A Deep Dive on Critical Minerals

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2:17He is here with us. We're talking everything when it comes to rare earths and critical minerals, a crucial part of the supply chain for everything from electronics to weapons systems. Joe, we've wanted to do this for so long and we're glad you can do it. I'm, I have to say, we're happy to have you, Christine. Carol is so sad. She's out today, but Joe is making it up to her because next week when I'm out, I guess Joe is stepping in a little bit. So he's going to be here. We get my Joe. Okay. So Joe, I want to start with you. Then we're going to bring in this, this fantastic lineup that we have for the next hour.

2:49And it's a lot of it is all of it is thanks to you and the people you've brought us over the last few years. So we are grateful to you for that. I just want to start, Joe, with a general question about critical minerals and rare earths, because when I met you, you were metals and mining reporter. And we talked to you sometimes about heavy equipment. And then something something happened. Something changed. What was it? And why did rare earths and critical minerals become this conversation that investors, the administration and we're so focused on? I mean, if we really go way back. Right. The pandemic hits in 2020, if we in case we forgot, and supply chains became a story like actual supply chains.

3:34And like, you know, those of us who are in the commodity space had covered actual supply chains, you know, understanding the procurement officers at various big companies you've heard of. Right. Soda companies, beer companies, car companies. And then if we just move from there, it becomes very apparent to investors in a big way why supply chains matter. Fast forward to a couple of years later, three years later, China in the middle of the summer of 2023 shocks a lot of close watchers by saying they're putting export controls on gallium and germanium. And these are two elements that are absolutely essential to defense technologies.

4:22Right. Defense. Right. Like it's not a it's not a Silicon Valley thing. It's not Apple and Google. It's it is very much these are defense applications. And we had some reporting shortly after that time. We did a big take that said when those export controls were announced, it sent off alarm bells throughout the Biden administration. And we had a senior administration official tell us for that story. That was the moment that all of the concerns that various agencies had had, in particular the Pentagon, and trying to warn big players in Congress, the president of the United States, that it was there.

4:59And that is where we are now, right? So the Biden administration moves on. Trump administration comes back in. They had long had this conversation about the importance of rare earths and critical minerals. In some ways, it was Trump and Trump 1.0 that put this on the map. It got it got supercharged. Right. Liberation Day happens. The president of the United States puts tariffs on every imaginable country in the world and he goes hard on China and China responds just a few days later. Initially, nobody heard about it because it just happened in the middle of the night on a Thursday. And they said, we are putting export controls on rare earths, important rare earths, but also permanent magnets.

5:40And this is when it went from becoming a defense technology problem to an all-out tech war. You bring up exactly what we're going to do right now perfectly, Joe, because you fast forward from then to today. And we're regularly hearing from the president about this meeting with executives from the mining and critical minerals industries, including on Friday when he had them down in Washington, D.C. Check out what he had to say about the U.S. versus China. Accredited mining programs in the United States now graduate less than 170 mining engineers each year, while China graduates more than 3 ,000.

6:18And half of our current mining workforce is set to retire within the next three years. Well, that was President Trump on Friday. Joe, jump in here. Yeah, I mean, his wow at the end, right, is, again, a conversation that you've been hearing in the world that I've been covering for a long time. I mean, I remember sitting in this office, call it three or four years ago, with the now former CEO of Rio Tinto. And, you know, we would catch up with him every so often. And one of the things that he pointed out was, you know, Joe, one of the big problems we have is a lack of geologists and a lack of people who want to come in to the mining space.

6:55Rio Tinto is the second largest mining company in the world. Well, who were they losing that talent to? Oil and gas. So when you hear the president say last week, you know, we're having an aging workforce. Well, it's largely because the people who are capable of a lot of these jobs are not going into mining. And we've had some wonderful reporting out from our commodities team even this year about the dearth of labor. And, you know, that's just the tip of the iceberg. Well, somebody who is at least going into mining from a reporting perspective is Pauly Massen, a reporter for Bloomberg News. Pauly recently writing about how the president is rewriting corporate norms with this 211 mile Arctic road.

7:36The federal government granting a permit to build a road through the Alaskan wilderness in exchange. it gets part of a mining company. Polly, what is happening here with the road and sort of the economic statecraft part of this, which I think investors are becoming increasingly used to? Yeah, absolutely. I think it's funny to ask what is happening to the road. Well, right now, nothing, but soon, potentially everything, right? This could completely alter the way of life there, which is that people go bush plane by bush plane from village to village to build a road in this untouched wilderness would really strongly change the way of life there, but it would also really change the mining environment there.

