A warning and a shipment dispute
Published 13 October 2026
A supply shock in 2010 looked sudden, but the dependence behind it was not. The U.S. Geological Survey had described that dependence eight years earlier, in a fact sheet created in November 2002. The fact sheet, USGS Fact Sheet 087-02, opens with a warning: "The United States once was largely self-sufficient in REE, but in the past decade has become dependent upon imports from China." It says that in 1999 and 2000 "more than 90% of REE required by U.S. industry came from deposits in China." The text also notes the paradox of the metals: they are "actually more abundant than many familiar industrial metals" but have "much less tendency to become concentrated in exploitable ore deposits," so that "most of the world's supply comes from only a few sources." re001, USGS, Rare Earth Elements: Critical Resources for High Technology (2002)
The fact sheet divides the history of production into four periods, using a chart of global output from 1950 to 2000. In its words: "the monazite-placer era, starting in the late 1800s and ending abruptly in 1964; the Mountain Pass era, starting in 1965 and ending about 1984; a transitional period from about 1984 to 1991; and the Chinese era, beginning about 1991." re001, USGS, Rare Earth Elements: Critical Resources for High Technology (2002)
The Mountain Pass era has its own origin story in the document. A carbonatite intrusion with "extraordinary contents of light REE (8 to 12% rare earth oxides [REO])" was discovered at Mountain Pass in 1949 in the upper Mojave Desert; by 1966 the deposit, owned and operated by Molycorp, "had become the paramount source of REE," with early development "supported largely by the sudden demand for Eu created by the commercialization of color television." The USGS gave Mountain Pass an average grade of 9.3 percent and reserves of 20 million metric tons of rare earth oxide at a 5 percent cutoff, and called it "the only large ore deposit mined solely for its REE content." It also noted that the large quantities of ore, and the development of solvent-extraction techniques for large-scale separation, allowed recovery of several middle rare earths, and that "increased availability led in turn to applications for these formerly exotic elements." re001, USGS, Rare Earth Elements: Critical Resources for High Technology (2002)
Where sources differ, those figures differ from the ones MP Materials gives today, and the difference is one of definitions and dates. MP's history page says the deposit averages about 6.0 percent total rare earth oxides over the life of the mine with about 1.9 million metric tons at a 2.4 percent cutoff. The USGS number is a 2002 figure at a 5 percent cutoff, and the MP number is a company figure at a 2.4 percent cutoff. They should not be compared or combined. re002, MP Materials, Company history re001, USGS, Rare Earth Elements: Critical Resources for High Technology (2002)
The Chinese era, the USGS wrote, rested on two sources. "Since 1985, production of REE in China has increased dramatically." The most important was the Bayan Obo iron-niobium-rare-earth deposit in Inner Mongolia, with grades of 3 to 6 percent and reserves "at least 40 Mt, possibly considerably more." The second was the ion-adsorption clays of tropical southern China, whose oxide ores were advantageous "in their relatively high proportions of HREE (fig. 6) and, especially, in the ease with which they can be mined and the REE extracted." Those two deposit types, one in Inner Mongolia and one in southern China, anchor the Chinese side of the story. re001, USGS, Rare Earth Elements: Critical Resources for High Technology (2002)
Why did the United States lose its lead? The agency listed causes: "much lower labor and regulatory costs in China than in the United States; continued expansion of electronics and other manufacturing in Asia; the favorable number, size, and HREE content of Chinese deposits; and the ongoing environmental and regulatory problems at Mountain Pass." On the last point, it wrote that the mine "has operated below capacity and only intermittently" after "environmental and regulatory problems with the main wastewater pipeline" led to the shutdown of the separation plant, so that Mountain Pass "currently produces only bastnäsite concentrates." re001, USGS, Rare Earth Elements: Critical Resources for High Technology (2002)
The fact sheet's list of consequences reads in 2026 like a forecast. It warned that "the United States is in danger of losing its longstanding leadership in many areas of REE technology," that "transfer of expertise in REE processing technology and REE applications from the United States and Europe to Asia has allowed China to develop a major REE industry," that U.S. dependence came "at a time when REE have become increasingly important in defense applications, including jet fighter engines and other aircraft components, missile guidance systems, electronic countermeasures, underwater mine detection, antimissile defense, range finding, and space-based satellite power and communication systems," and that "availability of Chinese REE to U.S. markets depends on continued stability in China's internal politics and economy, and its relations to other countries." It also observed that low prices stressed producers, "particularly Mountain Pass." re001, USGS, Rare Earth Elements: Critical Resources for High Technology (2002)
