NIMBYism Is a Strategic Threat

The world needs so-called rare-earth minerals to power its increasingly digital societies. Almost all rare-earth processing, alas, is done in China, which has Western leaders fearing that their countries’ digital futures, not to mention their green transformations, could be sabotaged by Beijing.

But rare-earth minerals are not rare at all: They exist in the earth right in our backyards. Now Western mining companies are advancing technology that would allow them to better extract the crucial minerals from mines in their own mountains—and, most promisingly, from waste in existing mines. It’s relatively clean and unintrusive, though not as clean and unintrusive as having the extraction and processing done by Chinese firms in China and Africa.

The German government is in a bind. It wants to reduce Germany’s dependence on Chinese-processed rare-earth minerals while keeping Germany as green as possible. Considering that the 17 elements that make up the rare-earth mineral group are needed in virtually every aspect of modern life—ranging from smartphones and electric-car engines to wind turbines and fighter jets—the continued supply is crucial. It’s an apt reflection of the world that the green transformation, the West’s increasing need for modern arms, and consumers’ increasingly digital lifestyles all require ample access to rare-earth minerals.

The German government is in a bind. It wants to reduce Germany’s dependence on Chinese-processed rare-earth minerals while keeping Germany as green as possible.

China possesses enormous rare-earth reserves, but so do Brazil, Russia, Vietnam, Australia, and, to a much lesser degree, the United States. Greenland—a self-governing region of Denmark in which China has been working to increase its presence—also has significant rare-earth deposits. And so do several African countries including Malawi and Burundi, which are emerging as a new frontier of rare-earth extraction. But rare earths are also extremely difficult to process because they appear intermixed with various other elements. While miners can extract a clump of iron ore or even a piece of gold or diamond, rare earths have to be removed from inside large chunks—and removed from them in a costly, painstaking process.

Because the rare earths appear in such a diluted state (hence the “rare”), companies have to go through large quantities of rock to collect them. The complications in processing the minerals may have been what caused a sudden surge in rare-earth stock prices to quickly plummet a decade ago. Either way, for the past three decades or so China has been willing to take on rare-earth extraction and processing, and it has delivered the crucial minerals to the rest of the world at a low price. Rare earths have been a poster child for globalization: a market in which one country could theoretically specialize to the benefit of all.

The hang-up that the German coalition, along with every Western government, is having to tackle is that that specialization has allowed China to build a veritable rare-earth mineral monopoly. Last year, 60.6 percent of the world’s rare-earth production took place in China, followed by the United States with a 15.5 percent market share, Myanmar with 9.4 percent, Australia with 7.9 percent, and Thailand with 2.9 percent.

The rest of the world produces virtually no rare-earth minerals (also, and more accurately, known as rare-earth elements). “And that’s not because we don’t possess them in our countries,” Matthias Wachter, head of international cooperation, security policy, raw materials, and space at the Federation of German Industries, told me. “We have rare-earth minerals right here in Germany, and they exist in other European countries as well. And in Australia, Canada, and Latin America there’s a lot of it. But since over the years China has pursued a strategy of processing rare-earth minerals very cheaply, it has become uneconomical to do it in our countries. And as a result, we haven’t been doing it.”

China’s 60 percent market share is down from the 90 percent market share it commanded more than a decade ago. But in 2010, after Japan arrested a Chinese fishing-boat captain who had rammed into Japanese patrol vessels, Beijing threatened to cut off rare-earth mineral exports. Since then, Australia and the United States have boosted their rare-earth mining and processing.

China’s 60 percent market share, though, is now making Western governments extremely nervous since they realize that they, too, can become subject to the treatment meted out to Japan—especially since in the past couple of years Beijing has repeatedly demonstrated that it’s willing to exploit globalization to pressure other countries. (Remember its punitive tariffs on Australian wine and its blockade of Lithuanian goods?) “The United States is trying to incentivize more domestic rare-earth mineral mining through the Inflation Reduction Act,” Wachter pointed out. “But in Europe, we don’t have any similar legislation.”

But while the German government is agonizing and the European Commission is contemplating labeling mining unsustainable, companies—clearly sensing a potentially massive market—are innovating. Swedish mining giant LKAB, for example, is in the process of perfecting a technology that will allow it to efficiently extract rare-earth minerals from the leftovers in its existing mines. “In every mining process, you’ll have the primary element that you’re mining for and then lots of waste,” Darren Wilson, the CEO of LKAB Minerals, told me. “With iron ore, you use 40 percent of what you take up. With copper you only use 1 percent, and with gold it is even less.”

Indeed, in what’s known as the “wheel of companionality,” mines typically feature a metal and a group of other elements. According to a 2021 report by Nordic geologists, mines in the Nordic countries contain up to 9 percent of the world’s known rare-earth resources, and other European countries also have reserves. Numerous European countries have iron ore mines, which means that their accompanying elements can be extracted as well, while South America is home to a string of large copper mines with accompanying elements that are not being extracted. But the enormous challenge of processing the elements has given China its near-monopoly.

Today, not using rare-earth minerals that exist right in one’s backyard and instead importing them from China seems foolish. The catch remains the price. “With all forms of mining, the mining company spends a significant amount of money on something that has a variable price,” Wilson pointed out. “And new mines are particularly expensive and not particularly popular among the residents. But we do have existing mines that we can use. You can even go to historical landfills and mine for rare-earth minerals. In effect, we can recycle from mining landfills.”

Such upcycling, of course, would make rare-earth production more attractive than if it had to be mined directly from the rock. The U.S. Department of Energy seems to view the issue in much the same way as Wilson and LKAB and earlier this year issued a $140 million funding incentive for the most innovative concept for a refinery producing rare-earth minerals from mining waste.

Combine that with plans to recycle rare-earth minerals, and freedom from dependence on Chinese rare-earth minerals is within reach—if firms like LKAB see a business case for the investment. Western production would most likely also entail businesses and consumers paying a bit more for their digitally enhanced goods.

Innovative processing technologies such as that of LKAB essentially represent high-tech upcycling since they extract the minerals from leftovers in existing mines and landfills. There’s another advantage to rare-earth mineral mining at home: It reduces dependency on global shipping, which is easily disrupted by forces as disparate as port congestion and China’s zero-COVID policy.

But there’s a hiccup: the will of the people. Unlike coal extraction, which features open-surface mining resulting in ugly scars on the landscape, rare-earth minerals, iron, and their accompanying elements are mined below the surface. But below-surface mining, too, has a visual impact on the landscape, and 21st-century residents of liberal democracies want pristine surroundings.

China appears to be fueling nascent NIMBY protests against planned rare-earth facilities in the West.

Indeed, China appears to be bolstering nascent NIMBY protests against planned rare-earth facilities in the West. Earlier this year, cybersecurity firm Mandiant discovered that the Dragonbridge group, which works on behalf of the Chinese government, was fueling a protest campaign against Lynas Rare Earths, an Australian company planning to build a rare-earth processing plant in Texas.

With or without Chinese information interference, what would happen if no one wanted even virtuous rare-earth mineral upcycling in their backyard? Would you accept rare-earth mineral recycling in yours? And would you pay a bit more for products that are free of Chinese-origin minerals?

Rare-earth mineral dependence is unlikely to become an election issue, but it’s an issue that will decide Western countries’ energy transitions, their digital futures, and their ability to defend themselves. To the question, “What have you done for your country?” people have traditionally given answers like “service in the military.” Tomorrow’s answer may be, “I helped it secure its supply of rare-earth minerals and lithium.” And unlike the military, it’s an effort in which everyone can play a part.