The Geopolitics of the Rare Earth: The Geopolitics


So if you look at the bottom of most periodic tables, you’ll find a bunch of elements, usually a different color than the rest of the table. These are known as Lanthanides and Actinides, and we don’t talk about them much but they do support everything in high tech. They make batteries for your phones, micro satellite chips, and magnets for your computer, and most of the technology we use today relies on small amounts of these elements. Although unlike iron or copper, these elements can be very difficult to obtain, but not for the reason you might think.

We formed a panel of experts to discuss exactly this problem, and what it means for the average American.

This week is on the board.

Guillaume Petron (Diplomat Scientist)
Julie Klinger (University of Delaware)
Sophia Kalantzakos (New York University)

We call these “rare earths” but this is kind of a misrepresentation, because they’re not actually rare (they don’t come in high concentrations). As a simplified example, if you have an iron mine, you are expected to get 1 kg of pure iron for every ton of dirt; But when it comes to rare earth elements like neodymium, you might expect to get 1 gram of neodymium for every ton of dirt. That makes producing things at least 100 times more expensive per kilogram, and that doesn’t even take into account the arduous refining process.

Not only does transferring the metal from its raw element to a usable material require enormous amounts of energy, it also results in excess elements such as thorium (radioactive), so if you live in a country with reasonable environmental regulations, you now have the extra element the cost of refining as well as product storage. The radioactive duo. For what it is worth, mining rare earths is an incredibly cost-intensive operation, and against those costs, have moved China to dominate the market.

In the 1980s and 1990s, the United States had a rare earth mine based in California, where elements are mined and refined within the borders of the United States. Although China could see the long-term value that this market would have on a strategic basis, and it began to enter the market strongly. Chinese state mining companies dig huge quantities of these things from the ground and then sell them to the international market at a lower price than the cost, so within a few years everyone started to buy rare earths from China to save money and American private companies got out of business (private companies need to realize Profit after all). With rare earth mining being conducted by Chinese state mining companies, short-term profits were not necessary.

China sent nearly all other renewable energy vendors into bankruptcy, and within a few years it controlled 98% of the global rare earths market. Even more impressive is the fact that they used the same process with refiners as well, with China still controlling 96% of the light and medium refineries. And 100% heavy rare earths refineries. Even if the United States returns to dig it from the ground in America, there is no place at this time but China to refine it into a usable material.

This becomes particularly frightening with the defense industry, and allows the F-35 to be used as an example. The F-35 requires 290 pounds of refined rare earths for its components, gyroscopes, sensors, and fins, and at the moment the United States is forced to get all of these from China (because there is no other option). If a trade war (or even a real one) did break out, there would be no way to build additional F-35s without China sending the materials to them, and I doubt they would willingly hand them over. Without rare earths, the United States would not be able to build additional missiles, planes, satellites, smart bombs, tanks, supercomputers, sophisticated robots or hidden equipment that cripple the next generation of American warfare.

This is a very big flaw in the current US supply chain, and resolving it would be a huge task. Environmental regulations will either need to pay, or rare earth miners will have to bear heavy costs. Even with the Biden administration trying to get the California Mountain Pass mine up and running, this still couldn’t create anywhere to purify the materials or make the components, which meant the raw materials would have to be shipped to China anyway for refining. Even putting aside the lack of refineries in the US, what’s the point of reopening the mine if China can flood the market again and push them into bankruptcy within a few years as they did before (a private company would head Mountain Pass at this point)? The solution is much more difficult than just reopening an old mine.

So the question is should the United States nationalize its rare earths mines to get around the cost issue? Or should they support private mining companies against Chinese market manipulation? Either way, we all know the status quo is too dangerous and risky going forward, and this is a problem that we have to address now to be ready in 10 years’ time.

Thanks again to this branch for your links and feedback.

If you’d like to hear the full discussion, you can listen here below.

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