America's Rare Earth Renaissance
Six months into Trump's second term, rare earth minerals are at the centre of his Administration's approach to foreign policy.
As President Trump reshapes global alliances, rare earth minerals are at the centre of his Administration’s approach to foreign policy, challenging China’s stranglehold on the resources that power modern technology.
Six months into his second term, the world is beginning to witness deals and alliances that reflect this new era of “mineral diplomacy”.
Greenland: The Arctic Prize
There were early signs of Trump’s intent. Within days of assuming the Presidency in early January, Trump indicated his intention to pursue ownership of resource-rich Greenland.
It was a proposal that he had first made in 2019 during his first term. At the time, it was swiftly dismissed by Danish Prime Minister Mette Frederiksen who called it “absurd”, leading Trump to cancel a State visit to Denmark in September 2019.
However, when Trump spoke to Frederiksen at the end of January this year it was clear that he was serious. One official told the Financial Times: “He was very firm. It was a cold shower. Before, it was hard to take it seriously. But I do think it is serious and potentially very dangerous.”
Rare earth minerals, essential for advanced technologies such as electric vehicle batteries and military applications, are abundant in Greenland, making it a strategic prize in this emerging resource race between the United States, Russia and China.
“As the polar ice caps melt due to the impacts of climate change, Greenland – and the wider Arctic region – is becoming an important geo-political battleground between the US, China, Russia, and the European Union as new trade routes open up and opportunities for natural resource extraction becomes more feasible,” said Bryan Bille, geopolitical and policy principal at Benchmark.
Whether Trump can secure an agreement with Greenland or Denmark, its governing nation, remains highly uncertain due to strong opposition from both Greenlandic and Danish leaders.
Ukraine and Congo: Minerals for Peace
At the end of April, after the now-infamous Oval Office bust-up with Zelensky, the US and Ukraine signed a deal that established a joint investment fund for the reconstruction of Ukraine. The fund will be capitalised, in part, by revenues from Ukraine’s future extraction of critical minerals, such as lithium and titanium, vital for the technology and defence industries.
The deal does not directly tie Ukrainian minerals to repayment for US military aid, as Trump had initially proposed, but it does position the US to secure access through commercial agreements.
The Ukrainian agreement signalled to many that the Trump Administration was integrating critical minerals into its foreign policy framework, which indicated a potential model for future deals that reflected Trump’s transactional approach to “mineral diplomacy”.
At the end of June, Trump announced a peace deal between Congo and Rwanda, the terms of which have been described as “minerals for peace”.
By facilitating this accord, the US has secured preferential access to Congo’s cobalt and other minerals vital for battery production, a strategic move intended to counter China’s longstanding investment in the region’s resource market.
Africa and Asia: Expanding the Resource Map
Having secured a foothold in Central Africa, Trump is now turning his attention to West Africa, where a high-stakes summit is currently underway.
This week Trump is hosting leaders from Gabon, Guinea-Bissau, Liberia, Mauritania, and Senegal for a three day summit which the White House has described as an “incredible” commercial opportunity.
The discussions focused on Trump’s “trade, not aid” approach, with these nations, currently subject to 10% tariffs on their exports to the United States, seeking agreements to reduce these rates.
Former diplomat Moussa Diagne told the BBC that the strategy is clear-cut: “It’s about trade. Agree to a minerals deal, and you have our support; otherwise, you’re on your own.”
Nicaise Mouloumbi, head of a leading non-governmental organisation in Gabon, explained that the Trump Administration’s interest in Africa stems from competition with China and Russia over the continent’s resources: “The invited nations, including Senegal, Mauritania, and Gabon, hold significant deposits of gold, oil, manganese, gas, timber, and zircon,” he told the BBC.
With Trump currently focused on Africa, his Secretary of State, Marco Rubio, has been engaging with Asian and Pacific countries on the same topic.
Last week, Rubio hosted the foreign ministers of Australia, India, and Japan in Washington, D.C., emphasising the strategic importance of the alliance known as the Quad in addressing shared global challenges.
During a press conference, Rubio underscored the need to diversify critical mineral supply chains, stating: “One [area] that I’ve personally been very focused on is diversifying the global supply chain of critical minerals - not just access to the raw material but also access to the ability to process and refine it to the useable material. It’s critical for all technologies and for all industries across the board.”
Now on his first trip to Asia, Rubio is both seeking to reassure trading partners that are receiving letters from the White House with new tariff rates and counter Chinese influence in the region.
In a meeting with Malaysian Prime Minister Anwar Ibrahim who is hosting the current ASEAN Regional Forum, Rubio discussed building resilient critical mineral supply chains and security of AI chip technologies.
The Homeland: Securing the Supply Chain
Yesterday, the US Department of Defence announced that it will become the biggest shareholder in Las Vegas-based MP Minerals, making it Washington’s most high-profile investment to date in the critical minerals sector.
MP operates the only US rare earths mine and is working to boost domestic processing and magnet production.
In a regulatory filing, MP said that the Department of Defence was funding the investment in part through a Cold War-era piece of legislation known as the Defense Production Act.
China’s recent restrictions on rare earth exports, resulting in a 75% decline in rare earth magnet shipments last month, have disrupted global supply chains, forcing some automakers to halt production and prompting companies to seek alternative sources.
In March, President Trump invoked emergency powers to bolster domestic production of critical minerals, aiming to counter China’s dominant control over the sector.
Shenghe Resources, a Chinese firm, holds an 8% stake in MP Materials and processes a significant portion of its ore. However, the U.S. Department of Defense has now become MP’s largest shareholder with its US$400 million investment securing a 15% stake in the company.
The Australian mining billionaire, Gina Reinhart, owns a 8.5% stake in MP. The DoD investment had ripple effects, boosting Australian rare earths stocks, with Lynas Rare Earths surging 18% to A$9.80 and Iluka Resources up 20% to A$4.80.
The DoD is also backing Lynas, having contributed almost US$258 million toward the construction of the company’s rare earth refinery in Texas several years ago.
New Zealand: Emerging Opportunities
In January, New Zealand First Minister Shane Jones launched the Government’s Critical Minerals List which identified 37 minerals considered essential to the economy and to the growing international critical minerals market.
“The West Coast has long been a drawcard for explorers and developers of gold and metallurgical coal. With international interest in critical minerals, we are seeing revived interest from near and far,” Jones said in early March.
“Of particularly note is investment by Westland Mineral Sands (WMS) in exploration next to its heavy mineral sand operation near Westport, which produces titanium, garnet, zircon and monazite containing rare earth elements.”
US company Energy Fuels took a 1% stake in WMS last October, recognising the latter as a key player in the global supply of rare earth elements.
Let’s hope the stranglehold successive governments have gifted those with some Maori ancestry doesn’t constrain NZ’s ability to make the most of this opportunity.
Thanks Philip. The trick is going to be can we balance the value of mining these minerals in the West Coast (jobs, earnings etc)with environmental issues, in a way that will not cause an extraordinary amount of damage both socially and physically.