Seaver Wang, director of the climate and energy team at the Breakthrough Institute in Oakland, explains that heavy rare earth elements are used as a kind of additive to enhance magnetism in magnets at high temperatures. This addition also improves corrosion resistance and extends the magnet’s longevity. Besides their use in magnets, these elements have a variety of applications, such as strengthening metal, enhancing radar systems, and even in cancer treatment. Although much technological infrastructure and consumer electronics depend on these elements for optimal performance, they can still function, albeit at reduced efficiency, without them. According to Wang, this would mean that wind turbines may need to be retired a decade earlier and electric vehicles would have a shorter lifespan.
Lange concurs, suggesting that the loss of access to heavy rare earth elements would be manageable for American businesses. As an example, he mentions that these elements are found in car motors used to operate electric windows. However, traditional manual window systems could be used as an alternative, albeit less convenient option.
In terms of mitigating resource restrictions, China’s limitations on critical minerals have not been particularly effective, partly because U.S. companies can acquire rare earth minerals via intermediary nations. Belgium has become a possible re-export hub for germanium—a mineral China restricted starting in 2023—redirecting it to the U.S. The European Union, having closer ties with the U.S. than China, makes it challenging for Beijing to halt this trade flow.
Additionally, the modest increase in critical mineral prices since the restrictions indicates that supply levels have remained stable, according to Lange. However, China’s latest export restrictions are more comprehensive, leading to increased reliance on private stockpiles, which have risen in value due to heightened demand. Baskaran notes that this has resulted in a sharp price increase for accessing these stockpiles, as mentioned by rare earth traders.
In the long term, technological innovations may serve as solutions to potential rare earth mineral shortages. For instance, Tesla announced a 25 percent reduction in the use of such minerals in its electric vehicle motors in 2023 and aims to eliminate them entirely in the future. Although the car company has not specified what alternatives will be used, experts suggest that Tesla might adopt other types of magnets that do not rely on rare earth elements.
In the context of domestic production, both rare earths and semiconductors are considered vital for reshoring efforts in the U.S. However, the challenges associated with each sector are distinct. Unlike semiconductor manufacturing, which involves complex and costly equipment and facilities, producing critical minerals does not require highly sophisticated technology. The U.S. and Canada possess substantial deposits of some of these minerals, and the technology to mine and refine them is well-established. Nonetheless, mining has largely shifted from Western countries due to its low economic value and significant environmental impact.
