There are few materials that are quite as important for America’s future security and economic prosperity as rare earth elements (REEs). These 17 metallic elements are essential inputs for weapon systems, clean energy technologies, and consumer electronics, yet for the past 20 years the United States has been almost entirely reliant on China for sourcing these critical materials. Today, the U.S. produces just 15% of the world’s REEs and exports 100% of mined material abroad — primarily to China — for separation and refining. China, by contrast, mines about 60% of all REEs produced globally and has increased domestic production of REEs by 60% over the last five years alone. The national security implications of China’s dominance of the rare earth supply chain are obvious, but viable solutions to securing America’s rare earth supply are not.
This policy paper provides an overview of the past, present, and future of the REE industry in the United States. Its primary goal is to establish a framework for a sustainable domestic REE industry through streamlined permitting, tax reform, and high-impact R&D. It considers how to mitigate the environmental impact of REE mining, the challenges and opportunities for REE manufacturing and recycling, the hype and hope for unconventional REE sources, and concludes with four recommendations for a U.S. REE strategy, namely:
1. Introduce tax incentives for domestic REE producers
2. Establish a federal coordinating body for REE mine permitting
3. Establish a federal REE recycling program
4. Prioritize federal support for REE alternatives
Although these are not the only pathways to securing a domestic rare earths supply, we believe that these policies are the most feasible and effective solutions available to policymakers today. When it comes to establishing a robust American rare earths industry, time is of the essence. As we’ll explore throughout this paper, China’s dominance of this sector has been wielded for political leverage in the past with disastrous economic consequences that were felt across the globe. This may very well happen again in the future, but the stakes will be even higher given the increasingly central role that rare earths play in our daily lives. The key to avoiding this scenario will be decisive action designed to support the domestic rare earths industry at every step in the value chain from basic research and mining to processing and manufacturing. America was once the global leader in rare earth production and processing, and it can regain its leadership position once again through the intelligent policy decisions we make today.
