The United States and other western nations are working on developing their own rare-earth supply chain to counter China’s dominance over magnet production. Currently, China mines over 70% of the world’s rare earths and over 90% of the world’s magnets.
While there’s no shortage of rare earth metals around the world, the tricky part is extracting, processing, and refining them without breaking environmental laws. China is a top processor due to their lax environmental and worker safety laws. While the U.S. is investing tens of millions of dollars into the effort, China is decades ahead with heavy funding from the state – this makes Beijing more desirable for many tech companies looking to relocate.
Rare-earth magnets are quickly becoming one of the most valued pieces of technology in the world. These powerful magnets are essential in clean energy initiatives that include electric cars, wind turbines, and other technology.
In February, President Biden signed an executive order to conduct a broad review of critical U.S. supply chains with the aim of strengthening domestic growth and strengthening ties with allies. This comes amidst a global chip shortage that’s disrupting the auto supply chain and other critical industries.
“The American people should never face shortages in the goods and services they rely on, whether that’s their car, their prescription medicines or the food at the local grocery store,” said Biden. “We need to stop playing catch-up.”
While China currently dominates the market, the U.S. used to be the leaders in the 1980s. That quickly changed once China was able to offer cheaper options while the U.S. began to enact environmental protection laws.
Rebuilding the Domestic Magnet Supply Chain
Both the government and private businesses are working on domestic efforts to extract rare earths. Right now, efforts are mostly taking place in Wyoming, Texas, and California.
MP Materials, a Nevada-based company, bought an old mine and restarted production in 2017. The company is vying to restore the domestic rare earths supply chain from mine to magnet, and is hoping to become the lowest-cost producer. However, government figures have issued concern towards the company due to Shenghe Resources owning a stake in the business – Shenghe is a Chinese company that processes rare earths in their homeland.
Despite hesitation, MP Materials is continuing to recieve state and federal grants with goals of accomplishing a domestic supply chain by 2025.
“This is happening and I think it’s happening much much faster than I think anybody had anticipated,” said Ryan Corbett, the company’s chief financial officer. “We can compete and we’re going to continue to do it.”
While other companies are competing with MP Materials, their main obstacles are stringent U.S. laws and regulations. China’s magnets are substantially cheaper because they don’t have to pay their workers fair wages or put environmental policies in place to prevent pollution. Other companies are working on alternative, eco-friendly methods of extracting rare earths in the future.
While a domestic supply chain is a hope for the future, the U.S. needs to focus on alternatives to Chinese magnets for the time being. This would mean working closely with the European Union and countries with similar environmental values to reduce reliance on China.