America Confronts Its Next Great Energy Crisis: Rare Earth Minerals

The United States could well be facing its most critical energy crisis in decades thanks to its longstanding reliance on imports for its rare earth minerals needs. The dramatic move announced by China last week to restrict the flow of such minerals around the world presents the U.S. and global community with its first potential global energy crisis since the Arab oil embargo sent crude prices skyrocketing in October 1973.

China’s Ministry of Commerce published a notice on October 9 announcing heavy restrictions effective December 1 on any country which wishes to export rare earth minerals mined or processed in its country or high-grade magnets, chips, and other materials in whole or in part made with Chinese-processed rare earths. Citing concerns that such materials have been exported by third-party countries to other nations to be used in military applications, Ministry officials cited China’s national security concerns as the justification for the move.

“China has taken note of the important uses of medium and heavy rare earths and related items in the military field,” a Ministry spokesman said. “China, as a responsible major country, employs export controls on related items according to the law, in order to better defend world peace and regional stability, and to fulfill non-proliferation and other international obligations.”

Later in his comments, the spokesman struck a more conciliatory tone, adding, “China stands ready to work with the rest of the world to step up export control dialogue and exchange, so as to better safeguard the security and stability of global industrial and supply chains.”

America Reacts To The Rare Earth Minerals Threat

Reaction in the United States was swift and severe. Every U.S. stock market index – which had opened the day Friday in firmly positive territory – immediately turned deeply negative with the NASDAQ dropping by more than 800 points by the end of the day’s trading.

President Donald Trump responded to China’s latest restrictive move with a post on his Truth Social noting “some very strange things happening in China,” and shortly thereafter announced another round of heavy tariffs on Chinese imports into the U.S. “Based on the fact that China has taken this unprecedented position, and speaking only for the U.S.A., and not other Nations who were similarly threatened, starting November 1st, 2025 (or sooner, depending on any further actions or changes taken by China), the United States of America will impose a Tariff of 100% on China, over and above any Tariff that they are currently paying,” he wrote.

Mr. Trump initially speculated that the latest move by the Xi Jinping government would obviate the need to follow through with his planned face-to-face meeting with the Chinese President scheduled for the end of October during the Asia-Pacific Economic Cooperation summit in South Korea. But he said later on Friday that the meeting would move forward.

The president took to Truth Social again on Sunday, October 12 in an effort to calm the waters. “Don’t worry about China,” Trump wrote, “it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!! President DJT”

The calmer language from the U.S. President, combined with positive vibes stemming from the apparent successful efforts to bring an end to the Gaza conflict between Israel and Hamas apparently worked, with the Dow Jones Industrial Average opening up by more than 400 points on Monday.

China’s Series Of Rare Earth Minerals Clampdowns

But whether things really will “all be fine” related to the global supply and demand for rare earth minerals remains an open question. Concerns are especially heightened given the key role these elements play in the making of cell phones, computers, all types of renewable energy and electric vehicles, and a wide array of military weapons systems. In reality, the maintenance of a ready, reliable supply of these minerals is a critical component of every nation’s energy security, which today is indistinguishable from national security.

It is key to note that this looming crisis is one which has been building for some time. China’s October 9 announcement was just the latest in a series of moves over the last year to restrict its own and other countries’ exports and global trade in these elements as it seeks to protect its dominance of relevant processing and supply chains.

• On October 1, 2024, China invoked restrictions on non-Chinese companies to purchase rare earth minerals mined and/or processed in China. The restrictions were mainly focused on semiconductor manufacturers but impacted other industries as well.
• Xi’s government followed that move in December with a ban on exports of germanium, gallium, and antimony to the United States. The ban, framed as a countermeasure to U.S. export controls on advanced chips and technology, forced major U.S. defense contractors to scramble for alternative supplies, highlighting vulnerabilities in American military procurement. The restrictions disrupted global markets, causing prices for these materials to surge.
• Beijing’s next escalation came in April, when the government imposed broader export controls on seven specific rare earth elements: samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, along with magnets derived from them. These elements are vital for high-performance magnets used in fighter jets, wind turbines, and electric motors.