8:16You're going from having extremely expensive expeditions to try to prospect in very costly helicopter rides to being able to drive in and, you know, really see what's going on there, see what could be mined there. And also once the mines are actually built and say about a decade to be able to just tuck, you know, get everything on tractor trailers and freight it out, that is a huge, huge difference. So right now we're at the very, very beginning stages of that. But allowing this road to potentially be built allows you to completely change the way that people live there and the way that mining is able to make money in Alaska.

8:49Now, Polly, one of the things that stood out from your story is the fact that the due diligence by the government in terms of carrying out the project was completed in less than 72 hours. And that seems a little too short, right, for a project that, as you say, is going to completely change the way that people live around that area. What could have been potentially missed given that rush to complete the due diligence? Yeah, I think one of the big questions is how successful is this mining district really going to be, right? Because there's a lot of prospecting still to be done. I think something that we and the federal government still need to see is exactly how much ore is going to be able to get out of there, how profitable it will be.

9:32And also you have the big question of how much are people going to want this stuff? Maybe if we're not in a huge AI, what does that actually look like? So that is a big part of what due diligence traditionally would be looking at is how successful is this investment going to be on a long term? And also, what does the American taxpayer necessarily get out of it? I'm so glad you went there because I'm struck by or reminded of something that Joe told us a month ago at this point and a point that he makes a lot. Joe and I'm going to turn it over to you for this is that the numbers historically have been really hard to make work for some of these companies like mining and processing rare earths is not an incredibly profitable endeavor especially if you don't have government support yeah it's I mean incredibly it's just not profitable like think about the MP materials story right and the mountain past mine this this this company MP materials got on a lot of people's radar over the last couple of years for the first time, but they operate in a mine that is, they are operating a mine that has been in operation for what, almost a hundred years at this point.

10:38And even in, in the last couple of decades, what was part of a company that went into bankruptcy, then emerged from bankruptcy. Like this is not easy work. No, it, you know, it's like, uh, what do they say? Squeezing blood from Iraq. Right. I mean, there, there is a reason we have not done this in the United States for a long time. There's a reason that we don't have a, as the president puts it, mine to magnet supply chain, right? From pulling ore out of the ground to creating the permanent magnets. I mean, we, with the exception of MP materials, which you've stated does actually do this. There is no other real comp for the United States.

11:20There are, there are some permanent magnet companies. There's some smaller ones. Novion is a well-known one. But essentially, this is not a market that exists in the United States. It is something that the United States has now decided that it needs to build. And this kind of brings us back to Polly's story, which Polly and I, full disclosure, she and I worked on this story together. But one of the questions I have for you, Polly, is you have not spent your career writing about metals and mining, which also is the terrific part about working with you on this. But I am curious, what is it that brought you to this topic of trilogy metals and why you wanted to make this your big project for the year?

12:04Yeah, I think to me, it's really the economic statecraft that we were talking about at the beginning. It is inherently unusual that the federal government is taking this role and taking this stake. I think that that is something that is worth exploring. And we should all be interested in all of the deals that are being invested in, right? As taxpayers, as citizens, I think that it's important to know what the federal government is doing with the taxpayer budget. I think that we should all really be aware of not just the outcome of the deals and how they might make money in the long term, but how those deals get put together and who gets what out of those deals as they are being structured right.

12:44Because in a deal like this, the stock pops when the deal gets announced. Whether or not people make money if the straw gets built in a decade is a totally different question than what happens when the deal gets announced and when the deal gets made. Yeah. Well, I mean, a very interesting, Polly, because, you know, as Joe had mentioned, really a lot of the emphasis on investment in critical minerals was all about freeing the U.S. from its dependence in China. It's all about the supply chain. But, you know, so the supporters, that's the argument for them. But then if the U.S. already produces a significant amount of copper, for instance, where really is the vulnerability here?

13:22Yeah, I think that's a good question. You know, I think this is really Joe's expertise, but I think that the vulnerability can also change with time, right? Perhaps there might not be a huge emphasis on copper in three to five years under a different administration the way that there is right now. We just don't know. And I think that's also the really hard thing with mining is that these take so long to get built out and it takes so much longer to refine everything. And the planning is really time consuming, but we're making choices with the information that we have today for a mine that might not be operable for a decade.

13:53And then also once it is operable, you actually don't know everything about the quality of what's in there until things are really underway. And then also what happens if there's a natural disaster or a man-made disaster or just less minerals than you expected. So it's really hard for us to sort of talk about sort of the copper and how we might need it in this moment when all of our forward thinking is so, so far out. And Joe made a great point that it's hard to make money in mining. And here we're going to try to make money in mining with the taxpayers on the line. Pauly, it's a great story. You wrote it along with Jacob Lawrence and Joe Doe, who's sitting here with us.

