Why is Trump suddenly obsessed with rare earths?
Donald Trump is talking about rare earth elements like they are magic rings with the power to unlock world domination.
The US President is on the brink of signing a multi-billion dollar deal with Ukrainian President Volodymyr Zelenskyy, that would give the US access to Ukraine's rare earth minerals in exchange for financial security and continued military support in the war with Russia. Rare earths are critical for manufacturing electronics, batteries, magnets, and military weapons.
But are these rare earth elements actually as rare and valuable as Trump has been led to believe?
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ABC Listen, podcasts, radio, news, music, and more.
I'm Julia Baird, and I'm Jeremy Fernandez.
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If you received an SD card in the mail with no note attached and no return address, what would you do with it?
Here at the ABC, we are definitely not meant to do this.
Curious, he inserts the key into his laptop.
By the time he arrives in Australia, his computer is infected.
If we really want to open it, we call IT.
If we don't, well, we chuck it in the bin.
In 2010, CNN's Tokyo Bureau had exactly this experience.
They received a rogue SD card and they chucked it in the bin.
If they'd opened it, here's what they would have found.
It's a video of a Chinese fishing boat harassing and ramming a Japanese Coast Guard patrol boat near the disputed Senkaku Islands northeast of Taiwan.
And this video was hot property.
Every news organization in Asia was looking for it, ever since a diplomatic dispute was triggered by the arrest of the Chinese fishing boat's captain.
Japan says he used his ship to deliberately ram one of their Coast Guard vessels near these disputed islands.
China wants Japan to release the captain.
One of the Japanese Coast Guardsmen was confused.
Why wasn't the government releasing the video that clearly showed the Chinese boat was at fault?
Well, it's because the Japanese government was actually quite spooked.
Japan appears to be trying to cool down the situation.
See, China had cut off exports of rare earth elements to Japan.
And it has Japanese electronics producers panicking.
Japan is the land of electronics and modern electronics all need rare earth elements.
In 2010, China was the world's only source of rare earths and they were cutting back exports in order to use them in their domestic electronics industry.
China suddenly slashed its exports by 72%.
That sent prices soaring.
Some elements have gained as much as five-fold in just the last few months.
The panic lasted most of 2011, but then Chinese supply returned and everyone everyone kind of forgot about it until February this year.
It's a very big deal.
It could be a trillion dollar deal.
It could be whatever, but it's rare earths and other things.
U.S.
President Donald Trump in particular has been suddenly expressing a huge interest in rare earth elements.
We need the rare earth and we have some here, but we don't have enough.
He's been frantically hunting for rare earth elements in Canada, Greenland and Ukraine, and even here in Australia.
We're also signing agreements in various locations to unlock rare earths and minerals and lots of other things all over the world.
But this whole debate over rare earths, it's a lot stranger than it seems.
So what's really going on here?
Is Donald Trump on a wild goose chase?
Or is he on the brink of a gold rush?
I'm Matt Bevan, and this is if you're listening.
I've got to start here by saying that the terminology in this area is very messy.
Critical materials and rare earth elements aren't the same thing, though sometimes they do overlap.
Today, we're talking specifically about rare earth elements, which does not include lithium, copper, nickel, and cobalt.
We'll get to those another day.
Rare earth elements kind of have the vibe of science fiction or fantasy about them.
The rings of power, the infinity stones, something like that.
In this case, though, there's not six stones, there's 17.
And these rare earth elements are extremely important in the modern world.
They're in your phone, your speakers, your hard drives, your cameras, your TV, your EV battery, your wind turbine, your attack helicopter, your anti-tank missile, your fighter jet.
Okay, maybe you don't have all those things.
Neither do I.
Yet.
One of the commonly used rare earths is called neodymium, which is used to make powerful magnets.
Each electric vehicle needs between one and two kilos of neodymium to build its motor.
The neodymium iron boron magnets are also used in the drives of hybrid vehicles.
I've got a neodymium magnet in my hand, the size of three shirt buttons.
It's extremely powerful.
Pinching them with my fingers, they can easily pick up a claw hammer.
Now the cool thing about this magnet is I can make one myself.
We're in a cost of living crisis and artisanal magnets could be a good way to diversify my revenue stream.
See, it's theoretically quite a simple process because rare earths can be found found in trace amounts in the ground all around us, including in my backyard.
So, to make a rare earth magnet, you need some rocks and dirt.
Any will do.
I've dug up a kilo of dirt from my garden and put it in this bucket.
Then you pour the soil into a large jar full of mysterious and horrifying chemicals.
Then there's a 50-step chemical process, which I'm not fully across, so we will just fast-forward through that.
More fast forwarding.
And voila!
My kilo of dirt is now a piece of neodymium that's about the size of a single grain of rice.
