The Indicator from Planet Money - The Strategic Value Of Rare Earths

Rare earths are essential to a wide variety of strategically important components, but the vast majority of rare earths are produced by mines in China. That's something that the U.S. is working to correct.

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Content Keywords: Rare Earth United States NP Earths China Earths earth
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everyone is the indicator from Planet Money. I'm Cardiff Garcia and I'm Stacey Vanek Smith the New York Stock Exchange. Got a new member last month a company called MP materials which started trading symbol m p and NP is notable because it is the owner of one of the only Rare Earth mines in the United States the mountain pass mine in California, and it's a big deal because Rare Earth stem cells are a big deal. They are a key component of cell phones wind turbines and electric cars and also and things like fighter jets and missile defense systems. What's fascinating about them? Is it the u.s. Gets nearly all of its Rare Earth from the country that it's been having a huge trade war with these past few years China and was we've been thinking about what will happen in the coming year after a new Administration isn't place what will happen with rare earth. And with that in mind we decided to bring back a show that we are earlier in the year Pamela Boyd off of CNN.

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Told us about the rare Earths industry and why it's so strategically important and what the US is doing to try to become more self-sufficient in its production of rare earth.

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321 fire in the hole

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Oh, nothing warms my heart like the sound of an explosion music to an economy nerds ears. So that is the sound of a blast at the mountain pass mine this site in California card. If it's the only place in the us where we mine rare Earths and we really really need these things. So if we look across the pit everything in the very bottom of the fifth is the existing bottom that is all I grade or at this time and he's talking to CNN International. He's the mine manager at Mountain Pass. He's showing our team this huge open Mine Pit just packed. He says with these Rare Earth elements beautiful sight to see this is the busiest he's ever seen it at Mountain Pass and card. If one of the reasons it's so impressive to see this bustling busy. Mine. Is it just two years ago. This mine was totally shut at that point. China, they really taken

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Where this dirty joke industry. Okay, that's fascinating in and of itself, but I actually think we should step back for a minute and explain a little bit more about what Rare Earth actually are. So everyone go back to high school chemistry for just a moment just for a second. I had a great high school chemistry teacher. Mr. Goodman rare Earths are a set of 17 elements that appear on the periodic table and they are an essential ingredient in making like super strong super small magnets with Swedish said are used in a lot of electronics and by the military despite the name, they are really not all that rare. They actually occur in a lot of places, but the process to mine them is labor intensive and it can be environmentally destructive. It can create lots of pollution and it can even involve radioactive waste not trying they put a lot of effort into building the mining and processing facilities for these Rare Earth and without the same environmental and labor standards that we have in the u.s. Owe China can produce

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Very cheaply and try to start it actually dominate the industry and in fact from about 2014 to 2017 the US imported 80% of its supply of Earth's from China as the relationship between the US and China started to get tents in the trade War China State media. They basically made a thinly Veiled Threat they implied that rare Earths could be used as a weapon in the trade War China could restrict exports basically cut off the flow of these elements to the US China's president Xi Jinping. He just happened to make a personal visit to a production facility that made these products. I was just in the neighborhood and there was a rare Earths over there. I thought I'd go check if there is a camera sees them on the other side of me, right? Yeah. It is a trade War has become nastier and nastier this idea. The China could restrict Rare Earth exports to the US. It has spooked some people especially in Washington because the world has become more dependent on Hi-Tech Electronics. It is also become more.

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On these elements on rare Earths. This has focused a lot of attention on the mine. I went to mountain pass. It has actually been in operation since the 1950s back then it produced europium which makes the red color in very early television. Yeah, and the previous owner invested more than a billion dollars on a new environmentally-friendly facility back in 2015. Just as the rare earth price collapsed as other company just went out of business in the mind shut and there was nowhere in the US producing these elements that the new owner of the mine MP materials there spent two years rebuilding it and they say that they now produce about 10% of the world's supply of rare Earths if there's going to be an American where with industry it's going to be led by off swear it on CNN International. He's the chairman of MP materials. He wants to create an alternative supply chain to China, but he's got a problem while he can.

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Dig these things out of the ground, he can't process them in the US everything needs to go back to China and back to Chinese Rare Earth processor owns a 10% non-voting steak in mp materials.

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Mountain Pass produces bags and bags of this Rare Earth concentrate basically a brown dust. They got all over my shoes when I was there then it all gets sent to China because there isn't a processing plant anywhere in this country that turns rare earth into the products that companies want to buy next year and P materials. They plan to reopen the processing plant at Mountain Pass. And this way they can make processed rare Earths to sell directly to global companies without going through China and the frankly there were a lot of people who who doubted that we can make this work. And so we we felt an extra burden and a duty and so we've had a sense of urgency from the very beginning but I would say that there's definitely been a heightened sense of awareness of what we're up to when China started making its veiled threats some people question that the US needed to nationalize the rare Earths industry to take it over but the experts we talked to don't really think so and they point to what is going on at Mountain Pass as proof that the ma.

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What is already correcting for China's near Monopoly now that there's increased demand for rare Earths and pressure by companies for sources that are more diverse and environmentally friendly suppliers outside of China are starting to grow and restricting Rare Earth exports. It's not a move China's going to make lately because it would hurt Chinese business has a lot of the rare Earths. They find their way into things that are manufactured inside China Lake Mobile phones to really completely cut the US off China would have to tell Chinese businesses to stop selling to United States processed Rare Earth and rare earth magnets and all the electronics that use them Chinese companies would lose a lot of business the whole thing could hurt the Chinese economy, which is already suffering in the trade War.

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I need the definition of a trade War. You can't hurt the other side without hurting yourself the messy business that we go.

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This episode of the indicator was produced by Rachel Cohn fact-check by Emily Lange and edited by Patty Hearst indicator is a production of NPR.

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