14:30Pauly covers metals and mining, and she joins us this afternoon on this special. We appreciate your time. Polly Moss ends. Thank you so much. Check out her story on the Bloomberg terminal and at Bloomberg.com. If you are just joining us, we are doing a special thing this hour. It's an entire hour on economic statecraft, metals, mining, specifically rare earths. Joe Doe is with us for the entire hour. He is Bloomberg News economic statecraft reporter. If you have any questions for him, you can go to Bloomberg.com slash ask radio and leave questions for Joe. Send questions to us. We have joining us in just a few minutes, Gracelyn Baskarin, director of the critical mineral security program at CSIS.

15:16And coming up a little later, Trip Hornick is stopping by, principal of Quinn Street Strategy. He understands the sort of connection between these private companies and the government because it's his job to go and work out those deals with the government. He's going to be stopping by in just a few minutes as well. Any questions for Bloomberg subscribers or terminal subscribers, Bloomberg.com slash ask radio. We've got Joe Doe with us. He's Bloomberg News Senior Economic Statecraft Reporter. He's got everything on this crucial part of the supply chain for everything from electronics to weapon systems.

15:48We're talking about critical minerals and rare earths. We're also joined right now by Gracelyn Baskarin, Director of Critical Mineral Security Program at the Center for Strategic and International Studies. We're talking to both of you and our other guests today because, Joe, as you reminded us, it's been about a year since the U.S. kicked off that critical mineral statecraft agenda. There was that unprecedented$400 million equity investment in MP materials. I can't believe it's been a year since then. Here we are a year later. Is the U.S. any closer to weaning itself off of relying on foreign partners or adversaries for critical minerals and rare earths?

16:27Wow. I spend a lot of time writing about this. And one person I like to often ask this question to happens to be our current guest. Is that why you brought Gracelyn Basker into us? I'm hoping she might have some answers for us. All right. She's director of Critical Mineral Security Program at the Center for Strategic and International Studies. Gracelyn, you join us from all over the world. And we're grateful for your time this afternoon and every afternoon that you do join us. Is the U.S. any closer to no longer relying on partners and adversaries for rare earths and critical minerals? First of all, thank you so much for having me.

17:01And thank you for the phenomenal work Joe does. He is reliably also one of my sounding boards. So it's a mutually beneficial relationship. Now, when I think about this question, I mean, I think there's two things we need to split out. Are we moving closer? Yes, we're moving closer. And the scale of the investment, the capabilities that are starting to come online. When China imposed restrictions in April 2025, we didn't have heavy rare earth separation capabilities outside. But slowly, Malaysia came online. But one of the things we have to remember is that we still have a very long ramp to self-sufficiency.

17:37As you know, recently the G7 put forth the goal of not being more than 60 % reliant on a single country outside of the G7. That's a pretty ambitious target. Japan's been working on that goal for 16 years, and they are now approaching that 60 % mark. So, we're getting closer, but we still have a long road to go. You know, Gracelyn, we're 12 months removed since the USA Rare Earth getting them all mixed up. MP Materials announcement, which really brought a shock, I think, to the market, right? To investors, to companies, to suddenly realize not only was this being talked about, But the government was there to make happen what you were just describing.

18:19I'm wondering, with the president's summit that happened on Friday, do we feel like coming out on Friday and making some of the comments that he did is more kind of reminding people that the government's there? Or do we feel like he was sending some other type of message? The number one message I took away from Friday's roundtable with President Trump, which also saw Secretary of State Rubio, Interior Secretary Burgum, Commerce Secretary Lutnik, was that industrial policy is here and that the government is here to support companies working in our national interest. In addition to making substantial funding announcements, he talked about developing the next generation of workforce through federal dollars.

19:05He talked a lot about on-shoring those capabilities. So industrial policy, once a word that both the left and the right kind of frowned on, is being seen as vital to seeing American industry succeed. Yeah, very interesting, Gracelyn, that concept of on-shoring, right? We've also heard about friend-shoring, which is another term that has come up in the discussion over rare earths. And, you know, do you think a lot of these investments outside the U.S., is it ultimately more realistic than trying to build a fully domestic critical mineral supply chain? Absolutely. There is not a country on Earth, maybe, you know, with the exception of China, that has the geological resources, the financial capital and the technical know-how to do it alone.

