Rare Earth Metals (Episode 3) – “The Empire Strikes Back!”
In my previous two articles on this topic of Rare Earth Metals “The War for World Domination” dated July 28, 2022 and “The Race is Very Much On” dated May 2, 2023), I had focused on China and India, respectively.
For those who missed them or wants a refresher, here are the links – https://industry4o.com/2022/07/28/rare-earth-metals-the-war-for-world-domination/ and https://industry4o.com/2023/05/02/rare-earth-metals-the-race-is-very-much-on/, respectively.
I had concluded my previous article of this series (Episode 2) with “In my next article of this series (Episode 3), I plan to cover further developments in this sector which I will be tracking, with a focus on what the US has been planning and doing. Watch this space!”
Well, I felt given the rapid pace at which this race is unfolding, it’s time to keep abreast with the momentum with a follow-on article to take stock on recent developments – especially when the race is being run on multiple realms – Earth, beneath the Oceans and in Space!
In this third episode of the series on Rare Earth Metals Race, I will be focusing on the United States of America – the original global leader in rare earth elements, who somehow managed to lose the plot to China in the past few decades, but is now clawing back with a vengeance to reclaim its lost empire!
The Rise (and Reign) of the Rare Earth’s Empire of the USA!
Through the 1950s until the 1980s, the Mountain Pass rare earth mine in California’s Mojave Desert near the Nevada border, made the United States the leading producer of rare earths. Before that rare earths were known to be available only in South Africa and India!
As per the Science History Institute, in the early 1950s rare earths like europium, cerium, lanthanum, neodymium, and praseodymium were extracted from this Mountain Pass mine. This mine, owned then by the Molybdenum Corporation of America, or Molycorp, dominated world rare earth production and exports from about 1960 until 2000.
The arms race between the United States and the Soviet Union during the Cold War (1945 to 1991) led to huge increases in government-funded research and development in many areas, including the rare earth elements. Corporate and industrial research further generated new products for consumers based on batteries, magnets and semi-conductor chips that use rare earth elements.
All these made the United States the world’s leading exporter of manufactured goods throughout most part of 20th century (from late 1940s to the 1990s). The Empire was thus born, and the US ruled!
The Fall of the Rare Earths Empire of Uncle Sam!
There were primarily two factors that led to the fall of the US from its place of pre-eminence in Rare Earths, viz, Globalisation and Rise of China!
Globalisation – As governments around the world reduced restrictions on trade and as global shipping and communications costs decreased, American manufacturing companies began to set up factories wherever goods could be produced most cheaply. Beginning in the 1980s and accelerating through the 1990s, many American firms relocated their manufacturing to countries like China, Japan, Mexico and the Asian Tigers (Hong Kong, Singapore, Taiwan, South Korea, Malaysia, Indonesia, Vietnam) that paid much lower wages and had fewer health and safety protections for workers and less stringent environmental regulations. These actions reduced the price of goods for American consumers but led to the closing of factories and loss of jobs in the United States!
Rise of China – Between 1978 and 1995 China’s annual production of rare earth elements increased by an average of 40% per year. During the 1990s its exports of rare earth elements also increased rapidly, causing prices for these metals around the world to decline sharply. As prices dropped, competing producers either went out of business or steeply reduced their production, unable to meet the so-called “China price”. Beginning in the 1990s companies owned by the Chinese government sought to buy controlling shares in rare earth companies located in other countries. I have already covered in some detail about China’s meteoric rise in Rare Earths space as the undisputed leader in the 21st century in the aforesaid Episode 1 of this article series.
The Empire Strikes Back!
It’s since about the last decade that the US finally got to understand the Chinese threat of rare earths hegemony! To address this challenge, the game plan of the US seems to hinge on 2 main strategies, viz, a) Domestic Rejuvenation and b) Global Alliances.
Domestic Rejuvenation – As per some reports, it was since the Donald Trump administration that the US initiated some serious affirmative actions towards fighting back against the Chinese hegemony in rare earths space, by boosting funding for domestic US firms. The Joe Biden administration has taken things further by incorporating rare-earth projects into its Defense Production Act and expanding its rare-earth stockpile.
Incentivisation efforts like the Rare Earth Magnet Manufacturing Production Tax Credit Act of 2023 that would offer tax credit for establishing rare-earth magnet production in the U.S. locally are also underway. Another related landmark legislation has been the Chips and Science Act that provides for $52bn in subsidies and incentives to develop semiconductor manufacturing capacity in America.
