Burgum Warns On Rare Earths

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Chinese Communist Party (CCP) export restrictions on seven heavy rare earths used to manufacture industrial magnets nearly shut down key industries in the West, according to United States Secretary of the Interior Doug Burgum.

“We were going tit-for-tat” in renegotiating trade pacts, he told “American Thought Leaders” host Jan Jekielek in an Oct. 7 interview.

Burgum recalled the CCP’s April 4 response to President Donald Trump’s April 2 executive actions that boosted tariffs on Chinese imports to 145 percent.

“They withheld shipping a certain type of magnet to all Western countries, not just the United States,” Burgum said. “We were facing, within weeks, every auto plant in the world being shut down.”

The Trump administration exempted electronics from boosted tariffs, and the CCP lifted the restrictions, but the episode underscored how vulnerable the United States and its trading partners are to China’s global dominance in critical minerals.

Chinese processors produce 85 percent of the “20 most important rare earth minerals” sold on global markets, Jekielek said.

The CCP’s import restrictions are “a wake-up call” for the West to secure its supply chains, Burgum said.

On his first day back in office, Trump issued executive orders to declare an energy emergency and increase domestic energy production to “help ensure a more secure, predictable, and affordable supply of critical minerals and materials.”

He followed with a March executive order requiring agencies to expedite projects by streamlining permitting, opening more public lands for mining, and including critical mineral development under the Defense Production Act

China, however, will still dominate the global minerals market for years. 

When its processors’ market shares are challenged, the CCP simply subsidizes them to upscale production and crash prices, making it unprofitable for competitors.

Burgum said China overtly tried to knock MP Materials’ Mountain Pass Mine in California out of business, despite the establishment of a Department of Defense (DOD) fund more than a decade ago to subsidize its reopening.

The company was successful and had plans for an IPO, Burgum said, but “boom, the next year, they’re losing $200 million because China’s dumping in the market.”

“This is just a playbook that China’s used to avoid market forces and just strategically, as a country, subsidize certain industries to gain control.”

Premature, Overplayed Hand

Burgum said the CCP’s minerals market manipulation has spurred the administration to take an “extraordinary step.” 

The government’s investment in key minerals can help markets weather CCP manipulation and, with select tariffs, encourage private investment to “create, again, a measure of protection for U.S. companies to be able to restart this mining industry.”

“In this case, we can come in, take a minority position, send a signal to the market that there’s going to be a partnership here,” he told Jekielek.

The “exposure” Western industries saw last spring remains a threat, he said.

Burgum said China agreed to start shipping magnets again, but required buyers to fill out an export form describing “how they use the magnet, what product it goes into, [and] what are the dimensions. Is it for commercial or military use?” 

“It is essentially a giant intelligence-gathering capability, Burgum said. 

The CCP, however, may have overplayed China’s advantages, exposing its own vulnerabilities, Burgum said.

“In my view, China played their card too early. They played it at a time when we were not involved in any kind of kinetic war … we’re in a cold war, essentially, a trade war,” he said. 

“They played it early, and that woke up America. Certainly woke up this administration.”

—John Haughey; Stacy Robinson

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—Stacy Robinson