Warrior Maven Guest Post: Grant Anderson P.E. is the President & CEO of Paragon Space Development Corporation, a recognized leader in life support and thermal control in extreme environments. He holds a B.S. in Mechanical Engineering and an M.S. in Aeronautical & Astronautical Engineering from Stanford University.
In early December of 2021, news broke indicating that China is set to create a new State-owned mega-company focused on the rare earth element (REE) market space – an industry that is already dominated by the Chinese. This company will be formed through the consolidation of several other existing rare earth companies in China. Based in Jiangxi, it will be called China Rare Earth Group. Such a move would reportedly help China further strengthen its hold on the global REE supply chain by reducing discrepancies between Chinese firms and establishing pricing leverage over global competition.
This is a dynamic that should be highly concerning to policy-makers in Washington DC, particularly in the wake of ongoing supply chain issues across an array of goods and materials – especially those directly tied to China – and the importance of REE’s to national security. At the same time and for the same reasons, the private sector should also be increasingly concerned about this issue. And as the U.S. seeks to expand our presence in space, and as we develop new technologies to advance that effort, this news should be of interest to companies in the new space economy as well.
REE’s consist of 17 specific elements and are used for a wide variety of applications – everything from batteries, cell phones, semiconductors, computers, and cameras, to petroleum refining and steel production. REEs are also critical to the manufacture of national defense and space technologies as well; REEs are used in magnets on aircraft, for missile guidance and control systems, lasers, satellite communications, and radar and sonar systems. They are also used in night-vision systems and stealth technology. And while REEs may not actually be that rare, they are disparately located and difficult to extract for both technical and regulatory (at least in the west) reasons.
Disconcertingly, the U.S. is now dependent on China for 80% of our REE uses and needs – even though like many other industries, we once led the world’s production of rare earth minerals. In fact, according to a recent Congressional Research Service (CRS) report, in 2019, “the United States imported 100% of rare earth metals and compounds it consumed, even though it exported some domestically mined rare earth element concentrate for further processing (due in part to a lack of domestic processing facilities).” Moreover, the U.S. relies on China for a great portion of 31 of 35 REEs that have been declared by the U.S. government to be indispensable to national security – and – sources indicate that 14 of those specific elements are not found in the U.S.
There is some variance regarding just how much the Chinese dominate the global REE trade – but regardless of estimation or source, the plain fact is that China is the heavyweight player in this space. And with this latest news about Chinese industry consolidation, it would appear that China doesn’t seem interested in relinquishing their control over the REE market.
The fears about China’s monopoly on REEs often focus on continued supply chain access in case of hostilities, or the potential for China to deliberately restrict rare earth mineral supply to the U.S., either as a provocative, retaliatory, or competitive action. Given the problems of our overdependence on China for other key products that have emerged in the ongoing COVID-19 pandemic, enduring concerns about Chinese dominance of REEs are not unfounded.
Frankly, the simple truth is this: with entire supply chain paradigms challenged by ongoing economic disruptions, we need to get serious about reestablishing domestic sources and processing facilities for our most critical raw materials and products, especially those with national defense uses. REEs should be at the top of this list. In the coming years, as we work to build new warships, add new modern aircraft to our squadrons, and expand use of multi-domain unmanned systems, REEs are only going to become more important – a fact that adds to the urgency.
Additionally, there will be increased need for ready availability to vital REEs as we seek to enhance our presence in space for national security purposes, and as we move forward on renewed human spaceflight missions to the Moon and beyond. The list of applications and uses for REEs in space may be considerable – optical coatings on lens and glass, for sophisticated communications and navigation systems, microelectronics on spacecraft and satellites of all sizes, lasers and batteries, solar power cells, fiber-optics, thermal control components and other applications. If we are truly concerned about maintaining our position in space, deterring conflict with space-based assets, and setting forth to the Moon and Mars, we should be committed to shoring up our own industrial capacity to mine and process rare earths.
Promoting American REE Supply Chains
On the bright side, this issue continues to gain more attention with Capitol Hill and multiple bills in several past Congresses have been advanced to address REEs. And, both the Biden and Trump presidential administrations have been supportive of protecting and promoting American REE supply chains. That said, policy-makers in Washington DC should have no illusions about – and maintain a clear-eye toward – China’s moves to secure even greater control over the global REE market. Whether it’s this new Chinese mega-company – or China trying to gain access to the Arctic where “an estimated trillion dollars’ worth of rare-earth metals” may be located (as was suggested by former Air Force Secretary Barbara M. Barrett), these concerns are not going away.
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In observing Russia’s use of natural gas to influence Western Europe, it is clear that competitive nations are unafraid to weaponize their natural wealth for wider geopolitical gain. We need to be alert to any similar dynamic with China and REEs – particularly since they evince no signs of abdicating their position as the world’s primary source for REEs. Considering the key role that REEs play in our nation’s defense and space programs – not to mention clean energy options – being solely reliant on China for these important resources seems problematic.
We need to start acting decisively to limit our exposure to China on this front.
Grant Anderson, P.E. is the President & CEO of Paragon Space Development Corporation, a recognized leader in life support and thermal control in extreme environments. He holds a B.S. in Mechanical Engineering and an M.S. in Aeronautical & Astronautical Engineering from Stanford University.