Late last month, Molycorp, Inc. announced it would suspend production at the only rare earth elements (REE) mine in the United States, the Mountain Pass Mine in California. The layoff of almost 500 workers there is an immediate economic tragedy, but the strategic impact is potentially dire.  

Here’s why: Our military relies heavily on the rare earths produced at the Mountain Pass Mine. And if they don’t come from the United States, chances are they will come from China.  

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Our military’s job is to be prepared for potential conflict. It cannot ignore the risk of future conflict with China by turning a blind eye to its vulnerable supply chains.  

REEs are essential components of modern, high-tech electronic equipment. They enable the high-tech magnets used in everything from iPhones to Joint Direct Attack Munitions and the white-noise-concealment stealth technology used for helicopter rotors. Even our military’s ships and aircraft depend on REEs for motor components. 

Fifteen years ago, the United States was self-reliant and produced rare earth oxides as well as the rare earth magnets essential to modern electronic products, both civilian and military. Since 2000, however, China has cornered the market on REE production along with the high-tech components that depend on REEs. Today, China controls 90 percent of global supply. 

As demand for REEs increases, China’s outright manipulation of the global supply chain poses a major strategic problem. According to Molycorp, REE global supply is hostage to “an ongoing tsunami of rare earths that are produced via unregulated and illicit mines and processors in China.” China achieved its REE dominance through a combination of overproduction and price manipulation to drive out competitors. The Mountain Pass Mine closure is an exclamation point in that fight against competition. 

China has manipulated the REE market before, and we should expect it to do so again. Chinese authorities have pursued an explicit policy of controlling a resource they considered “strategic and critical” since the 1990s. It’s unclear why the U.S. military and our political leaders do not see REEs in the same light. 

The Mountain Pass Mine was not a solution to this problem, but it was a hedge against it. In 2010, China halted REE exports to Japan after a fishing dispute near a set of islands claimed by both countries. At the same time REE prices were skyrocketing. So Molycorp reopened the Mountain Pass Mine in 2012 (it had closed in 2002) to take advantage of rising REE prices.  

In response, Chinese REE production ramped up and prices plunged as much as 90 percent in global markets, which brings us to today. This strategy effectively ended the feasibility of Molycorp’s Mountain Pass Mine. 

In the aftermath of the Mountain Pass closure, we must ask ourselves: How can we address our reliance on China for such strategically important materials? 

First, we need a national policy to address our dependence on foreign supply chains for REEs. Despite statements and reports from a number of federal departments and agencies, the United States has no coherent policy to address risks to the REE supply chain. 

Second, the Defense Logistics Agency (DLA) should add REEs necessary for key defense products to the DLA Strategic Materials stockpile. That stockpile could also serve as a cross-agency stockpile, allowing it to acquire strategic materials (in this case, REEs) at low prices. The 2015 National Defense Authorization Act addresses stockpiling of strategic materials, including some REEs, but a continuous review is essential given the volatile REE market. 

Finally, U.S. industry, supported by the federal government, should collaborate to recapture a larger presence of the REE mining industry. The U.S. possesses 13 percent of global REE reserves, with significant deposits in California, Alaska, Idaho, Montana, and Missouri. However, the U.S. receives the lowest rating for a “mine-friendly” business environment by industry watchers. Congress and the Obama administration can reform the authorization/permit process to expedite opening mines with promising deposits. 

America’s approach to REE production has been haphazard, unfocused, and minimalist. In effect, our heads are buried in the sand. The end of production at Mountain Pass Mine should serve as a warning; the time to shore up our defense supply chains is now, not when it’s too late.

Adams served more than 30 years on active duty in the U.S. Army as an aviator and military intelligence officer, retiring in 2007 as Deputy U.S. Military Representative to NATO. He is the president of Guardian Six Consulting, based in Gulf Breeze, Florida and Washington, DC. Guardian Six is a defense and national security consulting firm that advises government, business, and nonprofits.