US 'Way Ahead' of Last Year for Rare Earths Operations, Says CSIS Critical Minerals Director

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00:00How do you make sense of some of the headlines that are going on?

00:02Are countries just kind of figuring out deals and is, I don't know, extra production,

00:06extra exploration underway?

00:10So great to be back. Thanks for having me. What a year it has been. If you had told me at the

00:14start of 2025 that rare earths would become the most powerful currency in negotiation,

00:20in reforming our geopolitical alliances, I wouldn't have believed it. You know,

00:25what we've really seen this year and remember around the APEC summit, there were the third

00:30round of negotiations to restore access to rare earths. So we saw them in London, we saw them in

00:35Geneva, and then we saw them in South Korea. Since then, the U.S. government has really done

00:39two things. You've seen both that acceleration of domestic efforts with the Vulcan deal for rare

00:45earths to mine and process those rare earths and get some permanent magnets. But you've also seen

00:50a proliferation of the continued international efforts. So most recently, you saw during MBS's

00:55state visit from Saudi Arabia that the U.S. Department of War agreed to become a 49% shareholder

01:01in a refinery there. And what's really important is when you look at the spectrum of rare earths,

01:06we are continuing to drill into two things. Those heavy rare earths, right? Because here in the U.S.,

01:11we have the second biggest producing rare earths mine in the world. However, they are pretty lightly

01:16in doubt on the heavy rare earths. And we know that Saudi has bigger deposits of those. The second

01:21thing is we're really trying to build our permanent magnet manufacturing capabilities. We do not want

01:25to be held hostage any longer than we have to. I was going to say too late. I talked to Graceland

01:32automotive executives a lot in my side gig here, and they have expressed real concern with the idea

01:41that we would ever process rare earth materials, that we would ever refine rare earth materials in

01:48the U.S. because a lot of these men and women who work for car makers have toured the plants in China

01:53and say, like, I never want to go back there again. I wouldn't let my family anywhere near there. It's

01:57such a dirty and dangerous job that we simply cannot do that in the United States of America. What do you

02:02think about that? I don't think we have a choice, quite frankly. And I, you know, I'm originally from

02:08Detroit. I love our auto manufacturers, but at the end of the day, it was the auto manufacturers

02:12that stopped manufacturing in May when they had a supply chain disruption. So what we know is that,

02:18you know, having a close to home or at home supply chain is no longer an option. What I would also say

02:23to you is challenge the notion. But what is the process like? Walk us, walk us through the process.

02:27What makes it so dangerous, so dirty? And by the way, if I have a vote, they're not doing it in New York,

02:32not in my backyard. So I don't know where it's going to be. Certainly not in your backyard. I would

02:37probably agree with that in New York. Now, here's the thing. You've got to mine those rare

02:40earths. And then the process of separation is very pollution intensive. You're talking about

02:45air pollution, wastewater, waste gases, et cetera, right? It is messy. But what we also know is that

02:51the Chinese way of doing it is not the cleanest way of doing it. Mining and processing today is

02:56much cleaner than it was 20 years ago. So when we look at, like I was out at MP Materials Mountain

03:01Pass mine, one of really fascinating things is obviously this mine is in a desert. You have a lot of

03:06tension, particularly with the frequency of droughts and wildfires on water. They have a completely

03:11closed loop water system that actually keeps all of that water within the mine. And again,

03:17that's not commonplace in China. So we're actually learning how to innovate and do it cleaner and

03:23better than the Chinese have ever been able to. So in the land grab, if you will, when it comes to

03:29critical minerals, I mean, where is everybody at this point? I thought I recently saw a story about

03:33just how much the U.S. has progressed in this area in terms of lining up deals.

03:41Absolutely. The U.S. has made a lot of progress. So I want to point to the fact that when we look

03:45at some of the bilateral agreements and deals that we've signed this year, you've seen these

03:49agreements being made and signed in the context of Japan, Australia, Saudi Arabia. You're seeing

03:54DFC financing or U.S. government financing going to Brazil. Now, we're also accelerating our

04:01mining production and processing here at home. So these are all really big steps that we're doing

04:06it. Are we going to be self-sufficient? Secretary Bestman said we'll be self-sufficient in two

04:10years. That's pretty unlikely. We have to remember we're activating a very long-term industry.

04:15You know, 10 years from now, we'll look very different. We're also not talking about a huge

04:18market. This is a small market. So two years is a bit overambitious, given how long the timeline to

04:24developing these capabilities is. But we are, you know, this year is way ahead of where we were last

04:29year.

04:29Gracelyn, as someone from Detroit, you know how important rare earths are in our automotive

04:34production chain. Is it possible to engineer them out somehow?

04:39I just got 30 seconds.

04:41Yeah, and we're starting to. I mean, if you look at BMW, they've produced the first engine that

04:44doesn't use rare earths, right? But the difference is, you know, we're kind of getting to that nascent

04:49level of innovation, but to the point that we don't need them, seatbelts, steering wheels,

04:53door panels, that's still quite a ways away.

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