The United States is implementing strategies to increase domestic production and processing of rare-earth elements, aiming to reduce reliance on foreign supply, primarily from China. These elements are vital components in modern technologies, including smartphones, electric vehicle (EV) motors, wind turbines, and military aircraft.
Role of Rare-Earth Elements
Rare-earth elements, such as neodymium and dysprosium, are crucial for high-torque, compact EV motors, which are significantly stronger than conventional magnets. Demand for these motors is increasing by approximately 33% annually. Military applications also depend heavily on these materials; for example, an F-35 aircraft may contain over 900 pounds of rare-earth materials in its engines and electronics.
While not inherently scarce, these elements are challenging to extract and refine. China currently controls approximately 90% of global rare-earth processing and refining output.
U.S. Government Initiatives
The U.S. government has initiated a public-private approach to foster self-sufficiency in rare-earth production. This strategy involves federal loans and stakes in key mining operations and startups.
One beneficiary of this support is Indiana-based ReElement Technologies. The Pentagon's Office of Strategic Capital (OSC) announced a partnership between ReElement, Vulcan Elements (a North Carolina firm producing rare-earth magnets for military applications), and the Pentagon. The U.S. government also became the largest shareholder in MP Materials with a $400 million investment from the Pentagon's OSC.
Financial commitments include a $620 million loan from the Pentagon's OSC to Vulcan Elements, an additional $50 million from the Department of Commerce under the CHIPS and Science Act, and an $80 million loan to ReElement Technologies for expanding recycling and processing operations. These investments are part of a broader $7.5 billion allocation towards securing critical minerals.
Technological Advancements
ReElement Technologies states it has developed a more efficient and environmentally sustainable method for rare-earth processing and recycling, utilizing chromatography. The company operates a commercialization facility in Noblesville, Indiana, with a larger production site in Marion, Indiana, projected to begin operations next year.
ReElement Technologies CEO Mark Jensen states the company aims to be the largest producer of rare earth oxides in the United States by the end of 2026. In partnership with Vulcan Elements, ReElement aims to produce 10,000 metric tons of neodymium-iron-boron magnets within the next few years. This target represents a fraction of the approximately 230,000 tons produced globally in 2024, according to the Institute of Electrical and Electronics Engineers (IEEE).
Research analyst Bert Donnes of William Blair notes that ReElement's current operations are compact compared to traditional processing facilities.
Historical Context and Challenges
China's market share in rare-earth production increased significantly from the 1980s. Concurrently, environmental concerns at the Mountain Pass mine in California, the only major U.S. rare-earth mine at the time, led to production halts due to spills of radioactive and toxic wastewater. This situation contributed to China gaining a significant market share.
Mountain Pass, now owned by MP Materials, is an open-cut mine where solid materials are processed through grinding, flotation, and leaching with hydrochloric acid. MP Materials previously sent its ore to China for refining but is now increasing its on-site processing capabilities. China's share of global rare-earth substance production is approximately 60%, according to the International Energy Agency, and it holds about 34% of the world's proven rare-earth ore reserves, alongside other countries including the U.S.
Expanded export controls announced by Beijing requiring licenses for products containing Chinese-sourced rare earths further impact the global supply chain.
Aaron Mintzes, deputy policy director and counsel at Earthworks, advocates for processing methods that reduce energy and water intensity and toxicity. Brent Elliott, a research associate professor of geology at the University of Texas, suggests the U.S. possesses sufficient resources but faces challenges in environmentally and socially responsible extraction and processing. He observes that China's historical processing capabilities scaled faster due to differing regulatory environments regarding environmental considerations.
Simon Jowitt, director of the Nevada Bureau of Mines and Geology, highlights the complexity of developing rare-earth deposits, which require a source, transportation, concentration, and extraction methods.
China implemented new environmental and safety regulations for rare-earth processing last year. China also imports raw ore from various regions, including Southeast Asia and Africa, as part of a strategy to establish itself as a global rare-earth refining hub, according to Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies.
ReElement's method utilizes large columns in a specialized filtration process, developed at Purdue University, to extract and purify metals from raw ore and recycle rare earths from old magnets. Jensen contrasts this with solvent extraction, which he describes as 'ecologically challenging' and difficult to scale.
Elliott views the current grants and critical-mineral-focused funding as potentially positioning the U.S. for success in this sector.