OMAHA, Neb. (AP) — America’s only rare earths mine heard from anxious companies soon after China responded to President Donald Trump’s tariffs this month by limiting exports of those minerals used for military applications and in many high-tech devices.
“Based on the number of phone calls we’re receiving, the effects have been immediate,” said Matt Sloustcher, a spokesperson for MP Materials, the company that runs the Mountain Pass mine in California's Mojave Desert.
The trade war between the world's two biggest economies could lead to a critical shortage of rare earth elements if China maintains its export controls long-term or expands them to seek an advantage in any trade negotiations. The California mine can’t meet all of the U.S. demand for rare earths, which is why Trump is trying to clear the way for new mines.
Rare earth elements are important ingredients in electric vehicles, powerful magnets, advanced fighter jets, submarines, smartphones, television screens and many other products. Despite their name, the 17 elements aren't actually rare, but it's hard to find them in a high enough concentration to make a mine worth the investment.
Tariffs will impact ore supply and costs
MP Materials, which acquired the idle Mountain Pass site in 2017, said Thursday it would stop sending its ore to China for processing because of the export restrictions and 125% tariffs on U.S. imports China imposed. The company said it would continue processing nearly half of what it mines on site and store the rest while it works to expand its processing capability.
“Selling our valuable critical minerals under 125% tariffs is neither commercially rational nor aligned with America's national interests,” MP Materials said in a statement.
Experts say the manufacturers that rely on rare earth elements and other critical minerals will see price increases, but there is likely enough of a global supply available to keep factories operating for now.
The California mine yields neodymium and praseodymium, the light rare earths that are the main components of the permanent rare earth magnets in EVs and wind turbines. But small amounts of some of the heavy rare earths that China has restricted, such as terbium and dysprosium are key to helping the magnets withstand high temperatures.
Already, the price of terbium has jumped 24% since the end of March to reach $933 per kilogram.
“Our estimate suggests that there is enough stockpile in the market to sustain demand for now,” Benchmark Mineral Intelligence rare earths analyst Neha Mukherjee said, adding that shortages may emerge later this year.
China holds power over the market
China has tremendous power over the rare earths market. The country has the biggest mines, producing 270,000 metric tons (297,624 tons) of minerals last year compared to the 45,000 tons (40,823 metric tons) mined in the U.S. China supplies nearly 90% of the world’s rare earths because it also is home to most of the processing capacity.
The restrictions Beijing put in place on April 4 require Chinese exporters of seven heavy rare earths and some magnets to obtain special licenses. The retaliatory controls reinforced what the Trump administration and manufacturers see as a dire need to build additional U.S. mines and reduce the nation's dependence on China.
Trump has tried, so far unsuccessfully, to strong-arm Greenland and Ukraine into providing more of their rare earths and other critical materials to the United States. Last month, he signed an executive order calling for the federal government to streamline permit approvals for new mines and encourage investments in the projects.
Two companies are trying to develop mines in Nebraska and Montana. Officials at NioCorp and U.S. Critical Materials said they hoped the push from the White House would help them raise money and obtain the necessary approvals to start digging. NioCorp has worked for years to raise $1.1 billion to build a mine in southeast Nebraska.
