As demand for electric vehicles (EVs) and the REE required to power them continues to increase, North America is looking for ways to reduce its dependence on China and onshore its supply chains. But can we break our reliance on the production of Chinese REE and become independent from China? And if yes, how do we achieve this? Well, today, we’re exploring what North American REE mining projects are doing to onshore their production and break this reliance, including how government bodies are providing support and how the supply chain demands and price dynamics are impacting the current REE market.
Chinese Dominance
Currently, China controls about 90% of the REE production market. But their supply chain dominance doesn’t come simply from the physical mining of these elements; rather, it’s the fact that nearly all the REE mined is sent to China for refining and processing. As a result, their monopoly on REE production has created a supply chain dominance, from refining and metal making to advanced materials and technologies, making it difficult for other countries to compete on an impactful level. Therefore, one of North America’s most significant challenges is creating infrastructure that allows us to mine, extract, and refine our own REEs, thereby decreasing our dependence on China.
North American REE Mining Projects
So how close are we really to being able to onshore our REE production? From Texas to the Canadian Arctic, North American mining companies have been doubling down to source critical REEs and build infrastructure to process them domestically. For example, MP Materials, who owns the REE Mountain Pass Mine, has created a self-contained system – with co-located mining, milling, separations, and finishing – and is considered to be one of the highest quality rare earth deposits in the world with an average grade greater than 8%. Although Mountain Pass has currently the only active mine and processing plant in North America, many other junior rare earth mining companies are stepping in to help address REE demand, like American Rare Earths, Rare Element Resources, Commerce Resources, Energy Fuels, and our team at Defense Metals, among others.
Government Support
Thankfully, western Governments have shown interest in supporting the development of the critical materials sector. For example, as part of President Biden’s Investing in America agenda, the U.S. Department of Energy announced $16 million in support in September 2021 to help bring critical mineral supply chains to America and reduce reliance on China, and hundreds of millions have been made available via the Defense Production Act and the Departments of Energy and Defense. Biden is also interested in potentially funding critical mining projects abroad in places like the UK and Australia in an effort to shift dependency away from China. In Canada, the government announced 3.8 billion dollars in funding over 8 years for the critical minerals sector. Most Canadian provinces have critical metals strategies; for example, in September 2022, Minister Dan Vandal announced $7.5 million in funding to support Canada’s first-ever REE processing facilities located in Saskatchewan. In the end, the U.S. Secretary of Energy, Jennifer Granholm, eloquently summarizes the goal of this funding in North America, which is to “reduce our overreliance on adversarial nations and position [ourselves] as a global manufacturing leader — while supporting communities that have helped power our nation for generations.”
Price Dynamics & Supply Chain Demands
Currently, some of the drivers of demand for REE besides EVs are technologies like wind turbines, smartphones, and aerospace and defense equipment. Regarding price dynamics, REE prices have recently softened together with the rest of the commodities, but prices are likely to rise and stay strong over the coming years as demand is set to increase faster than supply. But are these prices controlled by Chinese producers? Well, until we solidify our onshore production and quell supply chain demands, the answer is likely ‘yes.’ However, the Ministry of Industry and Information Technology has previously instructed Chinese producers to regulate their operations to prevent any market speculation and keep prices reasonable.
Final Thoughts
Ultimately, shifting our dependence away from China will require further mining and processing infrastructure being built throughout North America. And even though budgets have been allocated, mine permitting timelines need to be improved, and more government funding must be directed toward the mining sector and downstream industries to keep things moving forward and address the growing REE demands in North America. This is where companies like us, Defense Metals, are stepping up to contribute at least to the production side of things with our proposed mine, which would generate an average annual REE production of around 25,000 tonnes of total rare earths. Although it’s still a long road, with drivers of demand continually increasing and more government budget needing to be allocated to create new mining and refining facilities, with some time and effort, onshoring our production of REE and shifting dependence away from China is a goal we can work towards in the coming years.
