Both Trump and Biden Keen on Rare Earth Markets

The US President Donald Trump and former Vice President Joe Biden are both keen on securing rare earth metals. The presidential candidate Joe Biden, whose greater focus on environmental issues is seen as a likely headwind for the oil industry with Trump's campaign activity limited.

The environment has emerged as an issue in the race as the president election. Trump has pledged to protect the oil industry, Biden supports measures to promote solar and other forms of renewable energy, which would cut into demand for crude. Biden has set out an agenda to actively address climate change, including $2 trillion in government investment, broader use of EVs, and achieving net-zero emissions in the electricity sector by 2035.

Shares in companies involved in renewable energy have climbed steadily since March, in contrast to oil-related names, which have fallen this year. Investors see another risk to the crude market with a Biden victory. The candidate has called for bringing the U.S. back into the 2015 Iran nuclear deal, from which Washington withdrew in 2018. If Tehran pushes ahead with stepping up oil shipments, it would undermine an agreement by OPEC and Russia to cut production. That could spur others to follow suit and reignite a scramble for market share.

Both Trump and Biden are keen on securing rare-earth metals, considered to be the essential vitamins of the tech industry. The two candidates see the need to wean the supply chain ofChina from a defense and environmental perspective.

Trump signed an executive order last Wednesday that called for decreasing the reliance on China for rare earths and boosting national self-sufficiency. "Our nation's undue reliance on critical minerals, in processed or unprocessed form, from foreign adversaries constitutes an unusual and extraordinary threat," Trump declared in the order.

This largely overlaps with Biden's environmental agenda. The former vice president looks to have the U.S. produce its rare earths, which are the key ingredients for high-performance magnets used in electric-vehicle motors.

Rare earth ores from Chinese mines, such as this one in Inner Mongolia, occupy 60% of the global market. Fueling concerns is China's lopsided control of the rare-earths market. Last year, China produced 132,000 tons of rare-earth ores out of the 210,000 tons produced worldwide, according to an estimate by the United States Geological Survey. That grants China a 60% share and is five times U.S. output of just 26,000 tons.

Rare earths can be found across the globe, but the radioactive material contained in deposits creates a hurdle in mining the commodities. China faces fewer costs associated with environmental protection, giving the country an advantage in price competition.

China is said to hold a 70% share in the separation, refinement, and processing of rare earths. The US currently exports ore to China, then reimports the processed products.

In July, the US Department of Defense decided to financially support the Australian miner Lynas, which is building a rare-earth separation facility in Texas jointly with the US partner Blue Line.

The goal of becoming China-free still faces stiff challenges. For one, the US does not possess the adequate processing plants or the technology necessary for the preliminary steps in manufacturing high-performance magnets. Low-cost competitiveness is another issue. Eliminating rare earth dependence on China will likely be a task that will be grappled with beyond the term of the next president.

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