rare earth critical minerals The rare earth
minerals bit about rare earth minerals Rare earths and rare earth magnets underpin all of
modern technology An obscure bunch of rocks have become the hottest geopolitical bargaining
chips of the decade possibly the century They don’t make for snappy headlines but with supply
chains now in chaos lots of people are about to find out just how critical these so-called rare
earths are and how much we’ve taken them for granted Let’s not take it for granted Today we’re
going to examine these critical minerals explain why they’re so important and look at the extreme
lengths countries are willing to go to to access them plus how they’re reshaping markets and power
relationships around the world My name is Guy and you’re watching the Coin Bureau Some know them
as critical minerals President Trump has renamed the whole lot of them raw earth But whatever
you call them this group of mineral resources is the lifeblood of modern technology Critical
minerals include not only the 17 elements known as rare earths but also others like cobalt nickel
graphite and lithium that are outside this group but similarly important But what makes a mineral
critical and not merely important or vital Well the difference is supply chain vulnerability If
a country is reliant on foreign imports for an important mineral for which there is no substitute
then they may deem it critical for policy-making purposes Different geopolitical environmental and
economic vulnerabilities affect supply chains from country to country So critical lists vary The EU
and UK for example have identified 34 minerals as critical whereas the US Geological Survey lists
50 And recently President Trump ordered another four minerals added to this list plus quote any
other element compound or material determined to be of critical importance by the chair of the
recently established National Energy Defense Council Now to understand why these minerals are
so important let’s take a closer look at what they’re needed for In case it wasn’t clear enough
we’re not just talking about consumer electronics here This list includes just about everything
that you can switch on and off nowadays All clean energy technology for example from EVs to
solar farms and wind turbines depends on minerals like silica selenium tourum copper nickel lithium
cobalt iron boron and rare earths More importantly critical minerals are needed in vast quantities
for military applications An F-35 fighter jet contains more than 400 kg of rare earth
elements An Alley Burke class DDG-51 destroyer contains more than 2,300 kg And a Virginia class
submarine contains around 4,200 kg That is a lot of raw earth Meanwhile another important use for
critical minerals in both civilian and military applications is in magnets The rare earths
neodymium dprosium samarium and preiodime are used in various combinations with cobalt iron and
boron to make permanent magnets that are extremely strong durable and resistant to demagnetization
And no I’d never heard of neodymium or indeed dprosium samarium or piodmium either before
making this video Now powerful neodymium iron boron magnets are essential components of high
torque EV motors and smartphone vibration engines wind turbines and power tools hard disk drives
headphones and speakers They also steer precisiong guided missiles power UAV motors and make possible
targeting and fire control systems in tanks and aircraft Highly stable samarium cobalt magnets
are needed for precision drives in robotics medical pumps aerospace and satellite components
sensors and data storage They can endure high temperatures and are corrosion resistant and
highly radiation tolerant making them crucial for missile airframes jet engines satellites
and naval mines Other minerals predominantly used for weapon systems include antimony which
is needed to make armor-piercing ammunition and explosives Tungsten needed for kinetic energy
penetrators and high temperature applications and tantelum needed for missile parts and jet
engines I could keep going but I think you get the picture Minerals are to modern technology
what fossil fuels were to the industrial revolution It’s the place to be when you’re in
need of amazing crypto deals and opportunities very rarely found in concentrations large enough
to be economically viable For viable deposits to form you need a geological goldilocks situation
with the perfect amount of heat and pressure just the right magma chemistry and hydrothermal
fluid activity to converge over millions of years These elements require highly specific tectonic
environments such as the slow cooling of alkaline magmas or the interaction of mineral-rich fluids
with unique rock formations to concentrate into economically viable deposits And even then
many deposits are chemically locked within minerals that are difficult and energyintensive
to extract This combination of geological rarity and technical complexity makes large accessible
rare earth deposits exceptionally scarce and is why only a handful of regions like China’s Bayan
Obo or the Mountain Pass Mine in the United States came to dominate global supply California’s
