MICHEL MARTIN, HOST:
China processes about 90% of the world's rare earths - critical metals for everything from smartphones to microwaves to fighter jets. But 60 years ago, it was the U.S. that had a monopoly on rare earths. How did America lose it? Emily Feng and Kenny Malone from our Planet Money team explain how it happened in three major moments.
EMILY FENG, BYLINE: Key moment one? The early 1960s.
(SOUNDBITE OF ARCHIVED RECORDING)
UNIDENTIFIED NARRATOR: Actually, the story of Molycorp production begins in this pit area.
KENNY MALONE, BYLINE: The Molycorp mining company was the world's rare earths provider.
FENG: Thanks in part to an element called europium.
MARK SMITH: E-U-R-O-P-I-U-M.
FENG: This is Mark Smith, former CEO of Molycorp.
SMITH: The europium is what caused the red color in the color televisions. And so for a period of time, every single color television that was made in the world had europium from the Mountain Pass deposit.
FENG: Mountain Pass was Molycorp's rare earths mine in California, and Molycorp became the world's rare earths provider.
MALONE: And in the 1960s, before Mark Smith's time there, Molycorp invited an international group to see this powerful mining and refining operation.
FENG: That group? They were from China.
SMITH: They could wander around, take pictures and whatnot. They took all that information back.
MALONE: And China became the world's leader in rare Earths.
FENG: Because they had lower labor costs and lower environmental standards. At first, at least.
MALONE: And the world seemed OK letting China take over until key moment two - the fishing boat incident.
(SOUNDBITE OF ARCHIVED RECORDING)
UNIDENTIFIED REPORTER: It all stems from the collision between Chinese fishermen and the Japanese coast guard near some disputed islands.
FENG: In 2010, a Chinese fishing vessel rammed into a Japanese coast guard ship. Japan detained the fishermen.
MALONE: And China cut off rare earths to Japan and decided to export way less to the rest of the world as well.
FENG: This was the first time China flexed its rare earths power.
MALONE: The short supply was a wake-up call and an opportunity for U.S. rare earths.
FENG: Mark Smith decided to revive Molycorp, and he goes on TV to hype it.
(SOUNDBITE OF ARCHIVED RECORDING)
SMITH: The Chinese are only exporting 30,000 tons of material to the rest of the world right now. The rest of the world needs 50,000 tons of this material a year. If anyone has taken Economics 101, what's going to happen? And that is, prices are going to go up.
MALONE: What are you feeling in those interviews?
SMITH: Absolute optimism because I was naive.
MALONE: Because what eventually happens is China floods the world with cheap rare earths, tanks the price and eventually kills Mark's plans.
SMITH: They sent a very strong message - you are not going to produce that much rare earths in today's market. So we learned the hard way.
FENG: And the world sort of moved on again, accepting China as the rare earths monopoly provider.
MALONE: Until key moment three - April 2025.
(SOUNDBITE OF ARCHIVED RECORDING)
PRESIDENT DONALD TRUMP: My fellow Americans, this is Liberation Day. Been waiting for a long time.
(APPLAUSE)
FENG: As part of the trade war with China, the U.S. government has been putting billions of dollars into American rare earths companies.
MALONE: And Mark Smith is back in business - a new company now called NioCorp.
SMITH: We are meeting with the Department of War. We're meeting with the Department of Commerce. We're meeting with the Department of Interior.
MALONE: Mark's company's gotten millions of dollars in government loans so far.
FENG: And the U.S. government has directly bought into nearly a dozen American rare earth companies and projects this year alone, though experts say it'll be years before the U.S. can stand on its own. And rare earths? They're going to be a big topic of contention if President Trump visits China, as planned for later this month.
MALONE: Kenny Malone.
FENG: Emily Feng.
MALONE: NPR News.
(SOUNDBITE OF NICK CAVE & WARREN ELLIS' "HAPPY LAND")
MARTIN: For Emily and Kenny's full story about the U.S. losing its rare earth monopoly, check out the Planet Money podcast.
(SOUNDBITE OF NICK CAVE & WARREN ELLIS' "HAPPY LAND") Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
