A trade war between the US and China is sparking anxiety among companies relying on rare earth elements, which are crucial for military applications and many high-tech devices. The Mountain Pass mine in California’s Mojave Desert, the only rare earths mine in the US, is bracing for the impact of Chinese export restrictions and 125% tariffs on US imports.
MP Materials, the company running the mine, announced it will stop sending its ore to China for processing due to the export restrictions. Instead, the company will continue processing nearly half of what it mines on site and store the rest while expanding its processing capability.
China holds significant power over the rare earths market, producing 270,000 metric tons last year compared to the US’s 45,000 tons. The country also controls most of the processing capacity, supplying nearly 90% of the world’s rare earths.
The tariffs will lead to price increases for manufacturers relying on rare earth elements. Some battery makers may face shortages within weeks due to high demand and limited supply. Automakers are likely to try to absorb the costs without raising vehicle prices initially but may need to pass them on if China’s restrictions remain in place.
New US mines, including those in Nebraska and Montana, aim to address the country’s reliance on Chinese rare earths supplies. Companies like NioCorp and US Critical Materials are working to develop new processing methods and increase domestic production to reduce dependence on imports.
The shortage of rare earth elements could lead to a critical supply chain disruption if China maintains its export controls or expands them further in trade negotiations. The situation highlights the need for the US to build additional mines and diversify its rare earths supplies.
Source: https://fortune.com/article/americas-only-rare-earths-mine-mp-materials-mountain-pass-mine-us-china-trade-war-tariffs