Mountain Pass Mine produced the majority of the world’s rare earth elements from the 1950s
to the 1980s Production was driven by cold war demand for nuclear and aerospace technologies But
after it ended the US left the fate of mountain pass up to market forces China meanwhile began
developing its rare earth industry in the 1950s Its answer to mountain paths was the Bayonobo
deposit in Inner Mongolia which is the world’s largest known deposit of rare earth elements and
home to mineral resources of exceptionally high purity Beijing was quick to recognize the
strategic importance of this sector and in the 1980s it invested heavily in research and
development It also implemented export rebates to give the sector a boost And by 1986 China
had surpassed the US to become the world’s top producer of rare earths In 1992 Deng Xiaoping made
a now famous comment that is often paraphrased as quote “The Middle East has oil China has rare
earths.” Few people in the English-speaking world thought anything of it because you know the
world runs on oil not minerals It wasn’t exactly a zinger for the history books but in hindsight
it looks pretty darn precient In 2015 the Paris climate agreement and China’s own made in China
2025 policy prompted Beijing to proactively expand its capabilities in mining processing
and refining the minerals that would be needed for the transition to clean energy sources and
advanced technology manufacturing By 2024 most of the goals of the made in China 2025 policy
were considered achieved despite US efforts to curb the program China now controls 58% of global
rare earth mining 89% of separation and 92% of magnet production It’s almost as if that was the
real motivation behind the green agenda all along Meanwhile dwindling production in the US led to
Mountain Pass closing in 2002 The Pentagon and US policy makers gave little thought to minerals
until the 2010s and China’s dominance was seen as a matter of business not one of national
security Over the last decade the US did not make comparable investments in rare earth extraction
The war on terror also ran out of steam leading the US defense establishment to transition to a
new great power competition with China setting the stage for the situation we see today Notably
it began with Obama’s military pivot to Asia policy and has continued as the Trump Biden Trump
trade war which has crescendoed to the point where China has now banned exports of many critical
minerals to the US China is expected to start issuing export licenses on a case-bycase basis
and preventing the US military from accessing Chinese mineral exports will be top priority With
US defense stockpiles now running out a supply shock appears to be imminent What resources make
it to the US will inevitably be rationed to the military first making it increasingly likely
that the consumer will have to digest higher prices for just about everything containing
critical minerals which as we’ve learned is a lot of stuff So it’s a good thing that the US has
been trying to reshore mineral production Then in 2017 it revived Mountain Pass under the ownership
of a company called MP Materials which resumed production However underfunding in R&D means that
the US lacks the technical expertise to process the mine’s mineral output which has to be sent to
China for processing instead This obviously isn’t ideal and MP Materials has since been the focal
point of American efforts to rebuild a complete domestic supply chain for rare earths To this end
the Department of Defense announced a remarkably ambitious 2027 mine to magnet goal Since 2020
it has handed out $439 million to make this happen But progress has been slow This is because
mineral production is one of the most difficult industries to reshore And that’s because of the
rarity of economically viable deposits and the decades of infrastructure investment and research
needed to develop mining separation refining and processing facilities and the technical expertise
needed to run them There are other barriers too though Take gallium for example which sits at
the top of America’s list of critical minerals Gallium is an essential ingredient for making
semiconductors solar farms satellites laser systems night vision and thermal imaging advanced
radar and communications thermometers and nuclear weapons The US is entirely dependent on
imports to meet domestic gallium demand But after it hit China with semiconductor export
restrictions last December Beijing banned exports of gallium germananium and other key materials
with military applications to the US Some 90% of gallium is produced as a byproduct of
aluminium production which consumes vast amounts of electricity China devotes about 6% of
its total energy output to aluminium production But the US power grid can’t currently support
new aluminium production due to its lack of capacity Even after a tree falling over in Ohio
caused a blackout for 55 million people in the northeastern US and parts of Canada back in 2003
the grid wasn’t updated The US now produces half as much energy as China and is struggling to
