Breaking China's Rare Earth Monopoly: A Strategy Using U.S. Allies and Ukraine
Introduction
China currently dominates the global supply of rare earth elements (REEs), controlling over 70% of global production and 85-90% of processing capacity. These elements are critical for military defense systems, renewable energy technologies, and high-tech industries. In the event of geopolitical tensions, including a potential conflict, China's ability to cut off REE exports poses a significant national security and economic risk to the United States and its allies.
To counteract this dependence, the U.S. must build a diversified supply chain leveraging allied nations and strategic partners. This strategy focuses on key REE-rich allies such as Australia, Canada, and Ukraine to create a resilient, China-independent supply network while mitigating geopolitical risks.
1. Strengthening Domestic Processing and Refining
While the U.S. has significant rare earth reserves, its refining capacity is minimal, forcing it to send raw materials to China for processing. To eliminate this vulnerability:
Invest in processing facilities in collaboration with allies like Australia and Canada.
Fast-track permitting and regulatory approvals for domestic refining projects.
Provide subsidies and tax incentives for companies investing in U.S.-based REE refining.
Develop advanced refining technologies to improve efficiency and reduce environmental impact.
2. Key Allied Rare Earth Sources
Australia
Key REEs: Neodymium, Dysprosium, Praseodymium
Uses: Essential for permanent magnets in electric vehicles, wind turbines, and military hardware.
Lynas Rare Earths is the largest non-Chinese REE producer.
Australia has vast untapped reserves and strong U.S.-Australia trade agreements.
Action: Establish long-term supply contracts and invest in joint processing ventures.
Canada
Key REEs: Neodymium, Terbium, Dysprosium
Uses: Critical for electronics, energy storage, and communication systems.
Canada holds significant REE reserves in Quebec and Saskatchewan.
The U.S. and Canada have a long-standing security and trade partnership.
Action: Expand U.S. investment in Canadian rare earth mining and refining projects.
Ukraine
Key REEs: Zirconium, Yttrium, Lanthanides
Uses: Used in aerospace, defense, and high-temperature superconductors.
Ukraine has promising REE reserves, particularly in Kirovohrad and Dnipropetrovsk regions.
The U.S. and Ukraine signed a Critical Minerals Partnership in 2021 to develop REE mining.
Action:
Strengthen post-war investment in Ukrainian mining infrastructure.
Secure logistics routes through Poland and other NATO countries.
Assist Ukraine in rebuilding its industrial sector with a focus on mineral exports.
3. Expanding Recycling and Substitutes
Enhance rare earth recycling programs from industrial and electronic waste.
Develop alternative materials to replace REEs in key technologies.
Invest in synthetic REE research to reduce long-term reliance on mining.
Increase public-private partnerships to accelerate the commercialization of REE recycling technologies.
4. Establishing a Strategic Stockpile
The U.S. should create a National REE Reserve, similar to the Strategic Petroleum Reserve.
Stockpiling REEs from allied sources would provide a buffer against supply chain disruptions.
Coordinate with allies to establish joint strategic reserves, ensuring mutual security.
Current Stockpile Levels: Estimates suggest that the U.S. currently has an insufficient stockpile to meet long-term defense and industrial needs. While the exact quantities remain undisclosed, experts indicate that existing reserves could last only a few months in a crisis.
Projected Demand: To ensure national security and economic stability, the U.S. would need a stockpile sufficient for at least 5-10 years of uninterrupted supply.
Timeframe to Reach Target Levels: Based on current mining and refining capacity, it could take approximately 7-15 years to fully establish a robust stockpile, requiring sustained investment in mining, processing, and strategic sourcing.
5. Timeline for Breaking Dependence on China
Short-Term (1-5 Years)
Expand U.S. domestic refining capacity.
Increase imports from Australia and Canada.
Secure processing partnerships with allied nations.
Establish federal incentives for REE mining and refining.
Mid-Term (5-10 Years)
Scale up Ukrainian REE production post-conflict.
Develop alternative REE substitutes and new recycling methods.
Expand stockpiling efforts.
Long-Term (10+ Years)
Achieve full independence from Chinese REE supply chains.
Fully commercialize alternative materials and synthetic REEs.
Create a globally competitive refining and recycling ecosystem.
Conclusion
Breaking China’s rare earth monopoly requires a coordinated effort between the U.S. and its allies. By leveraging resources in Australia, Canada, and Ukraine, expanding domestic refining capacity, and investing in recycling and alternative technologies, the U.S. can establish a secure and resilient REE supply chain. By implementing a phased timeline, this strategy ensures economic and national security while gradually eliminating reliance on China for critical materials.
