Rare earths supply chain outside China decades away – USA Rare Earth CEO

s sales of energy technologies such as electric vehicles and wind turbines grow, so does the demand for rare earth elements commonly used in the magnets supporting the technologies' electric motors. Rare earths mining and processing is heavily concentrated in China. The US and members of the EU have said they want to diversify their supply chains.

USA Rare Earth LLC is a Florida-based company focused on rare earths processing and magnet production. The company has majority ownership of the Round Top rare earths project in Texas, and is developing a magnet production plant in Oklahoma.

S&P Global Commodity Insights recently spoke with USA Rare Earth CEO Tom Schneberger about the state of US rare earths production, challenges to the domestic supply chain and environmental concerns associated with rare earths mining. The following conversation has been edited for clarity and length.

S&P Global Commodity Insights: USA Rare Earth is working on building out a domestic supply chain of rare earth materials. Can you give some detail on what your company is doing to this end?

Tom Schneberger: We actually consider ourselves a magnet technology company. When you look at the rare earth value chain right now, even if you mine rare earths and mine them cost effectively, all of that processed material then needs to go through China to be processed further into salable products, and then eventually to be turned into metals and turned into magnets.

At USA Rare Earth, we've purchased equipment that used to produce rare magnets in the US, and we're reconstructing that equipment to produce magnets again here in the US. Our team is engaged with customers on building recipes for magnets. And we have technologies to tie all the way back through the value chain to our mine near El Paso, Texas, to supply the magnet production.

When you talk about the concentration of the rare earths supply chain in China, how is that different on the mining versus the processing side?

If you start with the transition we're going through right now — the energy transition to electric vehicles and the transition to robotics as we digitize our manufacturing, 

for example — all of this requires rare earth magnets.

92% of rare earth magnets right now are made in China ... Even if you go further back in the value chain, if you take rare earths out of the ground, you have to separate them,

 and you have to turn them into metals long before you even create magnets out of them. 

90% of that processing in general is all in China right now.

As the industry stands today, essentially all rare earths, whether they're mined in China or elsewhere, find their way to China, and then China is controlling manufacturing 

and distribution of those rare earths.