About 25 years ago, China began to move to corner the world's supply of rare earth elements (REE) and control their processing and distribution.
According to Treasury Secretary Scott Bessent, no one really noticed. It has turned out to be a costly strategic mistake.
Today, the elements that are essential in the construction of electronics — from television screens to electric cars to medical devices — are almost entirely supplied (or, worse, not supplied) by China, giving the country extreme leverage over the industry and associated industries worldwide.
How did it happen?
According to The Wall Street Journal, in the early 1990s China started taking REEs very seriously, passing laws that prevented foreign mining companies from working in Chinese mines, even forbidding visits from foreigners. At the same time, China injected money into industry, financing processing ore and looking for the technology to turn ore into magnets.
However, China didn't have this technology.
That changed in 1995, when the U.S. government gave China the technology, approving the sale of the U.S. company Magnequench to China. Then, with U.S. engineers in China, they had everything they needed. By 2005, China closed all associated U.S. facilities. In the mid-2000s, China began exporting minerals in quantity and at prices so low they put existing U.S. manufacturers out of business. By 2022, China had made advances in REE mining technology, but China did not make the same mistake as the U.S. had in the 1990s. It passed a law preventing transfer of its rare earth processing technology.
After failed attempts to revive the U.S. industry over the years, the Trump administration this year announced it wants to take a 15 percent stake in MP Materials, an REE miner in California, and set a price floor to prevent low-cost Chinese materials from driving U.S. producers out of business.
