In reality, most REEs are surprisingly abundant. Cerium (Ce), for instance, is the most abundant REE and is the 25th most common element in the Earth's crust, with an average concentration of 43 to 68 parts per million (ppm), making it as common as copper. Lanthanum (La) and Neodymium (Nd) follow, each with an abundance of around 20 ppm.
Even the least abundant naturally occurring REE, thulium (Tm), has a crustal abundance of approximately 0.28 to 0.30 ppm, which is still higher than that of silver or mercury. When considering the entire group of REEs, their collective abundance in the Earth's crust is comparable to many common transition metals. The notable exception is promethium (Pm), which is virtually absent in nature due to its radioactive nature and short half-life.
The economic "rarity" of REEs stems from the fact that they are typically found in low concentrations dispersed within various rock formations. The primary challenge lies in locating ore deposits with sufficiently high concentrations of REEs to make mining and processing economically viable. Unlike metals like gold that can form concentrated veins or nuggets, REEs are often scattered within other minerals and rarely form their own easily exploitable deposits.
Therefore, while geologically present in significant quantities, the difficulty in finding economically extractable concentrations and the complexity of their separation are the true reasons behind their perceived rarity in industrial and economic contexts.
China's ascent to dominance in the rare earth element industry is a result of decades of strategic planning and focused investment. Recognizing the strategic importance of these metals, particularly for emerging technologies, China's leadership, notably Deng Xiaoping in the 1980s, prioritized the development of its domestic REE sector.
This vision was supported by substantial government subsidies for mining and processing operations, allowing Chinese producers to offer REEs at significantly lower prices than international competitors, ultimately driving many mining operations in the US, Australia, and elsewhere out of business.
Further bolstering its industry, the Chinese government implemented an export rebate system in the 1980s, providing tax credits to domestic producers, which stimulated production and increased China's foreign exchange reserves. Strategic government programs like Program 863 and Program 973 further propelled the industry by funding technological research and development.
The combination of lower labor costs and, at least initially, less stringent environmental regulations provided China with a significant cost advantage that other nations found difficult to overcome. Additionally, China strategically acquired foreign companies, such as Magnequench, a rare earth-specialized subsidiary of General Motors, in the late 1990s, facilitating technology transfer and further advancing its capabilities.
Over time, this concerted effort led to the development of deep expertise in the complex processes of REE extraction, separation, and refining.
Today, China controls an estimated 85% to 90% of the global capacity for processing and refining rare earth elements. This means that even when REEs are mined in other parts of the world, they often must be shipped to China for the crucial processing stages that isolate and purify individual elements.
The Baotou region in Inner Mongolia, home to the world's largest rare earth mine, has become a massive industrial hub dedicated to REE production, highlighting the scale of China's operations.
The Chinese government has also actively managed the REE sector through various policies and export controls. In the past, it imposed strict export quotas and tariffs, and declared REEs as a protected and strategic resource. These measures have occasionally been used as geopolitical tools, such as the alleged halt of exports to Japan in 2010 during a territorial dispute.
More recently, China has implemented export controls on specific medium and heavy REEs, citing national security concerns. New regulations governing mining, smelting, and trade have also been introduced, along with a ban on the export of technology related to REE mining, processing, and magnet manufacturing. These actions underscore the strategic importance China places on its REE industry and its willingness to use its dominance for economic and geopolitical leverage.
The United States was once a leading global producer of rare earth elements, holding a dominant position until the late 1990s. However, the rise of lower-cost Chinese producers, coupled with potentially more stringent environmental regulations in the US during that period, led to the closure of many domestic mines, including the initial shutdown of Molycorp's Mountain Pass mine. This shift resulted in a significant decline in US REE production and processing capabilities.
Currently, the United States has a limited capacity for refining rare earth elements and relies heavily on China for much of the downstream processing. MP Materials' Mountain Pass mine in California is the only major operational rare earths mine in the US, and while it has some refining capabilities, these are primarily focused on light REEs.
The US lacks significant processing ability for certain critical heavy rare earth elements, which are essential for advanced technologies and defense applications. For example, the US production of refined neodymium-praseodymium (NdPr), a key light REE used in magnets, is significantly lower than China's output. This dependence on China for processing, particularly for heavy REEs, creates a strategic vulnerability for the United States.
