A Green Gold Rush Part 2: Why Rare Earth Mining Is Good For America
"With this finding at Sheep Creek, the U.S. is poised to reap significant advantages, enhance our national security, level the playing field with China, and expand the pool of REEs accessible to American manufacturers."
“It really is about national security,” US Critical Materials’ Director Harvey Kaye said to me in a recent interview about the company’s mineral discovery at Sheep Creek in Montana’s Bitterroot Mountains. For decades America has sat idly by as other nations have led the way in providing the rare earth elements (REEs) necessary to create today’s modern tech. But, with the discovery of REEs in Montana, America could be on track to start receiving serious benefits, enabling our nation to bolster national security, assist in leveling the playing field with China and increase the supply of available REEs to American manufacturers.
As discussed in my previous column on the Sheep Creek Discovery, REEs are critical to over 200 high-tech devices ranging from cell phones and electric vehicle batteries to defense technologies. So important are REEs to America’s future that both the Trump and Biden Administrations have declared our dependence on foreign REEs a national security issue.
With nearly the entire modern American economy being reliant on REEs, it is no question that America has a serious interest in securing this critical supply chain. But unbeknownst to some, the U.S. did once hold a greater sway over the critical resource, but what happened since then?
About forty years ago, the U.S. had the largest market share of REE extraction and production. Then, China’s global market share was 21%, and the US had 31%. By 2000, the U.S.’s market share dropped to 6% while China’s skyrocketed to 85%. As of 2022, China accounts for 63% of global REE mining, 85% of processing and 92% of rare earth magnet production. This effectively allows China to control key components of the U.S. military’s high-tech missile systems, firearms, radars and stealth aircraft like the F-35.
China has long understood its unique position in the REE industry. The 1980s leader of China, Deng Xiaoping, once said “The Middle East has oil, China has rare earths.” It should not be surprising that China would have a large share of the REE industry, after all, China controls the single largest REE deposit in the world. But it is more than merely a competitive advantage. China has spent the last forty years creating an REE monopoly. Between 2006 and 2012, China dramatically reduced the number of foreign companies legally allowed to export its REEs in favor of domestic companies. Worse still, most of these domestic companies are owned by the Chinese State. By 2018, six state-owned companies control nearly all of China’s REE industry.
China has already flexed its power over the REE industry. In 2010, China enforced an REE export ban against Japan over contested islands in the South China Sea. Japan was able to weather this embargo because China had yet to fully concentrate its control over the industry as it has now. At the height of the Trump Administration’s trade negotiations, China’s leaders and state media floated the idea of implementing an export ban on the U.S., a plan that would have devastated the American economy. Without a reliable source of REEs, US high-tech manufacturing would face supply chain disruptions, skyrocketing costs and production delays that would make the post-COVID chip shortage look quaint by comparison.
Opening Sheep Creek to REE mining can help alleviate America’s untenable dependence on China’s REE resources. Increasing U.S. production can shield the U.S. from real or manufactured supply chain disruptions throughout the global market.
In an interview, Mr. Kaye of US Critical Materials explained that along with the deposit’s ease of access and exceptionally high grade in the deposits, “[Sheep Creek’s] major competitive advantage is [the deposit] is low in thorium.” This means that the mine would not require additional regulatory hurdles administered by the Nuclear Regulatory Commission that other REE sources high in radioactive materials face, effectively hastening the speed to market for Montana REEs.
Sheep Creek’s competitive advantage is a high-grade REE deposit with low thorium that could provide US manufacturers with a more reliable and cleaner supply. Currently, the U.S. imports around 80% of REE components from China. Developing Sheep Creek would diversify the sources of REEs and reduce the country’s dependence on foreign suppliers. By increasing the supply of REEs domestically, American manufacturers would have access to a more stable and secure supply chain, enabling them to innovate and create new technologies to drive economic growth and prosperity.
A few decades ago, the U.S. was highly dependent on foreign oil, but American innovation and ingenuity made the U.S. energy independent again. This shale gas revolution made the U.S. the world’s top oil and gas producer. This same innovation and ingenuity can make American REE independent and own the future. With this finding at Sheep Creek, the U.S. is poised to reap significant advantages, enhance our national security, level the playing field with China, and expand the pool of REEs accessible to American manufacturers.
In my third column in this three part series, I will discuss why the Sheep Creek discovery could be good for Montana and the environment.
Click here to go to: “A Green Gold Rush Part 1: Why Rare Earth Mining Is Good For America, Montana and The Environment”
Click here to go to: “A Green Gold Rush Part 3: Why The Sheep Creek Finding Is Good For Montana And The Environment”