Rare-earth elements (REE) — also known as rare-earth minerals or rare-earth metals — are a group of 17 chemical elements of the periodic table. Although most of them are not terribly rare, they are highly strategic substances and vital components in most of the technology we employ every day.

The 17 rare-earth elements are: cerium (Ce), dysprosium (Dy), erbium (Er), europium (Eu), gadolinium (Gd), holmium (Ho), lanthanum (La), lutetium (Lu), neodymium (Nd), praseodymium (Pr), promethium (Pm), samarium (Sm), scandium (Sc), terbium (Tb), thulium (Tm), ytterbium (Yb), and yttrium (Y).

What is rare are deposits of these minerals in high enough concentrations to be feasibly and economically extracted. Presently, about 90% of the global supply of rare-earth elements comes from just one country: China. In the context of fragile trade and diplomatic relations between the U.S. and China, any pressure on the supply of rare-earth elements could be a big problem for American industry.

To some extent that pressure is already being felt. In 2010, China completely cut off REE exports to Japan over a territorial dispute. This caused prices of some elements to soar, and the supply interruption resulted in a ruling against China’s action by the World Trade Organization.

China has also been drawing down exports of REEs for a number of years. Between 2005 and 2013, China cut exports of the minerals by almost 50%.

REEs are used in the production of everything from computers and smartphones to televisions and fluorescent lighting. They are key to the development of rechargeable batteries, motors and magnets used in hybrid and electric vehicles. Other REEs have vital defense industry applications, including jet engines, missile guidance systems, missile defense systems, satellites and lasers.

It is the U.S. military’s needs for rare-earth elements that sparks the most concern over Beijing’s persistent use of its dominant position as a supplier (and processor) of rare earths for leverage in the ongoing power struggle between the two global giants. China also has a stranglehold on processing REEs — maintaining 85% of the world’s capacity to convert rare earths into materials manufacturers can use.

Recognizing the nation’s vulnerability, the U.S. Department of Energy initiated Project REACT — short for Rare Earth Alternatives in Critical Technologies — to develop cost-effective alternatives to rare earths. No good substitutes have been discovered to date.

Congress may get in on the act, however, as it considers legislation aimed at reviving the nearly dormant U.S. rare earth industry.

The bill would support mining companies in developing rare earth mines and processing plants. It also would allow manufacturers of consumer electronics to deduct 200% of the cost of U.S. rare earth products. It would further require the U.S. military to exclusively use American-derived REEs in all weaponry and would provide $50 million in public funding for rare earth pilot projects.

Beyond China, there are no major miners with pure rare earth exposure. There’s only one operating rare earth mine in the United States — and it is co-owned by a Chinese group.

The Mountain Pass Mine in California’s Mojave Desert was operated for years by Molybdenum Corporation of America (Molycorp) and, through a string of acquisitions and bankruptcies, eventually came under the ownership of Union Oil and Chevron. Now operating as MP Materials, the mine and a rejuvenated processing plant are jointly owned by a pair of hedge funds and China’s Shenghe Resources Holding Co. Ltd.

In June 2019, the U.S. Commerce Department recommended that the United States take urgent steps to boost domestic rare earth production, warning that a halt in Chinese supplies would disrupt global supply chains. The report also advocated short-term measures such as stockpiling and longer-term measures to explore, develop and process more rare earth elements.