And as part of the processing, I now have this jar of horrifying waste products, which happens to be radioactive.
Hmm.
It doesn't seem like a great deal.
Maybe it works better if you scale up the process.
If I do this to my entire backyard, I can get to one kilo of neodymium.
I'll end up with roughly 50,000 liters of toxic radioactive waste.
And the bad news for my artisanal magnet store is that one kilo of neodymium is worth just 95 US dollars.
Because the thing about rare earths is...
They're not rare, they're more abundant than silver.
Guess where I got my little neodymium magnet from?
I just got it from Hammerbach!
We're going to Hammerbahn.
Yeah, Hammerbach!
Yes, Hammerbahn.
You can buy a chunk of rare earth from a hardware store for like 10 bucks.
Even though these elements are vital for modern life and modern military technology, they're not precious metals.
They're not valuable in small quantities.
You've got to mine and process tons of it and create even more tons of toxic byproducts before you start making any money.
So if they're so important, why are they so cheap?
Well, it has something to do with this.
In the rare earths facility in the Chinese city of Baotou, black sludge pours into a tailings pond full of waste.
The pond, which is four kilometers across, is black.
The thick toxic sludge being tipped into it from hose pipes propped up on sticks is black too.
Ideally, this sludge is meant to stay in the pond, but occasionally it seeps into the Yellow River just to the south.
Thankfully though, the Yellow River isn't China's second most important source of drinking and irrigation water.
Oh, wait,
I'm being told that actually it is.
The Rare Earths facility nearby is primarily a steel mill.
They just happened to make the Rare Earths as a byproduct, and it's not exactly a modern operation.
Until 2008, they used steam trains to shunt the slag wagons around.
The cranes overhead play haunting music when they move to warn people to watch their head, but that only makes the place
more dystopian.
By 2010, when the Chinese fishing boat rammed the Japanese Coast Guard, about two-thirds of the global rare earth supply was coming from Baotou.
The rest was coming from similar facilities elsewhere in China.
They mine 97% of the world's rare earth supplies.
And because the Chinese government has a monopoly on rare earth elements, they set the price.
And the price is so cheap, it's virtually impossible for democratic countries to compete.
Now, if China would simply let the market work on its own, we'd have no objections.
But their policies currently are preventing that from happening.
The funny thing is, if not for the fishing boat incident and the subsequent export reductions back in 2011, they probably would have retained a permanent monopoly.
But the incident created a panic in the U.S.
Defense Department.
Building each one of their flagship F-35 fighter jets needs 400 kilos of rare earths.
Running your military on a product that you can only buy from your likely World War III enemy is a bit of a military strategy, oopsie.
The military obviously are very concerned because rare earth magnets provide the guidance for their weapon systems on tanks, the tail fins on their their smart rockets and bombs.
Presently they all come from China.
Oddly enough though, I actually have good news about this situation.
The Australian government understands the strategic significance of rare earths globally.
Former Australian Prime Minister Kevin Rudd has been on the case since 2010.
But Australia stands ready to be a long-term, secure, reliable supplier of rare earths to the Japanese economy in the the future.
For the last 15 years, an Australian company called Linus has been setting up a large rare earth mining operation in Western Australia's goldfields region and a processing plant in Malaysia.
It hasn't exactly been easy though.
Black Lakes aren't popular.
Because the nearest community to the WA mine is 30 kilometres away, the pushback was primarily in Malaysia.
But they've built a solid reputation for compliance with environmental standards in both Australia and Malaysia.
Their waste products aren't just burped out as raw sludge into a lake.
In the last few years, they've been expanding the operation with additional processing facilities in the out-backtown of Kalgoorlie and in the US state of Texas.
All of this has been done with financial support from the Australian government and the US Department of Defence to provide an alternative to China for sourcing rare earths.
You see, Australia equals the periodic table.
We also have the biggest and best mining companies in the world.
Oh boy, oh boy, do we love mining here.
We are uniquely positioned to be able to do this.
Meanwhile, the US Department of Defense is also investing hundreds of millions of dollars in restarting an old rare earths mine in California and building up rare earth recycling operations across America.
None of these operations are running at full capacity thanks to the low market price of rare earths, but they could scale up if necessary.
The US, Australia and Malaysia could supply the world with rare earths for decades if China ever decided to stop exporting them.
They would be more expensive, thanks to our hesitation to create production facilities that look like hellmouths, but they are available.
So if that's the case, what's this about?
One of the things we are doing is signing a deal very shortly with respect to rare earths with Ukraine, which they have tremendous value in rare earth, and we appreciate that.
Why would you sign a deal to get rare earths from Ukraine when you've already got Chinese supply and a backup in Australia and California?
