OPINION — “Critical materials, such as rare earths, are materials needed to supply U.S. military, industry, and essential civilian needs during a national emergency and are not found or produced in sufficient quantities in the U.S. Rare earths and certain other critical materials, such as tantalum and tungsten, are overwhelmingly mined and processed abroad, making the U.S. reliant on foreign suppliers — particularly China.”
That was a quote from a Government Accountability Office (GAO) report released September 10, entitled Critical Materials: Action Needed to Implement Requirements That Reduce Supply Chain Risk.
The Defense Department (DoD) uses rare earth elements for a variety of purposes in its weapon systems – in radar, guidance systems, precision-guided munitions, lasers, satellites, and equipment including night vision goggles.
Because rare earth materials can store large amounts of magnetic energy, magnets using these elements are used in Tomahawk missiles, Predator unmanned aerial vehicles, and the Joint Direct Attack Munition (JDAM) series of smart bombs.The F-35 fifth-generation fighter requires more than 900 pounds of rare earth elements; an Arleigh Burke DDG-51 destroyer requires 5,200 pounds; and a Virginia class submarine needs 9,200 pounds, according to a March Pentagon news story.
However, as the GAO pointed out, “Although the U.S. has some domestic resources and mining capability for rare earths, United States Geological Survey (USGS) identified in its 2024 Mineral Commodity Summaries report that the U.S. imported more than 95 percent of the total rare earths that it consumed. USGS’s report also noted that, from 2019 through 2022, most of the total rare earths imported into the U.S. came from China, leaving DoD weapon systems vulnerable to supply chain disruptions by an adversarial nation.”
Over the last 40 years, according to the GAO, U.S. rare earth element production decreased “due to the emergence of lower-cost suppliers in other nations, such as China. In addition, mining operations pose significant effects to the environment, including habitat destruction, air and water pollution, hazardous waste generation, and other issues.”
The GAO reported that “rare earths and other critical materials lack equivalent substitutes that perform at the same level. For example, USGS reported that some materials can be substituted for rare earths or other critical materials, but these substitutes do not always perform as well or cost more to produce.”
To regain this lost capability, the GAO noted that DoD “has developed a rare earth investment strategy to help coordinate supply chain projects and build domestic capacity in all parts of the supply chain including sourcing, separation, processing, and manufacturing.”
Since 2020, DoD has awarded approximately $439 million in contracts to reestablish domestic rare earth supply chains. I will discuss more about this effort below.
Rare earth materials 101
What are we really talking about?
The rare earth elements are a set of 17 metallic elements commonly found in the Earth’s crust, but concentrated deposits are limited and they are difficult and expensive to mine, or to process from other sources.
Rare earths, according to the GAO report, “are often found as a byproduct of mining other elements, such as iron. During processing, they are separated from the mined ore, and the separated [rare earth] materials are chemically treated to produce high purity oxides, salts, and powders. To complete processing, the high purity oxides, salts, and powders are refined into metals and the metals are applied as coating onto…a DoD weapon system.”
For example, terbium, one of the 17 rare earth elements, adds temperature resiliency to neodymium-iron-boron magnets, making them extremely strong, and able to retain magnetic strength at elevated temperatures and operate under demanding conditions. Terbium-added magnets are used in multiple key defense systems including aircraft, submarines, and missiles.
Wanted: American replacements for the China trade
Eight days ago, on September 9, DoD announced a $4.22 million contract award to Rare Earth Salts of Beatrice, Nebraska, for developing and expanding production of terbium oxide, in this case from recycled fluorescent light bulbs. The contract was funded through the Defense Production Act Investment (DPAI) office as part of the National Defense Industrial Strategy to increase domestic production and sustainment of rare earth elements.
The DoD press release described Rare Earth Salts as “uniquely positioned as one of the only terbium oxide producers outside of China [that] uses environmentally conscious recycling processes. As co-products, the company will also recover the rare earths lanthanum, cerium, europium, and yttrium,” which are also used in both defense and commercial industries.
The DoD press release quoted Dr. Laura Taylor-Kale, Assistant Secretary of Defense for Industrial Base Policy, who said, “This award adds a domestic source for one of the most difficult-to-obtain rare earth elements,” and “Rare Earth Salts’ capability will help the United States establish a mine-to-magnet supply chain without reliance on foreign sources of material.”
Another DoD effort has been the approximately $45 million given MP Materials to help establish an integrated rare earth mine and oxide production facility at the company’s Mountain Pass mining facility in California. The first DoD contract to MP Materials in 2022 for $35 million was for design and construction of a facility which would separate 11 medium and heavy rare earth elements at the Mountain Pass site.
At one point, between the 1960s and 1990s, Mountain Pass, then owned by Molycorp, had one of the world’s highest quality deposits with more than seven percent rare earth content. However, as China established its dominant position in not only rare earth mining and processing, but also magnet production, operations at Mountain Pass were suspended in 2002.
After Molycorp experienced financial troubles, MP Materials acquired the Mountain Pass facility in 2017, when the site was idle and had just eight employees. The new management restarted production in 2018 with the aim of restoring a full rare earth supply chain in the U.S. Last year, MP Materials reported producing 41,557 metric tons of rare earth oxides in concentrate from the Mountain Pass facility.
Another major recipient of DoD funds has been Australia’s Lynas Rare Earths Ltd, the largest rare earth mining and processing company outside of China. In 2021, Lynas U.S. Rare Earths got $30 million to establish a domestic processing facility for light rare earth elements to be located in Hondo, Texas.
And in June 2022, Lynas got another $120 million to design and build a facility for heavy rare earth elements, to be co-located with the Texas facility. In August 2023, that figure was upgraded to $258 million, following detailed design work completion and cost updates, according to a Lynas release.
The 149-acre site purchased by Lynas will be in Seadrift, Texas, and “be large enough to allow for co-location of the integrated heavy rare earths and light rare earth separation plants as well as potential future growth opportunities such as downstream processing and recycling to create a circular mine-to-magnet supply chain,” according to Lynas.
Last week’s GAO report said that DoD’s “overall goal with these projects is to ensure there is a domestic alternative to foreign suppliers,” However, the GAO added, DoD “has not yet determined how much total domestic capacity it needs to create in the long term to meet defense-related demand.”
One sign of where the DoD appears to be came on April 11, when the office of the Under Secretary of Defense for Acquisition & Sustainment published a request for information to identify additional potential sources for rare earth elements and gather market research so it could “make decisions regarding the Rare Earth Element (REE) Metallization Project.”
According to the proposal, the inquiry was intended “to determine current capabilities in REE Metallization and potentially refine requirements and develop preliminary project cost estimates.” Responses were due last April 25.
In short, DoD is still trying to find its way in establishing not just new domestic sources for rare earth elements, but also conversion of them into metals and alloys usable in both military and commercial products.
It’s a national security issue, and one more example of the United States’ increasingly intense competition with China.
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