Highlights
- Rare earth elements are crucial in high-tech applications, requiring complex extraction and refinement processes involving multiple stages of separation and purification.
- China currently dominates the global rare earth market, controlling approximately 80% of the processing and production of these critical materials.
- The United States has developed a strategic three-phase plan (2024-2040) to achieve rare earth supply chain independence through domestic processing, international partnerships, and innovative technologies.
Rare earth elements (REEs) are a group of 17 metallic elements essential in various high-tech applications, including electronics, renewable energy technologies, and defense systems. The processing and refining of REEs involve several complex steps to extract and purify these metals from their ores.
So, what’s the process of refining the rare earth elements? REEs are typically extracted from minerals such as bastnäsite and monazite. The ore is mined and then crushed into a fine powder. Physical separation methods, including magnetic and electrostatic separation, as well as flotation, are employed to concentrate the REE-bearing minerals.
A process known as cracking is employed in the value chain. The concentrated ore undergoes “cracking,” where it’s treated with strong acids (e.g., sulfuric or hydrochloric acid) or alkalis to decompose the mineral matrix, releasing REEs into a soluble form. For instance, monazite can be processed by heating with sodium hydroxide, allowing the valuable phosphate content to be recovered as crystalline trisodium phosphate.
Next comes the separation and purification process. The resulting solution contains a mixture of REEs, which are chemically similar, making their separation challenging. Techniques such as solvent extraction, ion exchange, and precipitation are utilized to separate and purify individual REEs. This stage is critical due to the element’s chemical and physical similarities.
So, how is the output reduced to metals? The purified REE compounds are converted into their metallic forms through reduction processes, such as molten salt electrolysis or metallothermic reduction. These methods are essential for producing high-purity rare earth metals.
What are the dominant companies and their market share?
The global rare earth market is predominantly controlled by Chinese companies, reflecting China’s significant influence in this sector.
| Company | Summary |
|---|---|
| China Northern Rare Earth Group High-Tech Co., Ltd (opens in a new tab) | As one of the largest producers, this company plays a pivotal role in China’s rare earth industry |
| China Minmetals Rare Earth Co., Ltd. (opens in a new tab) | Another major Chinese enterprise, contributing substantially to the global supply of REEs. |
| Lynas Rare Earths Ltd. (opens in a new tab) | Based in Australia, Lynas is the largest non-Chinese producer of rare earths, accounting for a significant portion of the market outside China |
| MP Materials (opens in a new tab) | Operating the Mountain Pass mine in the United States, MP Materials is a key player in the North American rare earth market. |
Market Share by Country:
China dominates the rare earth market, both in mining and refining capacities. In 2023, China was the largest supplier of rare earth elements from refining, accounting for approximately 70 kilotons, according to Statista. China controls about 80% of the rare earth element processing business.
Home to Lynas Rare Earths Ltd., Australia contributes significantly to the global supply, especially outside of China’s influence.
And, with operations like those of MP Materials, the U.S. is working to increase its share in the rare earth market, aiming to reduce dependence on Chinese supply chains.
Efforts are underway in various countries to develop alternative sources and reduce reliance on Chinese production, but as of now, China’s dominance remains substantial.
Strategies for the United States to Overcome Chinese Domination in the Rare Earth Processing Market
To reduce reliance on China’s dominance in REE processing, the United States must take a phased approach that builds domestic capabilities, strengthens alliances, and fosters innovation in processing technologies. Note this entire process incorporates identifying and recruiting talent as well as cultivating expertise domestically.
This plan outlines a clear path in three stages: short-term, intermediate-term, and long-term, with achievable milestones to guide progress.
Short-Term (2024–2026): Stabilization and Building Foundations
In the short term, the goal is to secure the supply chain and establish initial domestic processing capabilities. First, the U.S. needs to build a strategic reserve of critical rare earth elements like neodymium and dysprosium, ensuring enough stock to meet one year of demand by 2025. Existing operations, such as MP Materials’ Mountain Pass facility, must be expanded to refine rare earths domestically instead of sending materials to China.
By 2026, key rare earth elements like lanthanum and cerium should be processed entirely within the U.S.
To encourage private investment, the government can offer tax incentives, grants, and subsidies for new rare earth processing plants. The goal is to have at least three new facilities under development by 2026. At the same time, the U.S. should strengthen partnerships with allies like Australia and Canada. These alliances could supply 30% of U.S. rare earth needs by 2026, reducing immediate dependence on China.
Intermediate-Term (2027–2032): Scaling and Diversification
By the intermediate stage, the focus shifts to scaling domestic processing and diversifying supply sources. New processing plants will be built to handle ore refinement and separation, with at least two operational by 2028. The goal is to achieve 50% domestic processing of rare earths by 2030. Note that sufficient financial mechanisms need to be readied to anticipate price declines, troughs of market dynamic that state-back companies in China exploit.
Innovative technologies will play a key role during this phase. Research and development in alternative processing methods, such as bioleaching and membrane separation, should be prioritized. By 2030, at least one of these novel methods should be operational at a pilot scale. To further reduce reliance on China, the U.S. should establish partnerships with countries like Vietnam, Brazil, and South Africa, ensuring that no single nation supplies more than 40% of U.S. imports by 2030.
Building a skilled workforce is equally important as we discussed previously. Training programs in mining and materials engineering should be expanded to graduate 5,000 workers in rare earth-related fields by 2032. This will create a strong foundation of expertise to support a growing domestic industry.
Long-Term (2033–2040): Independence and Global Leadership
The long-term goal is to achieve independence in the rare earth supply chain and establish the U.S. as a global leader in rare earth technologies. By 2035, the U.S. should have fully integrated operations that cover everything from mining to refining and manufacturing high-tech products like magnets. This will ensure 80% self-sufficiency in rare earth supply.
Recycling will also be critical to independence. A robust rare earth recycling industry will allow the U.S. to reclaim valuable elements from used electronics and electric vehicles. By 2040, recycled materials should meet 30% of the nation’s rare earth needs. At the same time, the U.S. can lead efforts to create global standards for sustainable rare earth mining, establishing an international supply alliance by 2040 that rivals China’s dominance.
Finally, significant investments in next-generation materials research can reduce reliance on rare earth elements altogether. By 2040, the U.S. should have commercialized alternatives like ferrite or graphene-based magnets in at least two major industries, ensuring continued technological leadership.
By following this phased approach, the U.S. can not only reduce its dependence on China but also position itself as a leader in sustainable and innovative rare earth production. Each stage builds on the previous one, ensuring steady progress toward supply chain independence and global leadership.
Transcending environmentally destructive practices becomes of paramount importance for scaling out in the United States.
Summary of Key Milestones by Stage:
| Phase | Years | Key Milestones |
|---|---|---|
| Short-Term | 2024-2026 | Secure stockpile, incentivize investment, expand existing operations, and ally sourcing. |
| Intermediate | 2027-2032 | Build two processing plants, pilot new technologies, diversify supply, and grow workforce. |
| Long-Term | 2033-2040 | Achieve 80% self-sufficiency, recycle 30%, lead global standards, and commercialize alternatives. |
This phased approach ensures gradual but consistent progress, reduces vulnerabilities, and positions the U.S. as a leader in sustainable rare earth processing and innovation.
Daniel
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