A 70-year-old mine in California’s Mojave Desert could become the center of an effort to revive an American mineral refining system and bolster the country’s national security by minimizing dependence on China’s rare earth metals industry.
Crucial not only to hybrid electric cars and smartphones, but, also, certain military equipment, the availability of rare earth metals has national security implications. In fact, the National Defense Authorization Act directs most Pentagon systems to use rare earth metals that have been mined and refined outside of China within five years. Additionally, the federal government must give preference to U.S. suppliers of such materials in government acquisitions.
The Defense Department announced contracts and agreements with several rare-earth element producers, such as MP Materials, which is the owner and operator of Mountain Pass mine, the sole rare earth mining site in North America.
Seventeen elements deemed critical to modern society had been discovered at the Mountain Pass deposit, which, shortly after its discovery by American engineers in 1949, began to provide more than half of the world’s demand for rare earth metals.
Despite being home to just one-third of the world’s rare earth reserves, China has obtained a near-monopoly on the metals with approximately 80% of the global supply chain. Furthermore, China processes most of the U.S. rare earth metals. Indeed, China processes ore mined in California, rendering the mine into a supplier for the Chinese rare earth industry.
Though called rare, the USGS designates the elements as “relatively abundant in the Earth’s crust.”
In a 2020 annual report, the government agency reported that, although some 20 countries worldwide are currently mining rare earths, the U.S.–with its 1.4 million-ton reserve–remains home to one of the largest rare earth deposits in the world. U.S. bedrock holds an estimated 100 years’ worth of deposits at its current consumption rate, yet China is home to nearly all the world’s processing capacity to convert the ores into materials for manufacturer use. The U.S. lacks processing capacity.
“The processing has always been the gap through which China has been able to kind of come to dominate rare earth metal production,” said Felix K. Chang, a senior fellow at the Foreign Policy Research Institute in Philadelphia.
Closed in 2002 due to environmental restrictions and competition from China, the Mountain Pass mine has since held the promise of revitalizing U.S. industryl. A privately held company called Molycorp Minerals had reopened the site until Beijing restricted rare earth exports to Japan over a diplomatic dispute in 2010. As Molycorp’s stock soared, China started to increase rare earth exports in 2013. The company then struggled to stay solvent.
The company declared bankruptcy and was then reorganized as the Toronto-based chemical manufacturing company Neo Performance Material with processing facilities in the United States and six other countries, including four plants in China.
Of grants worth roughly $13 million the Department of Defense to three companies, MP Materials, which acquired Mountain Pass in 2017, received the largest amount worth approximately $9.6 million. Clearly, the U.S. maintains high hopes for open-pit deposit on the southern side of California’s Clark Mountain Range.
Still, the federal investment could benefit China, as well as a Chinese rare earth manufacturer Shenghe Resource Holdings, which owns approximately 10% of MP Materials. According to a U.S. Securities and Exchange Commission filing, one of the MP Materials’ businesses is to “sell its rare earth concentrate products to Shenghe for further distribution to various downstream refiners in China.”