American dependence on Chinese procurement and refinement of Rare Earth Elements (REEs) suggests that effective green strategies are probably a long way off. The ownership and refinement of REEs are imperative to the execution of green energy reforms; however, the US does not have any reliable way to source these hard-to-find elements. REEs are essential components in a host of green energy technologies, from semiconductors and batteries to wind turbines and electric motors. The Biden administration has set ambitious climate goals, including pollution-free electricity by 2035. However, such objectives will rely heavily on the country’s ability to obtain and refine REEs.
Currently, the US imports all of its REEs, meaning access is contingent on trade agreements with foreign governments. An estimated 80% of the US’ REEs are imported from China, meaning the US depends almost entirely on its most dangerous adversary for elements critical in defense technologies. Another shortfall is the absence of a domestic or offshore refining capability. California’s Mountain Pass, the US’ only rare earth mine, extracts nearly 50,000 tons of REEs a year – all of which must be sent to China for processing.
China remains the dominant force within the REE supply chain, having cultivated a near monopoly through aggressive political and economic strategies. China has invested in and negotiated foreign trade deals for mining and refining REEs, and Beijing’s refining capability outpaces the rest of the developed world. One factor in this dominion is linked to the Chinese Communist Party’s (CCP’s) willingness to overlook the extensive pollution created by refining rare earth minerals. Consequently, China’s monopoly on processing capability has stalled advancements in the refinement process, stunting other countries’ efforts to compete.
Despite mutually dependent economic ties, China’s stranglehold on the REE supply chain, the US’ dwindling REE stockpile (4% of what it was in 1989), rising geopolitical tensions, and the forecasted increase in green energy spending have prompted US policymakers to take action. Legislation is being put forward by the Department of Defense and The House Armed Service Committee to shore up domestic REE supplies and galvanize American REE independence.
In conjunction with the defense-based motives and to achieve climate milestones, the Department of Energy (DOE), the Department of Defense (DoD), and the Department of State (DOS) executed a memorandum of agreement (MOA) in February 2022. The MOA seeks to enhance the National Defense Stockpile (NDS) for clean energy technologies, strengthen international partnerships and create alternatives to the current Chinese-controlled REE supply chain.
To rectify the US’ lack of refining capability and create a domestic supply chain, the DOE launched a Request for Information to develop America’s first critical minerals refinery. The proposed refinery will use fossil fuel mining byproducts to produce critical minerals.
Initiatives like a domestic supply chain, refining capacity, bolstering the NDS and international partnerships are a promising start to addressing the REE imbalance with China. However, until the US can begin to wean itself off of Chinese REEs, defense research and development and ambitious green strategies will be at the mercy of a CCP-controlled supply chain.
