Rare earth elements (or minerals) are comprised of 17 elements, including the 15 lanthanides plus scandium and yttrium. Although produced in small amounts compared to many elements, they are becoming increasingly essential to the economy and national security.

The minerals themselves aren't particularly rare geologically, but they are difficult to find in economically useful concentrations. Moreover, the refining/processing capacity is highly concentrated, with the most activity by far in China. Recent threats by the Chinese government to cease exports of these vital elements is becoming a bargaining chip in the ongoing trade-related negotiations with the United States.

Without rare earths, high-tech and clean-energy industries are vulnerable. They are used in permanent magnets which power EV traction motors, wind-turbine generators, and many high-performance industrial and defense motors. They are also found in electronics and optics products, including phosphors for displays and lighting, polishing agents, catalysts in catalytic converters, and petroleum refining. The defense and aerospace industries use them for specialized alloys, guidance systems, radar, lasers, and certain sensors. Medical applications include MRI contrast agents, some types of imaging, and precision instruments

Although estimates vary, it is clear that China accounts for a very large share of mining, separation/processing, and magnet manufacturing. While the US produces some rare earths, imports are crucial, with 70% of US imports originating from China. Several countries appear to have reserves of rare earths (including a relatively small amount in the US), but sufficient processing capabilities are not in place.

The most likely outcome is some sort of agreement with China to maintain access, but there are good reasons for diversifying sourcing and onshoring some production of these important minerals due to the high potential for disruption if supplies are substantially curtailed. If China restrict exports, global shortages and price spikes would occur. Manufacturers without adequate supplies would have to slow or stop production (including automakers, turbine makers, and defense subcontractors). Clearly, workarounds can be found in some cases, but it would take time to redesign products or improve recycling. Much of the additional costs would be borne by consumers.

Billions of dollars are currently being invested in the entire rare earths process, from mines to finished magnets and other products. The US government is committed to increasing domestic capacity through direct investments, funding, and strategic partnerships (such as with Australia) to build out a more robust supply chain.

Rare earths constitute one of the relatively uncommon cases in which using public policy to enhance availability in the US and in conjunction with allies is crucial to security and stability. Several industries (including some which are essential to national defense) rely on these minerals, and even a brief supply interruption could be catastrophic on multiple levels. Stay safe!