In the realm of modern technology, rare earth elements (REEs) serve as an invisible backbone, essential for countless industries.
Trump's administration has placed a significant emphasis on securing these critical resources to bolster national security and technology production.
Why Are Rare Earths So Important?
Rare earth elements are central to advancements in various fields, including defense, green energy, and artificial intelligence. The 17 rare earth elements—comprising 15 lanthanides, alongside scandium and yttrium—exhibit unique magnetic and electrochemical properties. These attributes make them indispensable in numerous applications, particularly within high-performance hardware.
Experts like Jane Nakano, an Energy Security and Climate Change fellow at the Center for Strategic and International Studies, highlight the pivotal role of these minerals. "The importance of rare earths and other critical minerals is hard to overstate," Nakano states. Ryan Kiggins, a political science professor at the University of Central Oklahoma, goes on to assert, "No rare earths mean no digital revolution, no tech billionaires, no military technological edge, no artificial intelligence – no selfies with friends on a night out."
Endless applications across civilian and military technology underscore the significance of REEs, rendering them a linchpin of contemporary prosperity and security.
Understanding the China Vulnerability
Currently, China holds a stringent monopoly over the global supply chain of rare earth elements, controlling approximately 70% of the global output and an eye-watering 90% of the worldwide rare earth ore processing operations. This dominance poses a significant geopolitical challenge for the United States, which heavily relies on these imports—70% of U.S. REE needs come from China.
The restructuring of this supply chain became urgent under the leadership of Donald Trump. In response to China's leveraging of its dominance for geopolitical advantage, Trump issued the 'Unleashing American Energy' executive order, marking the U.S.'s commitment to reclaiming its stake in the rare earth market. It aimed to create jobs, bolster domestic supply chains, and reduce dependence on adversarial nations.
America's Path to REE Independence
Trump's push heralded ambitions to revive domestic mining and processing of these essential minerals. However, challenges in the U.S. regulatory structure present significant roadblocks. According to a 2024 S&P Global report, the U.S. holds the distinction of having the second-longest mine development timeline globally—averaging 29 years from discovery to production. These delays stem from complex permitting processes and environmental regulations, necessitating urgent reform.
Ukraine's Potential Resources
The critical need for rare earths has transformed the geopolitical landscape, especially with negotiations between the U.S. and Ukraine. Discussions revolve around a potential minerals deal, granting the U.S. a 50% share of revenue from the country’s untapped resources, which include rare earth minerals.
Initially, Trump pushed for $500 billion in profits from Ukraine’s REEs, aiming to justify the U.S.'s extensive military and financial support to Ukraine amid ongoing conflicts. However, Prime Minister Volodymyr Zelensky resisted this request, leading to modified terms. In securing this agreement, the U.S. hopes to establish a solid link with Ukraine’s mineral wealth while assisting in its defense against Russian aggression. Yet, the ongoing military conflicts pose challenges regarding the feasibility and safety of mining operations in contested regions.
Greenland's Mineral Wealth
In a surprising move, Trump has once again expressed interest in Greenland, linking it to America's need for rare earth supplies. He stated that controlling territories like Greenland is essential for national security, especially with increasing activity from Chinese and Russian vessels in the Arctic region. This statement also coincides with the growing acknowledgment of Greenland's mineral potential, critical for various technological advances and green energy solutions.
With around 39 of the 50 minerals identified as critical/strategic for the U.S. located in Greenland, Trump's ambition becomes a potential avenue for reducing reliance on Chinese imports. However, this endeavor is fraught with challenges, including diplomatic ramifications, considering Greenland’s ties to Denmark.
Implications for American Foreign Policy
Trump's strategy to secure rare earth elements extends beyond just Ukraine and Greenland. There are indications of a broader foreign policy framework designed to assert U.S. dominance in the REE market, paralleling the historical oil competition. Canadian Prime Minister Justin Trudeau surmises that securing access to Canadian REEs might be a motivation for the U.S. to reconsider its northern neighbor’s status in international affairs.
Experts speculate that the race for rare earths will evolve into a geopolitical tug-of-war reminiscent of the past oil and gas competitions that shaped political landscapes in the 20th century. Wesley A. Hill from the ITIC notes, "The same way we competed for hydrocarbons, so shall we repeat with rare earth elements."
As Trump embarks on this endeavor, the urgency to develop a robust domestic supply chain of rare earth minerals remains at the forefront of American foreign policy. In doing so, the U.S. hopes to regain technological superiority and establish resilience against potential adversarial pressures.
Rare earth elements are not merely commodities; they represent the future of technology and defense. As the world increasingly veers towards digital and green technology solutions, securing a stable supply of these minerals will play a pivotal role in shaping global power dynamics.