With Ukraine mineral deal, the U.S. continues efforts to bolster its own supply — and lessen dependence on China
With Ukraine mineral deal, the U.S. continues efforts to bolster its own supply — and lessen dependence on China
Ukraine revealed some details around a mineral deal being discussed with the U.S. The U.S. would “support Ukraine’s efforts to obtain security guarantees needed to establish lasting peace” — that is by the way, not an actual security guarantee.
In exchange, Ukraine would give the U.S. 50% of the proceeds from Ukrainian state-owned mineral sales. The proceeds, but not, it would appear, the minerals themselves. And yet, the U.S. does need them. In particular, rare earths, critical to cutting edge technologies. The U.S. private sector and government have been working hard to develop an independent supply chain for these minerals.
Rare earth elements have names like gadolinium and lutetium, and they’re in the part of the periodic table where things get weird. They have special electric and magnetic properties.
“And two of them, two of those 17 are called neodymium and praseodymium and they’re used to make magnets,” said Ernest Scheyder, a reporter for Reuters and author of the book “The War Below.”
The strongest permanent magnets on earth. Two coffee mug-sized magnets like these could crush the bones of your hand in the blink of an eye. And they are critical to the U.S.’s economic future.
“The thing that makes our cell phones vibrate, the thing that makes an electric vehicle move is a rare earth magnet,” said Scheyder.
China produces 90% of the world’s refined rare earths.
“China is the big dog, they are gonna be the big dog for many many years,” said Curtis Moore, a senior vice president of Energy Fuels, a major uranium producer in the U.S. “They have invested heavily, there’s a lot of government support for their rare earth industry.”
This has presented a problem for the U.S., said Scheyder.
“China has been using its ability in this space as an economic weapon,” said Scheyder.
It’s restricted the supply of critical minerals before, and is considering doing it again. So the U.S. has been trying to get its own rare earth supply chain off the ground.
“We are really on the verge, at MP Materials, of restoring the full rare earth supply chain in the United states,” said Matt Sloustcher, head of Corporate Affairs at MP Materials, which owns the Mountain Pass rare earth mine in California. It’s the largest mine focused on rare earths in the world. It redeveloped refining ability.
“Now we can extract the material, we can process the material, and then we can refine it into a usable form factor,” said Sloustcher.
MP Materials has also built a magnet manufacturing facility in Texas. Energy Fuels, the uranium miner, has also begun refining a growing list of rare earths. But once the U.S. is past the technical challenge, there’s the economic one. China produces very cheaply, but U.S. costs have gone up.
“Because of inflation throughout the economy, the cost of capital of these domestic mining and metals projects has risen rather dramatically, upwards of 30%,” said Chris Berry, president of House Mountain Partners.
Finally, Berry said, tariffs have thrown in an element not on the periodic table: the element of uncertainty.
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