19:49And this is where, you know, at a time when it sometimes feel like American foreign policy now is America alone, critical minerals are an area from the very get go that we have embraced international cooperation. And when you look at the rare earth supply chain alone over the course of the last year, you have seen substantial U.S. support be announced with the Japanese, the Australians, Saudi Arabia, Angola, Brazil. And so this is really a sign that the U.S. does not intend to go at it alone. And, you know, that partnership is going to be really crucial if we're going to reach that mine to manufactured goods supply chain in any reasonable time frame.

20:27You know, Grace, I think in the first few months after the MP materials deal, there was a genuine concern in critical mineral circles that the U.S. was going to go it alone. It was clear by the end of 2025 that that was not the case. But as you look back on the past 12 months, what sticks out to you as maybe the most underwhelming part of the critical minerals policy we've seen so far from the administration or something you think they really need to improve on moving forward? I think one of the areas that's probably been the weakest are price floors. There is an acknowledgement that the problem we have today is not a political problem.

21:03It is an economic problem. It is how do we get projects outside of China to stay commercially viable? You saw a lot of discussion over the last year talking about instituting a price floor. But it's complicated, right? Because there's a principle problem that we can't seem to agree on even with our G7 counterparts, which is who pays for it. Is this a cost that the taxpayer bears or is it a cost that the person buying the automotive bears? And I can tell you, having spent a lot of time with our counterparts in places like Australia and the UK, that they feel much less inclined to put that burden on the taxpayer when those resources could be used for health care, education, housing policy, etc.

21:45So one of the principal challenges we are left with is how do we ensure that projects outside of China can compete and stay open at a time when a lot of these prices may be lower than cost of production? Is the answer ultimately a price floor? The answer is probably a more comprehensive toolkit. So when we look at what the U.S. government did with Linus in Malaysia, it was basically an off-take contract. As opposed to a guaranteed price floor for everything they produce, it is we will buy X quantity at Y price, right? The same$110. So it's probably going to be a combination of procurement, public procurement, facilitating private procurement with American auto manufacturers.

22:30It's going to be ongoing support, particularly for processing facilities, to cover the delta between where their operating costs are and what they need to be profitable. So I see it as probably being a comprehensive toolkit. I think the reality is when you look at 60 critical minerals, getting the U.S. government or even a coalition government to guarantee a price floor for everything is going to be fiscally very difficult, particularly when you look at the cost of the war in Iran. I was in Australia when a lot of the discussion centered around the additional financial support needed for fertilizer and energy and how that was going to potentially move resources away from critical minerals.

23:09So given the state of the world, expecting that to be a full balance sheet cost is difficult. So, creative tools are going to be necessary. Yeah, that's a perfect segue for what I wanted to ask you, Gracelyn. And it's the idea that necessity is the mother of invention. So, while these might be critical minerals right now, is there innovation happening with some of the products that these ultimately go into where they will not need as much or they will no longer need these minerals that are challenging to source? Absolutely. I mean, I would also add to that and say scarcity is a very powerful driver of innovation, if you go back and look at the 1970s oil embargo and what it did for energy innovation.

23:48Now, if we look at what the U.S. and our allies are doing, I think there's a couple things, right? So the first is recycling. How do we recycle our black mass? And the U.S., especially through the Department of Energy, has made significant investments in recycling to get some of these materials back out. We know how to recycle lithium. We know how to recycle copper. But rare earth permanent magnets are a little bit of a new area. So, investing in innovation to recycle. The second one is investing in innovation that uses less materials. And we see that to be true, for example, with BMW and a motor that doesn't need rare earths.

24:24And obviously, that is not a scaled technology yet. It's a nascent one, but one that has a lot of potential because that would be a big driver of demand. And the third thing I would say is we're getting a little bit more strategic with things like going back to our old tailings and recovering rare earths. So rare earths sit in our coal mines. They sit in gold mines. And we've mined that material out, but it's largely sitting in tailings. So we're looking to get that back out of it, not just in the U.S., but in our allied countries. And there is government financial support to getting out of that.

24:57So I always think, again, America's strong suit is innovation. And we're already seeing that to create a less dependent future. Gracelyn Baskarin is director of the Critical Mineral Security Program at the Center for Strategic and International Studies. Today, she's joining us from Washington, D.C. She's joined us in the past from Africa, from Australia, from Las Vegas and more. She travels quite a bit as part of this job. Also with us, Joe Doe from our Bloomberg News team. He is here for the remainder of our hour. We're speaking next in this critical minerals special to Trip Hornick, principal of Quince Street Strategy.

25:33He's joining us to talk about the government role here. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

25:44What if data didn't sit still? What if intelligence moved with us? Not buried in reports, but activated in real time. Where lives are being shaped. Where decisions are being made. It all starts with a question. Where is the potential?