Biden faces green dilemma in push to build US rare earths capacity

When officials in Hondo, a small farming town just 40 miles west of San Antonio, Texas, announced in February that a new rare earth elements processing plant would come to town, they were greeted by complaints from local residents.

“Hello, more pollution” read one comment on the county’s Facebook page, after it was announced that Lynas, an Australian rare earths company, had received a $30m US government grant to open a new processing facility with US company Blue Line.

The plant is just one of many that the Biden administration hopes will open in the US, which relies almost entirely on China for its access to the rare earths used in high-tech products ranging from smartphones to F-35 fighter jets.

But the reaction with which it has been met illustrates a dilemma facing President Joe Biden: while rare earths such as cerium and yttrium are needed for green technologies, the mining and processing to obtain them, which takes place mostly in China, has a reputation for being polluting and environmentally damaging.

“This is gross, dirty and polluting stuff,” said Aaron Mintzes, senior policy counsel at environmental group Earthworks, about mining rare earths. “And, frankly, it’s why it happens in China.” Processing the mined rare earths, which happens once they are extracted from the ground, can also create wastewater. 

A spokesperson for Lynas said it was an ethical and environmentally responsible company with “an excellent track record of compliance with local laws and regulations and [it adopts] international best practice in all jurisdictions where this is at a higher standard than local regulations”.

The US has been trying to encourage its own industry for more than a decade. The risks of relying on China were highlighted by Beijing’s move in 2010 to cut off exports of rare earth elements to Japan, prompting a World Trade Organization dispute. China was ultimately forced to roll back its controls.

As tensions with China rose, the Trump administration authorised the Pentagon to begin making grants to companies in an effort to reshore some production.

The US currently has one operational rare earths mine, Mountain Pass, in California. However, Molycorp, the only big rare earths producer in the country, went bankrupt in 2015, resulting in the mine’s closure at the time. The US Department of Defense is supporting the resumption of activity there by funding MP Materials, a private equity-backed company, and it has restarted excavations. 

Once unearthed, materials must still be sent to China for processing, because the US lacks a full supply chain that can process the mined minerals into usable form. 

Jane Nakano, a former energy department official who is now a senior fellow at the Center for Strategic and International Studies, a Washington think-tank, said US government investment should be spent wisely across the supply chain. “We already know from Mountain Pass that, without processing capacity, we still just end up shipping things off to China.”

Others say new mining in the US will be needed to meet the amount of demand for rare earths expected as electric vehicles become more popular.

Pini Althaus, chief executive of USA Rare Earth, said new mines would be critical to securing supply chains, as would increasing processing capacity, and said responsible mining in the US would be preferable to outsourcing it to China. The company owns an 80 per cent stake in the Round Top rare-earths mine in Texas that is not yet fully operational.

“Environmentalists want to have their cake and eat it,” said Althaus. “They want these materials for the EV sector — but if they’re causing environmental devastation [in China], then how are you going to put them into green technologies?” 

Alongside the Pentagon, the Department of Energy is providing funding to companies to experiment with new methods to extract and process rare earth elements from existing mining waste. 

Drew Horn, a former energy department official who specialised in rare earth minerals under the Trump administration, now offers consultancy services to rare earths groups. He says when it comes to companies applying for government funding from the Biden administration “if there’s not an environmental element it’s a non-starter”.

Earthworks’ Mintzes said recycling batteries and focusing on new extraction techniques from existing waste should form the backbone of any growth in the US industry. “We need to recycle, reuse and substitute minerals,” he said. “That’s where a lot of our focus needs to be.”

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