MP Materials Corp. has been tasked to revive the Mountain Pass mine and USA Rare Earth has announced that it expects to produce nearly half of the critical minerals listed in the US Geological Survey’s revised list of raw materials deemed crucial for national security and the economy.
In another frontier, deep beneath the Pacific Ocean, in an area of about 2 million square miles of ocean between Hawaii and Mexico, it has been estimated that there is a staggering rare earths potential reserve ranging from $8 to more than $16 trillion. U.S. companies are increasingly seeking to engage in seabed mining for minerals such as rare earth elements and cobalt that are critical to the broad U.S. economy and used in producing defence assets.
USA seems to be finally getting its together in the “final frontier” of Outer Space too. NASA’s Perseverance rover has just returned to Earth after exploring the Martian soil after about a 2-year mission. Further, last month NASA announced its plans to mine the Lunar soil for oxygen and water by 2032. It also stated that they aim to expand this to iron and rare earths in the future. The US seems to be determined to not let China steal the race in outer space, at least!
Global Alliances – I had covered the Minerals Security Partnership (MSP) in the Episode 2 of this article series. This US-led alliance includes Australia, Canada, Finland, France, Germany, Japan, South Korea, Sweden, the UK, and the European Union. I had mentioned then that India was trying to join the MSP. Now during PM Narendra Modi’s recent US state visit, India has now formally joined the MSP. With India’s existing reserves and its recent discoveries of Lithium and a few other rare earths, it made sense for the US to rope in India to make this MSP alliance more powerful.
A similar alliance led by the US to cover Outer Space is the Artemis Accords, which also includes countries like Australia, Canada, Italy, Japan, Luxembourg, UAE, and the UK. In the recent past more countries like Spain, Ecuador and India have also signed up. Formulating and upholding the Principles for Cooperation in Civil Exploration and Use of
the Moon, Mars, Comets, and Asteroids for Peaceful Purposes, is the mandate of the Artemis Accords.
Further, in terms of the Poles (both Arctic and Antarctica), the US is shoring up its existing set of Western Alliance/G7 partners, with other partners like South Korea, A&NZ, India, Argentina, Chile, etc through alliance formats like the Arctic Council and the Antarctic Treaty. The US wants to ensure that China (and also to some extent Russia), do not have a free run wrt the potentially rare earths resource-rich Arctic Ocean and the South Pacific & South Atlantic Oceans.
The race for rare earth metals is getting more interesting every day. Countries like the US and India, individually and in alliance (bi-lateral and/or multi-lateral formats), are trying to reduce their risky over-dependence on China for rare earths and its derivative outputs like batteries, magnets, semi-conductors, ceramics, glasses, etc. Multiple fronts in all frontiers have thus been opened up to build internal capacities & capabilities, and also a supply chain resilience that excludes China. “Taming the Dragon” seems to be the common mantra!
To summarise this rare earth article series of 3 episodes:
- China is losing some steam like the “Aging Emperor”
- US is finding back its mojo like “Uncle Sam is Back”
- India is swashbuckling like the “New Kid in the Block”
- ROW (EU, ANZ, Japan, South Korea, Russia, Chile,) is scrambling like “We Matter Too”
I will be keenly tracking further developments in this sector and maybe there will be an Episode 4 in the near future! Watch this space!
Banner Image Credit : SeekPNG
Disclaimer: The contents of this article are purely written in an individual capacity with data available in the public domain and based on the personal opinions of the author. Data sources and image credits have been cited duly as and where applicable.
About the Author :
Mr. Subham Sarkar is a business strategist, technology evangelist, thought leader and active blogger. He is a Senior leadership professional with around three decades of running career in the IT industry. He is also on the Advisory Board of a few exciting early- and late-stage start ups.
With a MBA and Engineering education background, Mr. Subham Sarkar have a passion for keeping himself abreast of the macro economics and dynamics of the global economy, how geo-politics and the ever evolving technology landscape are opening up newer possibilities and challenges for the present and the future.
Mr. Subham Sarkar core goals in life are to be known and respected as A) a professional continuously striving for excellence while evolving with changing times and B) a good human being in his sphere of influence, contributing meaningfully to his profession, to the society he live in and most importantly his family.
Mr. Subham Sarkar interests are in Business Strategy, New & Emerging Technologies, Geo-Politics & Geo-Economics, Alliances & Partnerships, Articles & Blog Writing, Mentoring & NGOs, Personal Finance & Investments, Nature & Travel, Kishore Kumar Songs, Thriller & Mystery Movies, Cricket & Football, amongst others.
Mr. Subham Sarkar can be Contacted at :
Mobile : +91-81476 52280
Also read Mr. Subham Sarkar‘s earlier articles: