This Is How The US Can Become a Player in Rare Earth Metals | Odd Lots

So, I think we actually do have a national emergency.

And certainly,

So

you know, policy makers and companies understand that when China shut off access.

And so you have

that was the moment.

I think that was the moment where it really hit that that not only over reliance,

but up to 100% reliance.

That's like that, I mean, the Chinese cut off access to the technology that they had developed for refining, for extracting.

They actually when we had that one year pause, one of the things that that the Council on Foreign Relations partner

um, Silverado, um, policy accelerator, they had done a lot of work on

what the what China was actually exporting after um, after that October lifting of the of the um, export controls.

They're exporting um, magnets.

But they're not exporting those rare earths or the technology that we need to actually um, produce the same for ourselves.

Yeah.

Yeah.

Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal.

And I'm Tracy Alloway.

Tracy, you know, we do these episodes on various areas of technology in which China is perceived to be ahead of the US.

Mhm.

And they're very interesting and I learn a lot.

It's not obvious to me like what lessons there are or anything, some of these things are like, we're really far behind, I don't think we're ever going to catch up, this is very interesting and academic, but what exactly is the point of talking about all this?

I don't know if there's anything to do with this information.

You know what I thought you were going to say is that we are sometimes accused of identifying strategic choke points or areas of difficulty on the podcast and then coming up with absolutely no solutions for how to fix them.

I I will be the first to admit I have no solutions.

If someone accuses me of saying, you have not offered any solutions, you know what?

I just say, that's not my job.

I'm I'm just a mere podcaster, I'm just asking questions.

We enunciate the problem and leave it to others to figure out.

We leave it we leave the problem to others to figure out.

But, you know, there are there are people who are doing more than identifying choke points.

There are people who are identifying uh areas in which uh vulnerabilities, etc.

Some people actually are thinking about solutions and they're not all pie in the sky.

Um, you know, I've seen people on Twitter it's like, oh, I know how to sort of uh people are like

How to be more

You've seen people on Twitter.

How to be more Chinese.

Yeah, they just say, why don't you just why doesn't the US just adopt uh Marxist Leninism with Chinese characteristics?

It's really that simple.

Well, no, on a serious note, the one you see most often is, well, why doesn't the US just ease up on some of its regulation

like China in order to get things done quickly?

Or just spend spend more money.

Or something like that, encourage actors to pursue things that aren't necessarily so short-term.

Et cetera.

Yes.

There are in theory uh solutions.

Anyway, let's have a conversation which we actually talk about ideas

that may be somewhere in the realm of uh feasible.

Excellent.

I'm ready.

And this is also this is on an interesting topic that's come up a number of times on Odd Lots at this point.

That's right.

So we're going to be talking about a very core topic and of course, this is the US vulnerability to sort of strategic minerals, rare earths, etc.

Which we know that China dominates, which in theory if China were to completely shut off access on, you know, not just military, high-tech, etc.

All kinds of problems.

So what do we actually what could actually be done to alleviate these vulnerabilities?

We really do have the perfect

And China's dominance was also a crucial turning point in the trade negotiations with the US.

And also, I think you get a sense of, I don't want to say desperation on the US side, but like maybe urgency on the US side just by looking at the headlines that seem to come out on a nearly daily basis about like,

oh, we found a huge critical mineral deposit in Utah, so, you know, we're all saved.

Uh, it's also worth noting.

Before we go further, this is an area in which there's probably a decent amount of overlap from the last administration to this one.

We did an episode uh a little while ago with Peter Harrell, um, who talked about some of these deals that the administration is making with equity stakes in private companies.

Um, I think Vulcan came up as one of them.

And so, yes, we're going to be talking about what where further we can go in terms of actually having a healthy, robust domestic mark uh domestic environment for our own strategic commodities, etc.

Anyway.

We really do have the perfect guest, we're going to be speaking with Heidi Crebo-Rediker.

She's a senior fellow at the Council on Foreign Relations, a former chief economist at the State Department.

And she is the co-author of a brand new report for the CFR looking at exactly this question, what can the US do in this realm?

So, Heidi, thank you so much for coming on the Odd Lots podcast.

Thanks for having me on.

Uh, tell us what is uh what what's this new report all about?

So, so you're right that everyone's identified the problem in that uh, I mean, it's been a long time coming.

This is like a slow train coming at us um, for for decades at this point.

It's not a surprise that China uh has dominated this market for a variety of reasons.

And it's not a surprise that they've weaponized it.

They've done it over the years.

We did pay attention, but we sort of forgot about it in many ways.

But right now we have an inflection point where we really need to get the sword of Damocles off of uh off of the United States.

And actually, it's it's really we our challenge is the same challenge that a lot of other advanced economies

have right now with this incredible choke hold, not just on critical minerals, but particularly rare earths, particularly heavy rare earths

that are the foundation of magnets, which go in everything.

Can I um

just back up in history for a second because I think it will help us contextualize where we are right now.

But what were the conditions that allowed China to basically gain dominance in this particular area?

Did they make a strategic decision at some point saying, you know, we're going to be the world's uh not manufacturer of of rare minerals and rare earths,

but we're going to we're going to make this, you know, a priority for ourselves.

Yes.

Uh, made in 2025 uh was their big strategic plan.

They had invested a lot in in rare earths, you know, particularly their domestic rare earths, um, to be like many, many years before that.

But they decided they wanted to dominate.

And they really they did a very smart job of creating an entire ecosystem.

So both domestic China, extraction, processing, and then they came up with the all of the products that were that would be the leading demand,

um, which you really need to have for for the creation of a market.

And the demand meaning the, you know, new energy, um, wind turbines,

uh, particularly their, you know, their their EVs and also defense.

So you have a whole like demand pull.

And you also have state companies that don't have to be profitable.

And that's pretty key.

If you're competing around the globe to uh to actually mine and process.

They also have a lock hold on the technology for processing.

And so in traditional mining, you know, they have really they've made a massive strategic investment.

And we for a variety of reasons did not.

Joe, this reminds me of the episode we did with Dan Wong.

Where he made sort of similar points about the tech ecosystem that's developed around Shenzhen.

And how that like allows innovation to really thrive and then also this idea that, well, if you don't necessarily care about returns on capital

as much as the US certainly, then you kind of have a leg up when you're developing something like this that might not pay off for a very long time.

And this always

seems to be an issue when we're talking about some matters of national defense.

Because right, when it comes to national security, you have this other priority that is not profit related.

Everything that we've done that has some every episode we've talked about, this comes up whether we're talking about literally the defense industries and the defense suppliers or other strategic things.

Here is this other goal that you have in which profit can't be the only.

You have at least two bottom lines, one is related to security and one's related to profit.

And so you have this tension.

Tell us, how did you do this report?

What was the process by which this was uh you researched this?

Who did you talk to, et cetera?

So that you could uh publish this.

So I started with the national labs because we we don't give enough credit to the fact that a lot of the great innovations that come out and are commercialized

uh that we all we all know and love, actually had their origin in our national lab system.

It's sort of a national jewel.

And so Ames National Lab has this critical material innovation hub.

And a lot of the companies that are doing the this like the various types of breakthrough technology

came out of or are working with Ames National Lab.

And so I started like poking around from there.

And then really word of mouth.

So as soon as as soon as we got the word out that we were working on this, it's a it it's a very enthusiastic

uh mission driven community that wants to all leap frog this challenge through innovation.

Plus people like talking about their problems, right?

So

first there has to be.

This is not just on government to do.

I mean, a lot of people point at the massive, you know, very muscular industrial policy that the Trump administration

is using right now and I think that that is that is a very good thing.

But it also takes uh it takes companies actually coming together more in a consortia

uh type of arrangement to have collective off take agreements.

You have certain companies that have been very forward leaning in their off take agreements with with certain uh I mean, Niron is a good case.

That um that they have some auto um OEMs that have been working with them for for years now.

You have uh I mean, Vulcan you brought up earlier, but Vulcan is kind of the poster child for when you get the technology,

the industrial policy and the commercial all together working um to solve.

And there and they actually are, I think they're the first innovation

um targeted uh industrial policy scale up, rapid scale up.

Vulcan's only three years old.

They they closed their series A in August.

I mean, we're talking about 1.4 billion that they got in a in a in a um consortia together with

uh a company called um ReElement that recycles magnets.

They take the rare earths and they actually

manufacture magnets.

That is that is incredibly interesting.

They do it on a they're doing it on a on a like a super fast scaling time time horizon.

I think they are aiming for 2027 to start rolling product out.

And have been going through the validation process with all of their their different types of magnets.

So it they're doing this on an accelerated basis.

They got funded by every branch of the military.

So they have a built-in supply, you know, demand from the US military right there.

They also have semiconductor and um and aerospace.

They're really looking to target the national security and the top economic security challenges.

And they have the partners to do that.

So I think that's a good example.

of how we want to do this moving forward.

Adjacent to the off take issue, who actually owns the waste water that we could potentially be, you know, extracting valuable things from?

So we have lots of different types of waste.

So we have

I mean, we have coal ash.

We have tailings from mines that are still operating where they extract like the the super valuable part of and the easy to extract.

And then they have all the other mine tailings that just sit there that have a lot of, for example, rare earths.

In them.

They have.

We have uh, you know, we have some really, really toxic areas that uh that are sitting in ponds and and, you know, have like giving a lot of problems to water supplies.

And uh

we have a huge amount of of waste that we can draw from.

Uh industrial waste that comes from from mines, um, where you have primary metals that are that are extracted.

But you have the piles of tailings that sit there on the side because they're either not uh there's no commercial viability to extract them.

Or they are, you know, they're just considered they're considered piles of waste.

Both in operating mines and in in mines that have closed down.

You have coal ash that is, you know, sort of toxic left over waste from from coal mining.

You have e-waste.

Which is, I think, one of the more promising areas.

We actually, if you look at old uh hard drives and cell phones and batteries and the like,

there are tons of uh of of rare earths that are in there and actually magnets that are in there from years, you know, when when we actually had much greater

rare earths uh, you know, intensity in those magnets before we started to like have to have to scale back.

So if you look at the waste ecosystem,

we have a lot of domestic um opportunity.

And that's actually why I think Vulcan is a really good example.

They pull from domestic recycled e-waste and then they process and manufacture magnets.

In a completely domestic cycle.

Joe, that's interesting about coal ash.

I could have uh I could have been mining my ashes from burning the coal stove in Connecticut that first year.

Mining them for rare earths.

If only I had known.

You had another another missed opportunity.

To monetize.

To exploit that to monetize all the natural resources on your land.

That you had in Connecticut.

Um, let's talk about.

Okay, so we understand there's various uh uh measures and opportunities and resources and technological opportunities.

And things that work in the lab, things that are already uh uh scaling up, et cetera.

Talk to us more like from a policy perspective, what do we need to do to get from what we already have cooking and what's already in the works to where we feel good about where we are?

And from does policy what it need to happen in the form of legislation or does the government, the federal government as currently constituted, have the cash and the policy levers to pull without um new laws being passed?

So policy plays an enormous role.

And the the first thing we need to do is actually understand that we can't do a fragmented approach to this.

Because you end up losing innovation that might actually change the the chessboard entirely with China.

Um, you also have to deal with with waste from a policy basis.

Because we actually don't track waste.

There's very hard to find data on how much e-waste the US produces.

We ship some of it to Asia, that is very likely fed back into China's massive recycling machine.

We shouldn't be exporting if you if you consider this as America's next mine.

There there are ways to address policy um that can, you know, provide the data.

Maybe restrict the exports till we know exactly what value is hidden inside all of the stuff that we're exporting.

And and then come up with a whole like a whole strategy that is a critical minerals innovation strategy.

That sits alongside our other critical minerals strategy.

And develop that um through not only the policy tools around waste, but also financial tools.

Where are the valleys of death, where do we find them, how can we solve them?

How can we use government as a as a um a pull to get companies together in consortia to actually have those off take agreements early on?

And also work with the material engineers to design what they're going to need earlier on in the process, they're like there are a lot of good ways to do this.

One of the big takeaways is that there is a specific

equity valley of death that a venture-like entity could help solve this for.

Because you don't have the venture outside of some really big frontier, you know, risk takers

that will invest in um in difficult technology.

So I think having some kind of a counter that we have now in the, you know, in the instruments that DOD has,

you know, we have a whole range of different agencies that have all loan-based, they're they're almost all loan-based instruments.

And that's not what it.

This is like the.

These are tech companies.

And they really can't sustain debt.

They're not.

They're you need to have that VC come in early on and help them through various series of fundraising.

Partner with others.

Bring in other like private VCs throughout the process.

And we need to and and we do have one of those right now um that's in Qutel.

It is not technically, I don't know if you've heard of Qutel before.

It's the CIA's VC arm.

It is.

Okay.

Very good.

Um, and they they are actually, they they recognize this gap in the capital structure and the and the actual ability for these

um breakthrough technologies to fund raise.

And so they actually created a separate fund within Qutel called their Compass Fund.

And they're not just the it's not just the CIA, they're they're a nonprofit, they work for sort of across the intelligence agencies.

And they've grown over the past 25 years from what they started out.

Um, which was really a very like a boutique VC for specific.

Solving specific problems for the intelligence world.

Um, so they have invested and actually going back to one of your earlier questions.

How did I find these companies?

Well, it ends up that they have invested, they invested in two um companies that I had found through Ames National Lab.

And so it was uh I think they were extremely helpful in in thinking through what the gaps actually were.

And we really nailed this early stage um VC.

Needing to come from government.

It's a market failure.

Until we have solved for that market failure, these will just lie on the shelf.

In Qutel has one mission to be the most sophisticated source of strategic technical knowledge and capabilities to the US government and its allies.

That's through capital.

That's an interesting one.

We should we should do an episode on it.

Yeah, we should for sure.

Um, okay.

So, since we're talking about the CIA and you brought up the military earlier,

this is going to be a natural segue, I promise.

Um, you bring up a historical analogy in your paper, a previous choke point that was militarily very, very significant for the US.

At a very, very historical time.

Which we actually managed to solve through industrial policy.

How much relevance does that particular analogy have to our current situation?

Well, I love this analogy.

Because in um in as we were contemplating entering World War II, the Japanese cut off the supply chain for natural rubber in Southeast Asia.

And we were dependent on this flow for 90% of our rubber.

Right.

And we can't grow rubber trees, right?

Rubber rubber came from Southeast Asia for a reason.

And what we did was we actually

um, we took technology, synthetic rubber technology, and we scaled it like crazy.

So we actually were able to um provide for, you know, for for trucks and tanks.

And everything that rubber goes into that we had never even thought about.

But until it was gone.

And we were not able to to actually enter World War II without the ability to provide something in replacing that rubber supply.

And so we did it both through a rapid

warp speed, Manhattan project-like, I mean, we think of Manhattan project for the for the atomic bomb.

But at the same time, I think there's a good case to be made that without synthetic rubber, we would not have won World War II.

The the other side of that was that we did a huge, you know,

all of the population should chuck in their extra rubber tires and their raincoats and their garden hoses.

And whatever you could for the war effort so that we could actually um use and recycle rubber that we had already here.

So it's a two-pronged, I think, analogy that works.

There are some um great like posters from World War II about recycling your tires and things like that.

Nice graphic design.

To find go I have boxes of like old old iPhones and stuff.

Recycle them for the rare earth.

Uh that randomly like I bet I have like ten old laptops and random stuff.

And and the way that I mean, the way that the cycles of of like upgrades happen.

I mean, everybody has tons of like old laptops where the software doesn't work anymore.

And so this is actually a huge opportunity.

So we could we could actually make it a national priority.

And there are ways to do that through government incentives, um, you know, you can.

There there are ways that companies can do that through paying for old, you know, old unused, unusable

uh technologies and and uh and the like and then have uh maybe get the government credit.

There are like a lot of ways you can be creative about getting this.

Um this entire system to rev up.

You mentioned warp speed just then and so, you know, the obvious thing that comes to mind is also the the COVID vaccination efforts.

Um, can these types of programs exist without a coinciding national emergency to sort of galvanize everyone into action?

And I totally take it that competing with China is one of those rare areas of bipartisan agreement nowadays.

But at the same time, shortages, potential choke points in rare earths has been a long-running issue, we've been aware of it for a while, so far we haven't really done that much.

What's going to galvanize people now and really lend this whole effort a sense of urgency?

So, I think we actually do have a national emergency and certainly, you know, policy makers and companies understand that when China shut off access.

And so you have

So that was the moment.

I think that was the moment where it really hit that that not only over reliance,

but up to 100% reliance.

That's like that, I mean, the Chinese cut off access to the technology that they had developed for refining, for extracting.

They actually when we had that one year pause, one of the things that that the Council on Foreign Relations partner

um, Silverado, um, policy accelerator, they had done a lot of work on

what the what China was actually exporting after um, after that October lifting of the of the um, export controls.

They're exporting um, magnets.

But they're not exporting those rare earths or the technology that we need to actually um, produce the same for ourselves.