The facts are nothing short of startling.
A high-tech F-35 stealth fighter jet contains 920 lbs. of rare earth elements (REEs).
Each US Navy Arleigh Burke-class AEGIS destroyer has 5,200 lbs., and a Virginia-class submarine has 9,200 lbs.
These commodities are also key to the future of alternative energy, electric vehicles, mobile phones, and even headphones.
Combine that with the fact that 80% of all American rare earth supplies come from China.
A nation now run by leader, Xi Jinping, who recently ordered his Marine Corps — in an act of sheer madness, or, to up the ante on the US — to prepare for war.
It now controls four-fifths of the global mined supply of rare earths, and an even larger share of the manufacture of powerful rare earth magnets — industries worth $13bn a year combined.
This gives the Chinese the ability to choke off the West’s economies while the struggle to produce the vital elements elsewhere is mounted.
Meanwhile, the Biden administration is reeling from a disastrous showing in Anchorage last week, where Chinese officials launched a history-making vindictive diatribe, attacking everything America stands for, and then some.
Biden has issued an executive order calling for a 100-day review of defense industrial supply chains — but is that enough for a crisis that looms larger with every passing day?
David Zaikin, a Ukrainian-born Canadian citizen working in London, is the CEO of Key Elements Group and founder of the Mining Club at the London Business School.
“China is out there and is trying to win every race globally. The West must do everything it can to subvert its efforts and find alternative nations to work with,” Zaikin told Inside Sources.
“The good news is that there are friendly nations like Canada, Australia, and India that are naturally very rich in rare earths. They are well-positioned to bridge the gap in potential rare earths shortages, or in the event those are weaponized by the PRC,” he says.
“The bad news is that it takes a long time to begin commercial production, and the right time to start was yesterday.”
The sector — a notoriously dirty, environmentally unfriendly business — is also plagued with technical complexity, a skills shortage in the west and a monopolistic market that hands pricing power to Chinese state-owned incumbents.
Even President Donald Trump — not exactly the sharpest knife in the proverbial drawer — saw the danger and signed an executive order last September that called on the federal government to examine alternatives including ramping up domestic production.
“Our country needs critical minerals to make airplanes, computers, cell phones, electricity generation and transmission systems, and advanced electronics. Though these minerals are indispensable to our country, we, at present lack, the capacity to produce them in processed form in the quantities we need,” the executive order said.
“American producers depend on foreign countries to supply and process them. For 31 of the 35 critical minerals, the United States imports more than half of its annual consumption.”
The former president’s order called for expanding domestic sources of these resources.
Meanwhile, Australia has the sixth largest concentration of these elements, as the Pentagon attempts a rapid pivot to REE sources outside China, National Interest reported.
Last August the Pentagon signed a contract with Lynas Corporation — the only significant rare earth processor outside of China — in Western Australia to design work and research on a rare earth separation facility in Texas.
It could take years for the plan to become commercially viable. It announced in February that it will pay US$30.4 million to Lynas USA to accomplish this.
There’s no way to know, however, if this Texas plant will produce an adequate supply of rare earth minerals to satisfy the military’s needs.
“Outside of China there’s very little expertise. We’re the only company in the past two decades, that have successfully ramped up, not just preliminary processing of rare earths, but right through to separated oxides,” Amanda Lacaze, Lynas chief executive, told Financial Times.
“It is not something that you can easily do from a textbook. Our in-house IP [intellectual property] is one of the most valuable things we have.”
The US must also work with allies such as Canada and Australia to gain control of mines in producing nations like Myanmar and Malaysia to keep the Chinese from gobbling them up.
For example, REE developer Vital Metals has started mining operations at its Nechalacho project, in Canada’s Northwest Territories.
The company told Mining Weekly that its mining fleet had been mobilized to site this week, with mining contractor Det’on Cho Nahanni Construction to start operations within the next few days.
All plant and equipment, including an ore sorter and associated infrastructure, will arrive at the mine site by the end of March, in preparation for rare earth production.
“We have been progressively achieving all the steps necessary to commence mining and rare earth production at Nechalacho over the past 12 months, and mobilization of the mining fleet is another important milestone,” said Vital boss Geoff Atkins.
The Mountain Pass mine, which lies in the Mojave Desert in California, is also back in production after a hiatus.
The Pentagon has agreed to fund MP Materials — a private equity backed company, which bought the mine for $20.5m in 2017 and restarted excavations — to design the first heavy rare earths processing facility in the US at the site.
But that doesn’t mean much in terms of Chinese dependence.
The production from California is shipped to China for processing and then shipped back to the United States.
Washington is not alone in being concerned over Beijing’s control of rare earths.
The European Commission is working on a raw materials strategy that aims to wean domestic industry off their dependence on China by boosting industry collaboration and providing sustainable finance for new producers, Financial Times reported.
European Commission President Ursula von der Leyen, on February 23, said that the European Union (EU) must end it’s over-reliance on imports from abroad to drive its technological development.
Highlighting China’s monopoly in providing rare earth elements, she said that it was not “sustainable.”
Earlier this month, Neo Performance Materials announced it is eyeing an expansion of its REE processing facility in Estonia to sate rising demand from European automakers and policymakers seeking to make the continent’s electric vehicle industry less dependent on China.
Neo is also a member of the European Raw Materials Alliance (ERMA), a European Union initiative to boost Europe’s output of critical minerals.
Rare earths — the 15 lanthanide elements on the periodic table plus two other related elements, scandium and yttrium — have become an integral part of modern life.
More than 90% of hybrid and electric vehicles use rare earth-based magnets in their motors.
Despite their name, rare earths are relatively abundant. But they tend to be widely dispersed, making them difficult to mine profitably, Financial Times reported.
The process of separating them into commercially viable products also poses technical and environmental challenges, which have caused many new entrants to struggle.
A source with a state-owned Chinese rare-earth company told PRC mouthpiece Global Times in February that there are no restrictions being imposed by China when it comes to rare-earth exports to the US.
“But there could be an export restriction in the future,” the source noted, without further elaboration.