Recognizing this gap, the US government and private sector have initiated efforts to expand domestic refining and separation capabilities. These efforts include government funding and policies such as the Defense Production Act and the Inflation Reduction Act, which aim to incentivize domestic production across the REE value chain.
Companies like MP Materials are investing in building new facilities, such as a magnet manufacturing plant in Texas, and Lynas USA is establishing separation facilities in the same state. The focus is on creating a comprehensive "mine-to-magnet" supply chain within the US. Furthermore, there is exploration of alternative, potentially cleaner processing technologies like chromatography and molten salt electrolysis.
While these initiatives represent significant steps towards reducing reliance on China, scaling up these processing facilities to meet domestic demand and achieve competitiveness will require sustained effort and time.
The United States government has implemented various strategies and policies aimed at revitalizing the domestic rare earth industry and securing a reliable supply chain. These include executive orders designed to boost American mineral production , the invocation of the Defense Production Act to accelerate the development of domestic capabilities , and the allocation of funding and tax credits through the Inflation Reduction Act.
The Bipartisan Infrastructure Law also includes significant investments in critical minerals, including REEs. A key focus of the Department of Defense (DOD) is to establish a comprehensive "mine-to-magnet" supply chain within the US by 2027 to ensure the availability of these critical materials for national security purposes. The US Geological Survey (USGS) is also playing a role through initiatives like the Earth Mapping Resources Initiative (Earth MRI) to identify and map domestic mineral deposits.
The government is also closely monitoring import reliance and considering actions to address unfair competition from foreign entities , and assessing the national security risks associated with the dependence on imported minerals.
These government strategies are supported by significant financial investments and funding initiatives. The DOD has provided funding to companies like MP Materials and Lynas USA to support the development of domestic processing facilities.
The Department of Energy (DOE) has also awarded grants and loans for projects focused on REE extraction, processing, and recycling. Initiatives like the National Security Capital Forum aim to facilitate private capital investment in commercially viable domestic mineral production projects. Furthermore, the US government maintains a National Defense Stockpile, which includes certain rare earth materials, and has considered potential acquisitions to further secure supply.
Several key projects and companies are at the forefront of these efforts. MP Materials is working to revitalize the Mountain Pass mine and establish comprehensive refining and magnet manufacturing capabilities. Lynas USA is in the process of setting up separation facilities in Texas.
Other companies, including American Rare Earths, Energy Fuels, Phoenix Tailings, ReElement Technologies, Rainbow Rare Earths, Ucore Rare Metals, and Aclara Resources, are actively exploring and developing REE resources and innovative processing technologies across the US. The US is also collaborating with allies like Australia and Canada to strengthen and diversify the global REE supply chain.
Despite this significant progress, the US still faces considerable challenges and limitations in establishing a fully independent and competitive REE supply chain. Scaling up processing facilities to commercial levels is a time-consuming process. Replicating China's extensive expertise in solvent extraction techniques and addressing the associated environmental concerns remains a hurdle.
Domestic producers also face competition from established and often lower-cost Chinese producers. Stricter environmental regulations in the US, while beneficial, can potentially increase production costs compared to regions with less stringent oversight. Notably, there is still a lack of commercially proven, large-scale processing capacity for heavy REEs outside of China.
In conclusion, the notion that rare earth elements are geologically rare is inaccurate. Their perceived scarcity is primarily due to the economic challenges of finding concentrated deposits and the complexities of their extraction and processing.
China has achieved a dominant position in the global REE supply chain, not because it possesses the vast majority of reserves, but through strategic long-term planning, substantial government investment, technological advancements, and a focus on controlling the processing and refining stages. The United States, once a leader in this sector, now faces a significant refining capacity gap, particularly for heavy REEs, leading to a reliance on imports, primarily from China.
However, the US government and private sector are actively engaged in efforts to revitalize the domestic REE industry through strategic policies, financial investments, and support for innovative projects. The global rare earth supply chain is complex, with geographically diverse mining operations but a highly concentrated processing sector.
Environmental and social costs associated with traditional REE production are substantial, prompting a global quest for more sustainable solutions.