One more detail connects to the later price story. The agency gave prices for the 1999 to 2000 period: europium oxide was worth 250 to 1,700 dollars per kilogram over the previous decade, and erbium about 700 dollars per kilogram, a price accepted because for fibre-optic repeaters "it alone possesses the required optical properties." The point of the passage is the one the 2010 shock would make again: the cheap, abundant elements and the scarce, specific ones are different markets. re001, USGS, Rare Earth Elements: Critical Resources for High Technology (2002)
Rare earths are not rare. The elements are spread through the earth's crust in quantities larger than many familiar industrial metals. What is rare is a deposit rich enough to mine, and rarer still is the ability to separate one element from its chemically near-identical neighbours. re003, USGS, Mineral Commodity Summaries 2026: Rare Earths re001, USGS, Rare Earth Elements: Critical Resources for High Technology (2002)
Before the Japan dispute, an American company with a closed mine went to the stock market for money to reopen it. Molycorp's mine at Mountain Pass, California, had closed in 2004, according to MIT Technology Review, after having been the world's biggest supplier of rare earth elements. Reuters reported on July 13, 2010 that Molycorp expected to price an initial public offering of 28.1 million shares between 15 and 17 dollars, to trade on the New York Stock Exchange under the symbol MCP, with the proceeds intended for "the modernization and expansion of its Mountain Pass facility." The underwriters included Morgan Stanley and J.P. Morgan. re012, MIT Technology Review, Undermining China's Monopoly on Rare Earth Elements re013, Reuters, Molycorp sees IPO price range at $15-$17 a share
The market was less enthusiastic than the company. The Denver Post reported on July 29, 2010 that Molycorp cut the size of its offering by 18 percent after underwriters failed to attract enough buyers at the range, selling 28.13 million shares at 14 dollars each. Shares lost 8.2 percent on the first day, to 12.85 dollars. The net proceeds were 394 million dollars, which Molycorp would use to fund plans to restart operations at the mine, and the paper noted that the company "hasn't made a profit since acquiring the site two years ago" and would compete with Chinese companies that supplied 97 percent of the metals globally, according to its own regulatory filing. A fund manager quoted by the paper called the offering "a bet on something so unknown." re014, Denver Post, Molycorp slumps first day after IPO
The 2010 episode began with a newspaper report of a blockade. The contemporary Reuters reporting is more careful, and the differences matter for how the later years are read. re006, Reuters, China denies banning rare earths exports to Japan
The facts that were not in dispute were few. In September 2010 a Chinese fishing trawler was at the centre of a dispute with two Japanese coastguard ships near islands that both countries claim, the Senkaku in Japan and the Diaoyu in China, and Tokyo accused its captain of ramming them. Reuters reported on Thursday, September 23, 2010 that Chinese Premier Wen Jiabao had that week threatened retaliatory steps against Japan unless it released the captain, and that Tokyo accused the captain of ramming the two coastguard ships. re006, Reuters, China denies banning rare earths exports to Japan
The embargo was a report before it was a fact. The same Reuters story said that a New York Times article, "sourced to unnamed industry experts," had reported that China banned rare earth exports to Japan, with an initial trade embargo on all exports to last through the end of the month. A spokesman for China's Ministry of Commerce, Chen Rongkai, answered: "China has not issued any measures intended to restrict rare earth exports to Japan. There is no foundation for that." He said, "I don't know how the New York Times came up with this, but it's not true. There are no such measures." Major rare earth traders in China and Japan told Reuters they had not heard of any ban, and one Japanese trade official said he had heard rumours of an embargo but could not comment. re006, Reuters, China denies banning rare earths exports to Japan
