vehicle batteries, is forecast to grow by more than 4,000 percent by 2040 based on a scenario where the world achieves its climate goals. Graphite is projected to grow nearly 2,500 percent .
“The creation of a secure supply chain requires reliable, stable supply of all critical elements for electronic components beginning with the mining and processing of raw materials and extending through production and delivery of components,” said ECIA’s Ford.
Earlier this year, the Department of Defense’s Industrial Base Analysis and Sustainment program awarded MP Materials $35 million to separate and process heavy rare earth elements at its facility in Mountain Pass, California, establishing a permanent domestic magnet supply chain. Currently, China controls 87 percent of the global permanent magnet market, used in electronics, electric vehicles, defense systems and wind turbines.
MP Materials announce it will invest $700 million in the magnet supply chain by 2024, including constructing a rare earth metal, alloy and magnet manufacturing facility in Texas. Production will begin next year, with the capacity to produce enough magnets to power 500,000 EV motors annually. The company has a supply agreement with General Motors to power GM electric vehicles.
Other companies are ramping up mining and recycling operations in the U.S. For example, Berkshire Hathaway Energy Renewables (BHE Renewables) announced it will build a new demonstration facility in Imperial County, CA, to test the commercial viability of its lithium extraction process as part of a multibillion-dollar investment in sustainable lithium production. If successful, BHE Renewables could produce 90,000 metric tons of lithium a year.
Controlled Thermal Resources has also established operations in Imperial County to extract lithium from geothermal brine. Tesla has a deal to purchase high-grade nickel for its EV batteries from Talon Metals’ Tamarack nickel project under development in Aitkin County, MN. And Redwood Materials, in partnership with Ford and Volvo, is piloting the collection and recycling of end-of-life lithium-ion batteries at its Nevada facilities to extract and reuse lithium, cobalt, nickel and graphite.
Given China’s dominant position in mineral mining and processing, it is too early to declare the renaissance of a competitive U.S. mining industry, partly because China is increasing its investment both domestically and in other countries as the U.S. ramps up domestic mining operations. A case in point is China’s mining investment in Afghanistan for its gold, lithium and rare-earth minerals. A decade ago, the U.S. estimated the value of Afghanistan’s mineral resources at $1 trillion.