Two decades ago, Indiana factories that converted rare earth metals into magnets transferred production to China, just when the demand for magnets for all types of products began to shoot, from cars and semiconductors to combat planes and robots.
Now, the United States faces the cost of losing that supply chain. The Chinese government abruptly interrupted exports from rare earth magnets to any country on April 4, within the framework of its commercial war with the United States.
American officials expected China to soften their restrictions on magnets as part of the commercial truce that both countries reached in mid -May. But on Friday, President Donald Trump suggested that China had continued to limit access.
Now, American and European companies are depleting magnets.
American automobile manufacturers are the most affected; Executives warn that production in factories in the west and the south could be reduced by the next few days and weeks. Automobile manufacturers need magnets for electric motors that activate brakes, direction and fuel injectors. The single luxury car engines, for example, use up to 12 magnets.
Factory robots also depend on rare earth magnets.
“This is the Achilles heel of the United States and the world, which China explodes continuously,” said Nazak Nikakhtar, who was the Undersecretary of Commerce in charge of supervising export controls during Trump’s first mandate.
The Chinese government has said little lately about its restrictions on the export of rare earths. Kevin Hasett, director of the National Economic Council of the White House, said the weekend in the program This Week From the ABC chain that Trump and the Chinese leader, Xi Jinping, could talk about commerce this week, although no date had been set.
After China stopped all exports, Beijing said future shipments would require independent export licenses. Since then, the Chinese Ministry of Commerce has battled to grant licenses. He granted a handful to European companies in mid -April and some more to US companies last week, but world supplies are decreasing rapidly.
“Some approvals are coming, but they are far from enough to avoid the imminent paralysis of production,” said Jens Eskelund, president of the European Union Chamber of Commerce in China. “We continue to face an important interruption of supply chains.”
To make things worse, some Chinese manufacturers of rare earth magnets have stopped production while waiting for permission to resume exports. The interruption of weeks in the production of magnets is moving through the supply chains and could soon reach manufacturers.
“China could paralyze the United States car assembly plants,” said Michael Dunne, specialized automotive consultant in China.
China produces 90 percent of the almost 182 thousand tons per year of high performance rare land magnets. Japanese companies produce most of the rest in Japan and Vietnam, mainly for Japanese manufacturers.
The United States produces practically none, although small factories will begin to operate at full capacity this year in South Carolina and Texas. A succession of American governments has tried to reactivate the industry since China caught attention to its domain by imposing a two -month seizure to sending rare earth to Japan during a territorial dispute in 2010.
But little has happened, due to a harsh reality: to manufacture rare earth magnets requires considerable investments in each phase of production. However, sales and earnings are tiny.
World Sales of rare lands amount to only US $ 5 billion a year. This is tiny compared to industries of 300 billion such as copper or iron mining.
China has a formidable competitive advantage. The state industry has few environmental compliance costs for its mines and an almost unlimited government budget to build huge processing refineries and magnet factories.
Rare earth processing is technically demanding, but China has developed new processes. In 39 universities from all over the country, rare earth chemistry programs are taught, while in the United States there are no similar programs.
China refine more than 99 percent of the world supply of so -called heavy rare earths, which are the least common types of rare earths. Heavy rare earths are essential to manufacture magnets that resist high temperatures and electric fields of cars, semiconductors and many other technologies.
The only American land mine, located in Mountain Pass, California, stopped producing in 1998 after remains of heavy metals and slightly radioactive material of a desert pipe. Chinese companies controlled by the State tried three times without success to buy the inactive mine before it was acquired by US investors in 2008.
In 2010, an investment program of US $ 1 billion backed by the Pentagon was launched to improve compliance with environmental standards and expand the mine and refinery on one side. But the expensive complex could not compete when he reopened briefly in 2014, and closed again the following year.
MP Materials, a Chicago investment group that included a minority associated company owned in part of the Chinese government, bought the mine in 2017. The mine reopened the following year, but sent its mineral to China for the difficult task of separating the different types of rare earths.
Just in recent months the mine has been able to chemically separate rare earths in more than half of its production. However, this represents a loss of money, because processing in China is very cheap.
MP Materials built in Texas the new factory that will convert the separate rare earth into magnets.
The transformation of the strange earth separated into chemically pure metal bullshit that can be introduced into the furnaces of magnet manufacturing machines is a considerable bottleneck. An emerging company from New England, Phoenix Tailings, is addressing that deficiency, but its small scale highlights the challenge.
Phoenix Tailings has absorbed much of the staff and the Infinium team, an emerging company that had tried to do the same. Infinium ran out of money in 2020, when US legislators were more focused on Covid-19 pandemic than in rare earths.
As Chinese land minerals are difficult to achieve, Phoenix manufactures metal from mining waste: excess material in mines that has already been processed once to eliminate another material, such as iron.
Phoenix Tailings has four machines, each the size of a field house, in its Massachusetts factory. Each produces a 3 -kilograms ingot every three hours, 24 hours a day. The total capacity of the operation is 36.2 tons per year, said Nick Myers, executive director of Phoenix. He did not want to identify the buyer, but said it was a car company.
Phoenix is installing equipment in a major location in Exeter, new Hampshire, to produce metal at a rate of 181.5 tons per year, a very small figure compared to Chinese factories that produce more than that in a month.
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Thomas Villalón Jr., Technical Director of Phoenix, said that rapidly increasing production was important during a commercial war: “At this time it is a race.”