Let's figure it out.
U.S.
Republican Senator Lindsey Graham is a big supporter of Ukraine.
He wants America to continue helping them out in the war against Russia.
And in the middle of 2024, in the thick of the presidential election campaign, he made this argument on CBS for why the US should continue assisting Ukraine.
They're setting on $10 to $12 trillion of critical minerals in Ukraine.
$10 to twelve trillion dollars is quite the price point considering china is keeping the cost so low unless ukraine is made entirely of neodymium they could be the richest country in all of europe i don't want to give that money and those assets to putin to share with china
now this doesn't really make any sense Russia and China have access to all the minerals they need for the next several centuries.
But a couple of months later, Senator Graham traveled to Ukraine to make sure they understood his message.
I'm here with President Zelensky.
I am such an admirer of what you and your country have done.
You're trying to stop the Russians so we don't have to fight them.
They're sitting on trillion dollars worth of minerals that could be good to our economy.
Ukraine needed a plan for what to do if Donald Trump was elected, and Senator Graham provided it to them.
While Trump was skeptical of the need for the US to pay to support Ukraine, he's also the art of the deal guy.
So during the campaign, Zelensky came to Trump Tower with a plan.
I think we have a common view that the war in Ukraine has to be stopped and put in cunt to win.
The Ukrainians have to prevail.
And I want to discuss with you the details of our plan of victory.
Our plan of victory, not our plan of peace, of victory.
Two weeks after Trump was elected, Lindsey Graham was on Fox News talking about a deal.
Donald Trump's going to do a deal to get our money back, to enrich ourselves with rare earth minerals.
Interesting.
But you know the richest country in all of Europe for rare earth minerals is Ukraine.
Two to seven trillion dollars worth of minerals.
That is a bit of a jump down from 10 to 12 trillion dollars, which is what he was saying before, but okay.
Ukraine's ready to do a deal with us, not the Russians.
So it's in our interest to make sure that Russia doesn't take over the place.
And by February, President Trump was in on this too.
He seems to have got it into his head, primarily thanks to Senator Graham, that under the battlefields of eastern Ukraine was some kind of Aladdin's cave full of sparkly magnets.
We're telling Ukraine they have very valuable rare earth.
So we're looking to do a deal with Ukraine where they're going to secure what we're giving them with their rare earth and things.
He told Fox News that he would help Ukraine out in exchange for the contents of the cave.
I told them that I want the equivalent, like $500 billion worth of rare earth, and they've essentially agreed to do that.
So at least we don't feel stupid.
Otherwise, we're stupid.
Right.
Yeah.
So.
Ukraine doesn't have $12 trillion of rare earths.
It doesn't even have $500 billion of rare earths.
That's because nobody does.
The total global rare earth market is worth less than $5 billion each year.
So $500 billion is the total global rare earth market for the next century.
In fact, geological experts say that Ukraine actually has no notably large deposits of rare earths at all.
Modern surveys indicate the closest economically significant deposit is in Romania.
And even if that weren't all the case, and Ukraine could profitably mine their non-existent rare earth deposits under a battlefield, it would take decades to build the infrastructure.
Infrastructure which already exists in California and Australia.
It doesn't make any sense.
It'd be like Australia threatening to bomb another country if they don't give us all their chicken salt.
They don't have any, and we have have more than enough.
So what's going on here?
Has Trump been fossicking about in the Donbass and discovered something about Ukrainian geology that nobody else knows?
Is Trump engaging in a Machiavellian scheme where he crafts a deal, demanding something he knows Ukraine cannot provide so that he has an excuse to renege on it?
Is it a way to justify cutting off support for Ukraine because they can't pay up?
Or is it possible that the flow of information is so dreadful in Trump's White House that he's trying to shape foreign policy based on ideas that make no sense?
I hope it's not that last one.
Otherwise, we're stupid.
Yeah.
If you're listening, is written by me, Matt Bethany.
Supervising producer is Cara Jensen-McKinnon.
Audio production is by Cinnamon Nipart.
Another reminder that we're doing our live show at the Newcastle Widers Festival next Sunday the 6th of April at the Newcastle Conservatorium of Music Concert Hall.
Details are in our show notes.
Next, it's not been a good year so far for Elon Musk's car company Tesla.
Stocks are plummeting and sales are falling even faster as people around the world who are opposed to his involvement in the Trump administration boycott the company.
That's been accompanied by arson and vandalism at Tesla dealerships.
But this isn't the first time that a company has come under sustained attack for its connections to a presidential administration.
For three decades, one of America's biggest beer companies was subject to a boycott because of the conservative views of the family that owned it.
How did that turn out?
And what does it tell us about what's in store for Tesla?
That's next on If You're Listening.