USA Rare Earth Aims to Break China’s Grip

USA Rare Earth Aims to Break China’s Grip

USA Rare Earth aims to become the sole American supplier of the obscure metals vital to national security and production of electric vehicles (EVs), CEO Tom Schneberger told EE Times. The startup will go head-to-head with China, which controls over 90% of the rare earth supply chain and at times has used that strength as a geopolitical bludgeon.

USA Rare Earth plans to spend more than $500 million to ramp up mining, extraction and refining by 2027. Before that, the company will start supplying high-performance rare earth magnets for EVs and other electronics by 2024, he said.

“We’re starting by phasing up magnet production in the U.S., and we’re focused on primarily talking to [American companies] as customers, but also talking with some customers in Europe and in South Korea,” he added.

Remaining questions for Schneberger are what portion of total sales will be either magnets or rare-earth elements, and how much of each will be sold to the U.S. versus Europe and other regions.

“These are all things that we’ll learn as we go,” he said.

Rare-earth metals are a vulnerability in the U.S. electronics supply chain. Others include chips, IC substrates and printed circuit boards—all of which are primarily sourced from Asia. China halted rare-earth exports to Japan in 2010 during a diplomatic row between the two countries. Amid an intensifying tech war between the U.S. and China, concerns are rising that rare earths could be weaponized again.

“We’ve been this seeing lately,” Schneberger said. “You can see it across a number of critical minerals.”

In October last year, the U.S. strengthened limits on exports of chips and related production tools to China, citing national security concerns. China may retaliate if it is pushed too far, according to Robert Maire, president of Semiconductor Advisors.

“They could frankly screw us over pretty badly. There are a lot of rare-earth elements and a lot of other things that they supply to us that they have not yet cut off,” Maire said. “That could be used in a strategic manner against us. Frankly, I’m surprised we haven’t seen that happen.”

In December 2021, the People’s Republic of China (PRC) merged three state-run enterprises to establish the China Rare Earth Group Co., according to a report by the China Briefing. The newly established company will account for about 62% of the nation’s supplies and gain enhanced pricing power over key rare earths, such as dysprosium and terbium, the report said.

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