A nuclear energy company has emerged as an unlikely champion of the rare earths industry as it faces a herculean task: overcoming China’s vice grip on the market.

By Jo Constantz

A year and a half ago, a consultant approached executives at Energy Fuels, a uranium producer in southeast Utah, with an intriguing possibility. Energy Fuels could use its uranium technology and permits to enter the business of rare earths––a crucial component in nearly every electronic device manufactured today.

In the short time since then, Energy Fuels has emerged as a leading contender to revive a rare earth supply chain in the U.S., and an unlikely challenger to China’s dominance in the industry. If successful, Energy Fuels could be a lifeline for technology manufacturers in the U.S. who almost exclusively depend on China for rare earth metals and magnets––a potentially vulnerable position given rising tensions between the two countries. 

Like so many others, the supply chain for rare earths was put in jeopardy when the pandemic hit. The disruption was short lived, but served as a wake-up call for many in Washington and in the industry. The impact of a shortage would be devastating: Most of our electronic devices––including cell phones, laptops, and rechargeable batteries, as well as electric vehicles and renewable energy technology––rely on rare earth metals and magnets. 

The call to reshore supply chains has emerged as a rare point of bipartisan consensus, with lawmakers on both sides of the aisle looking to reduce dependence on China and increase resilience and security. In February, Biden issued an executive order calling for a 100-day review of critical supply chains, including rare earth production. 

“In some cases, building resilience will mean increasing our production of certain types of elements here at home,” President Biden said in February. “In others, it’ll mean working more closely with our trusted friends and partners, nations that share our values, so that our supply chains can’t be used against us as leverage.”

However, the high level of capital investment needed to establish mining and processing operations has kept many companies from entering the business. Traditionally, rare earth companies must dig a new mine, a costly and time-consuming process.

Energy Fuel’s industrial facility in southeast Utah, meanwhile, takes up only a few hundred acres of the more than 5,000 acres of private land––with no open pit mine in sight. Instead of operating its own quarry, Energy Fuels extracts rare earth elements from monazite, a mineral that is readily available as a byproduct of heavy mineral sand operations.

The nuclear energy company discovered it already had all the processes and permits in place to safely remove radioactive uranium and thorium from monazite to isolate rare earth elements. By sidestepping mining, the company saves billions of dollars and years of site development.

“We’re taking a totally different approach to it, which we think will be very low cost, very low impact––at least from an environmental standpoint,” said Curtis Moore, the vice president of marketing and corporate development for Energy Fuels. “But very high impact from a market standpoint, for restoring this supply chain in the United States.”

Establishing a secure source of supply will become even more important over the next few years. By 2026, demand for rare earths is expected to surge 40% as the U.S. and other countries transition to electric vehicles and renewable energy technologies, according to a forecast from Valuates, a market research firm. The batteries in electric vehicles are made with several pounds of rare earth metals––much more than a traditional car––and wind turbines can use up to two tons of rare earth magnets. 

Despite their name, rare earths aren’t actually all that rare––most are just as abundant as commonly used metals like nickel, zinc, tin, and lead. What is rare is finding them in concentrations high enough to extract profitably.

The U.S. was once the world leader in rare earths production, with all production originating from Mountain Pass Mine in California’s Mojave Desert. But starting in the mid-1980s, China began mining and processing rare earths and soon became the world’s largest producer. By the 2010s, China contributed about 85% of the world’s supply of rare earths and about 95% of processed rare earth metals and magnets.

Mountain Pass Mine closed in 2002. It was sold to Molycorp Minerals in 2008, a company that received an influx of government funds and private capital to restart the mine but filed for bankruptcy in 2015. MP Materials bought the mine in 2017, and reopened mining operations the following year. It plans to begin separation operations next year, though many industry insiders remain skeptical about the feasibility of these plans, which require enormous investment and technical expertise.

As the relationship between the U.S. and China deteriorates, it is possible that China will leverage its dominant position in the rare earths industry. In 2010, China halted supply of rare earths to Japan in response to a maritime dispute, causing prices to skyrocket around the world. Since then, policymakers, national security experts, and politicians in the U.S. have been wary of depending so heavily on an adversary for materials critical to national defense and so much of our modern technology.

Yet not everyone agrees that China’s dominant position in the market is cause for concern. Eugene Gholz, a professor at the University of Notre Dame studying the intersection of economic policy and national security, said U.S. companies are fully capable of successfully competing with China and that government intervention in this sector is misguided.

“The real motivation for this is a way to express growing anti-China sentiment in the policy community. It’s not an actual expression of economic competition problems,” said Gholz. “It’s an expression of a new kind of cold war mentality.”

Others, like Jim Kennedy, president of ThREE Consulting, a rare earths consulting company, see China’s control of the rare earths market as a real threat. Kennedy says that China has been highly strategic in the way it has invested huge sums of money into rare earths production, along with other key commodities, forgoing short-term profits in order to gain political leverage.

“It’s uniform and it’s coordinated and it’s well directed,” Kennedy said of China’s industrial policy making and execution. “It’s very efficient.”

Meanwhile, in the southeastern corner of Utah, Energy Fuels is working on getting separation facilities up and running. The company plans to begin separation operations in two to three years, the first time any company in the U.S. would be producing more than rare earth carbonate in over 20 years.

“We’ve created a very small supply chain that is decoupled from China and Russia, which is significant,” said Curtis Moore of Energy Fuels. “It’s significant because nobody else is this far down the rare earth supply chain in the United States right now.”