In Omaha, Nebraska, the United States’ rare earths sector is feeling the impact following China’s response to tariff measures imposed by President Donald Trump. Companies have been reaching out to the Mountain Pass mine, the only rare earths mine in America, expressing their concerns over China’s decision to limit exports of these crucial minerals, which are essential for military and high-tech industries.
Matt Sloustcher of MP Materials, the company overseeing operations at the Mountain Pass mine located in California’s Mojave Desert, acknowledged the influx of inquiries, indicating immediate effects from the trade tensions. The ongoing trade war between the U.S and China could significantly disrupt the supply of rare earth elements if China maintains its export restrictions or even increases them. The Mountain Pass mine alone cannot satisfy the entire U.S. rare earths demand, leading the Trump administration to push for the development of new mines.
Rare earth elements are pivotal in manufacturing electric vehicles, potent magnets, advanced military aircraft, submarines, smartphones, TV screens, and other technological applications. These 17 elements, although not actually rare, are difficult to extract in economically viable concentrations. MP Materials decided to halt ore shipments to China due to stringent tariffs placed on U.S. imports, opting instead to process a portion of the ore on-site while storing the remainder, pending processing capabilities expansion.
MP Materials argues that exporting valuable minerals amid high tariffs contradicts commercial logic and national goals. Experts suggest increased costs for industries dependent on these minerals, but for now, global supplies seem adequate to sustain ongoing production. The Mountain Pass yields key elements like neodymium and praseodymium for permanent magnets used in electric vehicles and wind turbines. However, minerals like terbium and dysprosium, which China has restricted, are vital for these magnets to function at high temperatures. The price of terbium has soared by 24% since March, owing to these constraints.
China’s dominance in the rare earth market is unmistakable, with the country producing 270,000 metric tons compared to the U.S.’s 45,000 tons, backed by an extensive processing infrastructure. The licensing requirements imposed by China for exporting certain heavy rare earths and magnets further underscore the strategic necessity for the U.S. to establish more domestic mining operations and reduce reliance on Chinese supply chains. Despite previous unsuccessful attempts, Trump aims to secure more rare earths from Greenland and Ukraine and has signed an order facilitating new mining ventures. Companies like NioCorp and U.S. Critical Materials are striving to develop projects in Nebraska and Montana respectively, looking to meet approval and investment requirements spurred by the heightened focus on national resource independence.
Mark Smith, NioCorp’s CEO, emphasizes the need for the U.S. to produce its own heavy rare earths to counteract China’s leverage. Meanwhile, MP Materials is working with a strategic investment of approximately $45 million from the Trump administration to boost processing facilities to manage heavy rare earths fully. This developer plans to build a Texas factory to manufacture rare earth magnets for domestic use in electric vehicles, aiming to decrease China’s market dominance.
While major automakers and defense companies such as Boeing and Lockheed Martin, which have been impacted by China’s restrictions, remain reserved about their reliance on rare earths, the Pentagon is evaluating the security implications of dependency on Chinese supplies. Lockheed Martin actively assesses the global rare earth supply chain to ensure its defense mission continuity.
Battery makers might experience supply constraints in the coming weeks as the demand for key elements rises, compounded by China’s past export restrictions on critical minerals like antimony, used in strengthening lead-acid batteries. As manufacturers grapple with rising costs, the willingness of automakers to absorb price hikes without affecting vehicle prices remains uncertain, especially under existing tariffs affecting automobile imports. U.S. automakers once met domestic rare earths needs until Chinese markets dominated in the late 1990s.
Efforts are underway to capitalize on domestic rare earths resources, with NioCorp aiming to prove sufficient reserves in Nebraska to seek an $800 million loan for project financing. New production sites may not materialize until after the current administration, with exploratory and developmental work continuing. U.S. Critical Materials remains optimistic about its Montana site’s potential, given high ore concentrations of these essential minerals.