U.S. Seeks Minerals, But Can't Process Them

"President Trump wants to secure the minerals the U.S. needs for everything from smartphones to jet fighters by striking deals in Ukraine, Greenland and even Russia.

But even if the Trump administration secures more mines for American companies through agreements like the mineral-rights deal being discussed with Ukraine, it may have to send much of the minerals to China -- its main geopolitical rival -- to be processed.

A prime example of this conundrum is rare earths, a group of minerals used for defense systems that Trump has said is a focus in Ukraine.

"We very much need rare earth. They have great rare earth," Trump said about Ukraine, ahead of a recent cabinet meeting.

In truth, the U.S. already has abundant supplies of rare earths, but it relies on China to refine them. That is because the U.S. has lost much of its capacity to process minerals, while China has become the world's dominant refiner of rare earths, cobalt, copper and many other metals.

"Drill baby drill is not the right focus," said John Ormerod, a consultant for the rare-earth industry.

The Wall Street Journal reported that the Democratic Republic of Congo has offered the U.S. access to a trove of minerals, including cobalt and copper, in exchange for helping it defeat a rebel force in the country. But such a deal raises questions about where these minerals would be processed.

"President Trump been long committed to unleashing all of America's God-given natural resources, including critical minerals," said White House deputy press secretary Anna Kelly.

The loss of American refining capacity to China is just one example of how the deindustrialization of the U.S. has ended up favoring its main geopolitical rival. The U.S. has all but stopped manufacturing key products, including containerships, certain pharmaceutical ingredients and some machine tools, as they became cheaper and more efficient to produce abroad, particularly in China.

In the case of rare earths, the U.S. mines around 12% of the world's supply, putting it only behind China, according to the United States Geological Survey. Most of the bounty comes from a massive deposit in the Mountain Pass mine in California.

But the U.S. exports about two-thirds of its rare earths to China. It has little choice: China is responsible for around 85% of the world's rare-earth refining. Chinese companies then turn the ore into the final product -- rare-earth magnets -- and export the magnets back to the U.S.

Similarly, the U.S. sends a chunk of its substantial supplies of copper to China for processing. Even America's lone nickel mine sends its nickel concentrate abroad to Canada for smelting.

"That so-called midstream piece of processing and refining of ores into chemicals and metals is really important and dominated by China," said Morgan Bazilian, director of the Payne Institute at the Colorado School of Mines. Given the pace of China's expanding efforts, "I don't see it becoming undominated," he said.

Until the 1990s, the U.S. was a major refiner of minerals and metals. But then China emerged as the dominant player, powered by its cheap labor force and looser environmental regulations of a sector that can be highly polluting. The voracious need of Chinese manufacturers for raw materials during the country's years of explosive growth was also a boon for Chinese refiners.

Today, the sheer scale of China's refining industry makes it difficult for others to compete. According to industry estimates, the cost of building a refinery plant in China is a third of the cost in the U.S." [1]

1.  U.S. Seeks Minerals, But Can't Process Them. Emont, Jon.  Wall Street Journal, Eastern edition; New York, N.Y.. 25 Mar 2025: A3.