power chat GPT as it is Meeting domestic gallium demand with domestic energy supply is not going
to happen anytime soon unless the US can delete its northern border That is Canada happens to be
the world’s fourth largest producer of aluminium thanks to its abundant hydroelectric power
resources This and other mineral resources are widely believed to be President Trump’s motive
for his policy of wanting to annex Canada And the fact that this looks like a better option speaks
volumes about the difficulty of establishing new domestic production Recognizing the challenges and
time horizons involved the Biden administration advanced friend shoring as an alternative Former
Treasury Secretary Janet Yelen popularized this term in April 2022 when she encouraged the
sourcing of critical resources from a large number of geopolitical allies rather than relying
on an exclusive block i.e China Friend shoring as foreign policy gave us multilateral initiatives
like the partnership for global infrastructure and investment or PGI and the mineral security
partnership both established in 2022 The PGI was built as America’s answer to China’s Belt and
Road initiative designed to organize US investment and rally allied support behind new exchina supply
chains The mineral security partnership meanwhile brought together US allied mining countries to set
standards for producing processing and recycling of transition materials But actually replacing
existing supply chains will not be easy A 2023 study by researchers at John Hopkins University
concluded that to meaningfully French shore supply chains would require an unprecedented and quote
highly coordinated international joint industrial strategy that aligns and focuses global investment
Meanwhile President Trump has given new meaning to the term friend shoring with his proposal to
colonize longtime friends of the US But at the same time recent developments in US trade policy
have thrown the future of French shoring as it was originally conceived into doubt Multilateral
initiatives like the PGI and mineral security partnership were designed to rally international
support for a collective decoupling from China But all the countries who agreed to sign up have since
been subject to punitive US tariffs and they are not happy about it Take Canada for example After
China the United States’s main source of geranium is a Canadian company called Tech Resources They
recover geranium from zinc mining in Alaska then refine it in Canada and export it back to the
US However after Trump introduced 25% tariffs on goods from China the CEO of tech publicly
announced that he was no longer interested in selling to the US market and will redirect tech
zinc and germanmanium to markets in Asia Funny how that works The EU meanwhile is another key
party to the mineral security partnership that’s now taking a fresh look at China following
the collapse of its relationship with the US China would very much like this with President
Xi and Foreign Minister Wang Yi recently urging EU and UK leaders to join forces with China
in safeguarding multilateral trading systems Something to this end may be in the pipeline
soon as European Commission President Ursula Vonlayan and other EU leaders are planning a trip
to Beijing this July for a summit with Xi Jinping This suggests a serious effort to re-engage and
a potential pivot from decoupling from China to de-risking from the United States It wouldn’t be
the first move in that direction either Brussels and Beijing have quietly established several
economic working groups following a visit by EU trade chief Maros Sephkovich in late March The
two sides are now negotiating EV supply chain investment agri food market access and a removal
of the European tariffs on Chinese EVs introduced last October Meanwhile Xi Jinping recently visited
Vietnam and Malaysia on a tour of Southeast Asia that was widely seen as an effort to cast China
as a more reliable trading partner than the US After China Vietnam and Malaysia are two of the
world’s biggest producers of critical minerals Malaysia has the world’s largest and one of the
only critical mineral separation plants that exist outside of China In Vietnam meanwhile President
Luong Kuang greeted Xi at the airport and later gave him a 21 gun salute at Hanoi’s presidential
palace This made for a sharp contrast with the increasingly fraught relations between the US
and Vietnam on whom President Trump recently introduced and then paused a 46% tariff to the eye
of Vietnamese businesses According to Chinese news media she urged Vietnam to resist quote unateral
bullying and stated that quote China’s mega market is always open to Vietnam President Trump told
reporters at the White House quote “That’s a lovely meeting.” Meeting like trying to figure
out how do we screw the United States of America Vietnamese and Chinese media disclosed that the
two sides signed some 45 agreements during she’s visit without providing any details So then at the
moment it looks like China has taken over friend shoring duties while President Trump pivots
to a mineral reshoring agenda Late last month Trump signed an executive order titled Immediate
