It’s an unprecedented time to be involved in international business due to President Donald Trump’s tariffs, and Wyoming’s rare earth minerals industry is smack-dab in the middle of it all.
China placed export restrictions on the quantity of rare earth minerals that can be shipped out of the country last Friday as part of its sweeping response to Trump’s tariffs, as a way to squeeze American supply of a range of goods used to make weapons, electronics and other consumer goods.
If the restrictions last, it will cause a significant impact to Wyoming’s burgeoning rare earth minerals industry that could be a positive in the long run.
The purpose of Trump’s trade war is to help bring jobs and economic opportunities back to America. The American rare earth minerals industry however is for the most part not commercially operational yet, leaving a major question mark as to what China’s restrictions will mean in the short term.
American Rare Earths is working on a rare earth minerals project near Halleck Creek outside Wheatland that the company has previously reported could be the richest rare earths deposit in the world, with an estimated 2.6 billion tons of rare earth minerals.
American Rare Earths is still working through the permitting and study process and doesn’t plan to be able to start mining until at least 2029, said Melissa Sanderson, the non-executive director at American Rare Earths.
More Focus On Domestic Development
But if China remains steadfast with its restrictions and particularly if it expands to a full ban on rare earth exports, Sanderson said this would be a benefit for American Rare Earths in the long term, as the demand for these materials is expected to rise by 2029, along with an increase in prices caused by China restricting the worldwide supply.
Seven categories of medium and heavy rare earths, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium-related items, will be placed on an export control list.
Major American companies like Lockheed Martin, Tesla and Apple all depend on these materials to make their products.
Rare Element Resources (RER), a rare earth mining and refining project, is setting up a processing and separation demonstration plant in the northeastern Wyoming town of Upton as a part of its goal to refine ore into marketable quantities of rare earth minerals.
China’s export restrictions, RER Business Development Director Paul Bonifas said, makes his company’s work all the more valuable.
“Rare earths are not valuable until they’re separated,” Bonifas said, mentioning the patents his company holds for this part of the mining process. “Our technology is proving out at our demonstration plant in Upton. That's what’s proving out on a commercial scale.”
Only one U.S. rare earths mine is active at a site in California owned by MP Materials. If the Chinese restrictions are still in place by that time, Sanderson said it could be a benefit to her company and other American companies like it.
“We would be able, between MP Materials and Halleck Creek, to cover any potential shortfall and to continue to ensure that American companies have that material as they need it,” Sanderson said.
Bonifas agreed and said assuming classical economics comes into play, the Chinese restrictions on supply will allow the American rare earths industry to grow.
“We’re monitoring the situation and prepared as we have been to be at the cornerstone of the rare earth supply chain,” he said.
In order to take advantage of these quickly changing conditions, Bonifas said his company is making upgrades to their demonstration plant so they can move to commercial production at a “warp speed” pace.
“That is our goal,” he said. “We want to be a commercial operation with a domestic supply chain.”
The Details
Terbium and dysprosium, two of the materials China has restricted, make up two of the “core four” of rare earth minerals crucial for energy transition technologies used to make many of the battery inputs and permanent magnets in electric motors and wind turbines.
Without those two elements, Sanderson said a battery would be unable to effectively cool itself.
“That’s why those two are on China’s list,” Sanderson said.
Other materials on China’s restricted list are not readily available in the U.S., which Sanderson said could quickly become a large problem for the American companies that use them for the production of items like semiconductors, artificial intelligence and various military applications.
“Those are going to become more expensive pretty quickly and in some cases might become quite scarce due to the complexity of sourcing elements that are on China’s list,” Sanderson said.
The restrictions apply to all countries outside China and will significantly limit the quantity of rare earths available in the world market, Sanderson said.
Trump has made domestic rare earth mining a priority issuing an executive order March 20 directing federal agencies to expedite permitting and funding for critical minerals.
Trump continued his aggressive trade posture on Monday, threatening new 50% tariffs on China, which Sanderson said could lead China to implement a full ban on rare earths.
Nothing New
China produces around 90% of the world’s rare earths, which gives the country tremendous market power, a leverage it has never been shy about using. Sanderson said the Asian country has been engaging in the type of market manipulation tactics it’s currently employing for many years prior to the current tariff war.
For instance, she said whenever a non-Chinese rare earth company appeared to be gaining traction with a larger market share, China would simply increase the supply of its rare earth exports, thereby causing prices to plummet.
Conversely, with products like gadolinium that’s not easy to replace, China has cut the supply of the material produced, which has driven market prices higher, to their advantage.
Bonifas also said the Chinese rare earth minerals industry has benefited from unfair competitive advantages such as receiving massive governmental subsidies, paying extremely low wages, failing to adhere to any environmental standards, and selling their products at such a low price that they take a loss on the sale just to corner a larger percentage of the market.
Fulfilling U.S. rare earth demand is a point of pride for American Rare Earths, Sanderson said, which they see as the answer to America’s energy needs. However, if a scenario emerged where they had enough material mined to be sold to America’s allies, they would do so, she said.
Tariff Concerns
As bright as the future may be for these domestic rare earth companies, they won’t be completely insulated from a tariff war if China keeps its restrictions. There are certain materials that these companies purchase from other countries like steel and equipment to build mines that affects their final cost of production.
Sanderson, who previously staffed and ran a corporate office focused on government and public relations and social responsibility programs as well as serving as a senior diplomat in the U.S. Department of State, described Trump’s tariff moves as “disruptive and bold.”
“He really has taken bold steps to disrupt a global trading structure that has pretty much been in place for 70 years,” she said. “When you do something that big and out of the box, it’s very hard to predict what the outcome will be.”
One worst case scenario is that Trump’s actions could lead to a global tariff war from which no country benefits. Another situation could play out if foreign countries create a free trade alliance that excludes the U.S.
The most likely scenario, Sanderson believes, is a gradual process of negotiated settlements on tariffs. This has already proven out with Canada and Mexico, which have been temporarily excluded from Trump’s tariffs over their immediate response to his border security requests to reduce the inflow of Fentanyl into America.
“I think a lot of countries are asking themselves right now, ‘what does President Trump really want from us and can we deliver all or part of what that may be?’” Sanderson said. “Essentially countries around the world are being asked to look whether they’ve been true partners for the U.S.”
Sanderson believes the countries that have been fair trade partners with the U.S. can expect continued good relations, while those that haven’t may experience less than ideal relations going forward.
Leo Wolfson can be reached at leo@cowboystatedaily.com.
