President Trump wants more rare earth mining done in the U.S. and less of it done in China and Russia. The stuff that will power your Tesla TSLA , and the minerals that go into the next generation microchips, don’t fall from the sky, and it doesn’t grow on pine trees. And the problem with obtaining those rare minerals is that China controls a large chunk of them.
Trump’s Executive Order came out on Wednesday, September 30. It is the second one of its type. The first one, EO 13806, came out in 2018. It asked the Department of Defense to produce an inventory of its reliance of “adversarial nations” for critical, basic materials like Russian nickel or Chinese barite, a metal used to make equipment used in fracking for oil and gas in the U.S.
American producers depend on foreign countries to supply and process numerous critical minerals.
For 31 of the 35 critical minerals, the United States imports more than half of its annual consumption, according to yesterday’s EO.
The United States has no domestic production for 14 of the critical minerals and is completely dependent on imports to supply its demand of those items.
The EO said that the U.S. government recognized the “importance of cooperation on supply chain issues with international partners and allies”, but was designed to avoid the “aggressive economic practices” of certain non-market foreign producers of critical minerals (read: China), which has “destroyed vital mining and manufacturing jobs in the United States.”
Pini Althaus, CEO of USA Rare Earth called the executive order “an important step” in ensuring the U.S. is free from price manipulation and other aggressive economic maneuvers, particularly those perpetrated by China.
“It also addresses supply chain vulnerabilities based on our ability to source the critical materials we need for defense and manufacturing,” says Althaus.
If there is one thing the U.S. government can agree on it is that China plays too large a role in U.S. supply chains. This includes source material used to manufacture weapons and other Defense Department items.
Speaking at a Senate Armed Services Committee hearing on Thursday, Alaska Senator Dan Sullivan said that in regards to China dependence, “This is a bipartisan issue. It is outrageous that we are so reliant on the Chinese.”
He said his state has good opportunities for mining rare earths, and that the jobs are high paying, often in the six figure salary range, “and our mining operations take better care of the environment than China.”
Today’s executive order to build and protect the rare minerals supply chain targets countries that are also servicing Chinese importers. Most of those players are in Africa.
The EO said that reliance on processed or unprocessed minerals from “foreign adversaries” constitutes an “unusual and extraordinary threat”. So yesterday Trump declared another national emergency to deal with that threat.
The president said the U.S. needs to increase its mining and processing capacity, including for minerals not identified as critical minerals and not included within the national emergency declared in yesterday’s order.
“The executive order is designed to establish independence from relying on China and other nations for its strategic rare earth minerals and metals. It’s a declaration that the U.S. must be self reliant and independent from foreign sources and free from geo-political interference,” says Jim Hahn, advisory board member of American Manganese.
American Manganese, listed on the Toronto Stock Exchange, is in the battery recycling business. They extract the metals such as lithium and cobalt from EV car batteries and remake them in a process they refer to as “urban mining”. They aren’t digging through rock, but they are resurrecting cathode metals as a way to avoid dependence on foreign sources for those metals. Their company is part of this whole repatriation process, and the burgeoning market for high powered, long life batteries.
Tesla is one of the world’s largest battery producers and is the largest domestic producer of EV car batteries. Jeffrey Brian (“JB”) Straubel, the original chief technology officer of Tesla, got into the battery metals recycling business in 2017. He founded Redwood Materials, a company that will eventually also manufacture recycled lithium ion batteries at a plant in Nevada.
For the EO, the idea is to strengthen domestic mining and processing capabilities immediately in an effort to guard against the future possibility of supply chain disruptions or attempts by China to hold back key source materials.
Trump’s EO also states that it is not just targeting China, but will make it harder to purchase these goods from countries that do not endorse and pursue appropriate minerals supply chain standards, leading to human rights violations, health and environmental damage.
Executive Orders can be overruled by new presidents. But because this is such a bipartisan issue, it is unlikely that if Joe Biden wins the White House next month he will sideline this effort.
A Biden Environmental Protection Agency, however, could make new mining more difficult, giving the recyclers like American Manganese and Redwood a larger market.
The Senate is also on the case.
In May, Senator Ted Cruz introduced the Onshoring Rare Earths Act and earlier this month, two more Texas Congressmen – Lance Gooden and Vicente Gonzalez — with co-sponsors from both parties – introduced the Reclaiming American Rare Earths Act.
Both bills create comprehensive tax incentives and grant programs to encourage investment in and development of U.S.-based rare earth and critical mineral production, from mining, reclamation and recycling through processing and advanced materials production, as well as “secondary recovery” projects that recover and recycle the materials from legacy mine waste and metal scraps that come from the shop floor of U.S. battery producers.
“We are ready to assist,” says USA Rare Earth’s CEO Althaus. Their processing facility in Colorado is already up and running and their magnet manufacturing plant should be operational within 12 months. By early 2023, their Round Top mine in Texas, which has 16 of the 17 rare earth elements, including lithium, is also expected to be fully operational.