Measures to increase American mineral production that directs federal agencies to expedite
permitting and remove regulatory barriers to mining on federal land It also invokes war powers
under the Defense Production Act that authorize the Secretary of Defense and the US International
Development Finance Corporation to finance mineral production projects that directly support domestic
capacity Interestingly Canada Australia and the UK are treated as domestic sources under the
Defense Production Act However the emergency funding powers aren’t unlimited as projects
requiring over $50 million are subject to congressional notification It’s too early to
assess what effect this executive order will have but 2025 should nonetheless be a big year
for US critical mineral supply chains That’s because projects under the mine tomagnet goal
are beginning to come to fruition MP materials received a little under 100 million in subsidies
and tax credits to build a new metallization and magnet production facility called Independence
in Fort Worth Texas MP is now sending rare earths extracted from Mountain Pass to be refined
metallized and turned into magnets in Fort Worth The new facility began commercial production of
magnetic metals earlier this year and is expected to slowly scale up magnet production starting in
late 2025 The goal is to produce 1,000 tons of finished magnets per year which it will supply to
General Motors and other manufacturers So it looks like the mine tomagnet box will be ticked in the
US by 2027 Then again it looks a little cute when compared to the 300,000 tons of these magnets
that China produces annually But the US is no longer 100% dependent on China for magnet metals
And this month it finally stopped sending US rare earths to China for processing But if it wants
domestic production to meet domestic demand it will need to scale up big time MP Materials has
been trying having produced a record 1,300 tons of magnetic metals last year But despite being
heavily subsidized by the Pentagon the company is leaking money like a civ losing 28 million
in a single quarter last year Now part of this is because of China’s decadesl long head start
in this industry Economies of scale mean that China is able to produce rare earth elements at
much lower cost than anyone else And this drives down prices globally threatening the economic
viability of US projects And this trend is likely to continue in the coming years because China is
already exploring the mineralrich depths of the Pacific Ocean in a new frontier that the US has
already seeded for ideological reasons Sitting on the seafloor somewhere between Hawaii and Mexico
are an estimated 21 billion tons of extremely high orgrade cobalt nickel copper and manganese just
waiting to be collected in convenient polytallic balls This is the Clarion Clippetton zone or
CC home to far more critical minerals than all known terrestrial reserves combined The CCZ is
regulated by the International Seabed Authority or ISA under the United Nations Convention on the
Law of the Sea The ISA has issued CCZ exploration licenses for deep sea mining to 21 countries
and various private companies effectively dividing the seabed up between them China and
Russia dominate with a combined nine permits Loheed Martin also held permits but was forced to
sell them because the US does not recognize the international seabed authority Despite playing a
key role in negotiating the law of the sea in 1982 the US has never ratified it because it keeps
getting blocked by the Senate Republican and Democrat presidents have been trying ever since
but have so far been thwarted at every turn by the persistent lobbying of the Heritage Foundation The
Heritage Foundation has persuaded generations of senators to resist ratifying the law of the sea
at all costs on the grounds that the US doesn’t need anyone’s permission to mine the seabed As a
result the US has no exploration licenses and no voting rights over the rules for commercial mining
which are still under development at the ISA So it looks like America is leaving the CC up to the
CCP for now But when US defense stockpiles of critical minerals start running out in a month
or two just don’t be surprised if politicians and lobbyists start humming under the sea in
the corridors of the US capital We’ll have to wait and see how this mineral struggle shakes out
but at the moment it looks like Trump has blinked first in his own trade war Will this lead to
export controls being relaxed Well it’s hard to see that happening because this would mean
China providing the US with materials for its military once again That said stranger things have
happened though like for instance Fartcoin rising from the dead to break the 1 billion market cap
once again Wait are you telling me you haven’t been paying attention to crypto lately Well
before you FOMO back in you should check out this video for all the upcoming macro and crypto
catalysts that could affect prices Okay that’s all from me for now though As always thank you for
watching and I’ll see you next time This is Guy