The same article carried a competing explanation from the trade. Bruce Zhang, a rare earths expert at the consultancy Asian Metal, said: "Rare earths export quotas were cut pretty sharply and have been basically used up, you can't export any to Europe or the U.S. either. People think it's about Japan, but it isn't." He added, "This has nothing to do with the fishing boat incident. The export quotas were issued long before that." Reuters gave the numbers behind that view: China accounted for 97 percent of world supply in 2009, and steep cuts in export quotas for the second half of 2010 meant that total export quotas for 2010 were about 40 percent below 2009 levels. The quota system had been used for several years, Reuters wrote, to keep more of the minerals for China's own industry, and its effect was undermined by smuggling, especially through Vietnam. re006, Reuters, China denies banning rare earths exports to Japan
Six days later the story changed again. On Wednesday, September 29, 2010, Reuters reported that China had ended "a de facto ban" on exports of rare earth minerals to Japan, according to a source at a Japanese trading firm. The source said Chinese exports were still being delayed by preshipment checks: "There is a long line at the customs office." Reuters noted that Japan had released the skipper on the previous Saturday, after mounting worries about worsening ties and high-profile pressure from Beijing, including a halt to top-level diplomatic contact. It said China had denied imposing an export ban in retaliation, that Japan's government was examining the situation, and that China supplied about 97 percent of the world's rare earths, about half of which were exported to Japan. re007, Reuters, China lifts rare earth export ban to Japan: trader
Putting the two reports together, three statements can be printed side by side. The New York Times, per Reuters, reported an embargo, citing unnamed industry experts. China's Ministry of Commerce denied that any measures existed. A Japanese trading firm source told Reuters six days later that a "de facto ban" had ended, while describing continuing customs delays. The published record does not settle whether the delays were an instruction, a consequence of a quota that was already nearly used up, or both. What they establish is the setting: a market in which 97 percent of supply sat in one country, quotas already cut by about 40 percent, and a diplomatic dispute at the same time. re006, Reuters, China denies banning rare earths exports to Japan re007, Reuters, China lifts rare earth export ban to Japan: trader
On October 13, 2010 the Associated Press quoted Japan's trade minister Akihiro Ohata saying the situation "has not at all returned to normal." At that point China supplied about 97% of the world's rare earth metals, according to the Associated Press report. Japan was considering becoming a centre for rare earths recycling and was partnering with Mongolia to develop new mines. The embargo, if it was one, was never acknowledged by Beijing. That leaves a narrower record than a declared ban: official denials alongside reported shipment and customs delays. re008, Japan Times, No improvement in China's rare earths ban re006, Reuters, China denies banning rare earths exports to Japan re007, Reuters, China lifts rare earth export ban to Japan: trader
Japan did not wait for the WTO. It moved within weeks of the reported 2010 delays. On Wednesday, November 24, 2010, less than a week after China resumed exports of the minerals to Japan, the trading house Sojitz announced a $250 million procurement deal with the Australian miner Lynas. Under the deal, Sojitz and Lynas would start shipping 3,000 tons a year of rare earths from the new Mount Weld mine beginning late the following year, rising to more than 9,000 tons a year by early 2013. Sojitz's senior vice president Satoshi Mizui said Mount Weld "has the potential to be first to begin operations" among the world's rare earth development projects. Sojitz also warned that the outlook for stable shipments from China remained uncertain. The New York Times reported that Sojitz was seeking financial support from Japan Oil, Gas and Metals National Corporation to finance the investment. re010, New York Times, Japanese Firm in Rare Earths Deal With Australian Miner re008, Japan Times, No improvement in China's rare earths ban
By December Molycorp had permits and money. MIT Technology Review reported on December 22, 2010 that Molycorp "has secured the permits and funding needed to restart production" and had that week announced a partnership with Hitachi Metals of Japan to turn material from the mine into high-strength magnets. The magazine gave the market figures of the day: China supplied 95 percent of the world's supply in 2009, or 120,000 tons, worldwide demand was 125,000 tons in 2010 and was expected to rise to 225,000 tons by 2015, and a U.S. Department of Energy strategy document the previous week had pointed to the "risk of supply disruption" in the short term. The revamped mine was expected to produce around 20,000 tons of rare earth materials a year by 2012. The magazine described the site as a 50-acre open pit about 50 miles outside Las Vegas, to be deepened from 500 feet to 1,000 feet in the coming years. re012, MIT Technology Review, Undermining China's Monopoly on Rare Earth Elements