In Omaha, Nebraska, America’s sole rare earths mine, operated by MP Materials at the Mountain Pass site in California’s Mojave Desert, drew significant attention from companies following China’s recent move to limit exports of rare earth minerals in response to President Donald Trump’s tariffs. The restrictions have immediately affected the market, as indicated by the increasing number of inquiries received by the mine.
The ongoing trade conflict between the United States and China, the two largest global economies, has the potential to create a severe shortage of rare earth elements if China’s restrictions persist or expand. Given the inability of the California mine to fully satisfy U.S. demand for these elements, President Trump aims to facilitate the establishment of new mines.
These elements are critical in the manufacture of electric vehicles, advanced military technology, and numerous high-tech products. Though not actually scarce, the challenges lie in their extraction due to low natural concentrations, which impacts the commercial viability of mining operations.
Due to China’s newly enforced trade measures, including imposing a 125% tariff on U.S. imports, MP Materials announced its decision to cease sending ore to China for processing. Instead, the company plans to process nearly half of its extracted ore onsite, while the remainder will be stored pending capacity expansion. In a statement, MP Materials emphasized that selling critical minerals under such high tariffs is economically impractical and not aligned with U.S. national interests.
Although, according to experts, there appears to be sufficient global supply to meet immediate demand, companies reliant on rare earth elements may face increased costs. The Mountain Pass mine primarily produces neodymium and praseodymium for permanent magnets used in electric vehicles and turbines. However, elements such as terbium and dysprosium, critical for high-temperature applications, have seen significant price increases due to their restricted supply from China.
China’s dominance in the rare earth market is reinforced by its extensive mining operations, producing vastly more minerals than the United States, and hosting the majority of the world’s processing facilities. The recent export controls implemented by China require special licensing, highlighting the urgent need for the U.S. to diversify its sources and reduce dependency on China. Efforts have been made by U.S. officials to engage with other potential suppliers, albeit with limited success thus far. Additionally, there are ongoing discussions about developing mines within the U.S., such as those in Nebraska and Montana.
In a bid to accelerate domestic production, MP Materials is expanding its processing capabilities with the aid of previous governmental financial support. However, the firm lacks the current capability to process the heavy rare earths restricted by China.
Amidst this landscape, major U.S. companies in the automotive and defense sectors, directly affected by China’s trade policies, have largely refrained from commenting on their dependency on these materials. The situation has prompted an executive order from President Trump to evaluate the security implications of reliance on Chinese rare earths.
Manufacturers, especially those involved in battery production, are preparing to manage potential shortages of essential elements in the near term, which could impact battery prices and, in turn, vehicle prices, unless mitigated by tariff reliefs being considered by the administration.
Historically, the U.S. met its rare earth supply needs domestically until the late 1990s, when the market was dominated by inexpensive Chinese imports. Currently, new technological advancements have spurred a renewed demand for these materials.
Development projects in Nebraska and Montana are being pursued to bolster domestic production. However, it could be several years before new U.S. mines start operating, given the complexities of fund-raising and approval processes. Meanwhile, industry stakeholders continue to explore innovative processing and extraction methods to capitalize on domestic mineral deposits.