All of those moves by China brought retaliatory responses from the U.S. government under both the Biden and Trump White Houses. Thus, last Thursday’s announcement by the Xi government and the Trump response constitute the latest moves in a year-long game of geostrategic chess related to these crucial minerals, arguably bringing the world to the edge of a major energy crisis.

Rare Earth Minerals Are Not In Fact Rare

One of the prevailing myths about what we refer to as rare earth minerals is that they are actually rare. They aren’t. The U.S. and many other countries are home to massive reserves of these minerals just waiting to be mined. While it is true that the permitting of new mines in America often consumes more than a decade, that process could be dramatically sped along with a presidential declaration of a national energy emergency specific to this need, a move President Trump has often discussed.

But even with faster permitting, the opening of new mines would still consume years before first production could be achieved, even in the most ideal conditions. So, scaling domestic production to meet U.S. national needs cannot be accomplished in weeks or months. In a world in which China produces 2/3rds of global supply and controls over 80% of the processing capacity, this is a true national security issue that could linger for years to come.

I’ve written about the perils of U.S. reliance on China for its critical energy minerals needs in a series of articles here since 2021. This is an issue which, much like the oil-related energy crisis of the 1970s, has been building for decades.

As the CEO of tungsten mining company Almonty, Lewis Black, pointed out in a piece published in October 2021, the United States and most other western countries made a conscious decision to essentially get out of the hard rock mining business in response to the environmentalist movement of the 1970s, intentionally ceding the playing field to China and other developing nations known to possess huge stores of them.

It was at the time seen by experts in the Carter and Reagan administrations as a marriage of convenience that would allow these developed nations to continue cleaning up their own air and water by simply shifting environmental impacts related to mining, processing, and refining to China, where it would be out of sight and, presumably, out of mind to the U.S. population. Looking back from today’s perspective, it seems naive that the geopolitical geniuses of that time apparently believed the day would never come when the west’s over-reliance on imports of these crucial materials would lead the Chinese government to use its dominance as negotiating leverage.

But here we sit today, with the looming crisis now on America’s doorstep.

Where This Game of Rare Earth Minerals Geopolitical Chess Goes From Here

The Biden White House seemed to recognize the problem when, in June, 2021, President Joe Biden said in a speech he would commit his administration to a “whole of government” approach to free the U.S. from dependency on China-dominated supply chains. Unfortunately, that promise never led to much discernible action, leaving the issue behind for Trump and future presidential administrations to address.

Since taking office in January, the Trump administration, realizing the unlikelihood of effective congressional action, has placed a heavy focus on taking executive branch actions designed to streamline federal permitting processes for energy-related projects of all types. That effort is being managed by President Trump’s newly created Energy Dominance Council chaired by Interior Secretary Doug Burgum, and also involving Energy Secretary Chris Wright, Transportation Secretary Sean Duffy, and EPA Administrator Lee Zeldin, among others.

The Pentagon has entered into a series of deals in recent months in which it has purchased equity interests in mining and rare earth processing companies, starting with a deal with California-based MP Materials in July. MP Materials is currently the largest processor of rare earths in the U.S. and will work to double its capacity as a part of the government’s investment in a 15% share of its operations.

More recently, the administration has reportedly been engaged in negotiations to invest in an equity interest in the Tanbreez mining operation located on the southwestern coast of Greenland. Reuters reported in August that the administration is also considering a reallocation of $2 billion in CHIPS Act funds to help fund additional investments in America’s critical energy resource needs.

Regardless of how the Trump/Xi meeting in a few weeks addresses this current issue, it should be obvious that America’s current dependance on China for its energy needs is not sustainable in the long run. Many more strategic moves by government and industry will be required to fully free the U.S. from China’s dominance over all aspects of rare earth minerals. The Xi government is fully aware of that reality and also has a long history of taking aggressive action to protect its dominance in this realm. Thus, this long game of geopolitical chess is certain to continue – and likely escalate – across the months and years to come.