Joining me now is Josh Ballard. He's CEO of USA Rare Earth. They're traded on NASDAK. They have a website as well. On NASDAK. They're symbol as USAAR on the web. You can find them at us AAR dot com. If I got that correct. If I didn't, Josh, you can correct me. And I want to talk to him because he's been on the forefront of this rare earth issue and that is really kind of at the forefront of what is going on in this trade dispute with China.
We hold all the cards when it comes to tariffs and who's going to buy what from who, But there are other ways that they can strike back, and one of the things that they have done is to use their position of dominance in rare earth minerals to essentially shut down supply of critical things. So thank you so much for joining us, Josh. We've got a lot of questions about rare earth minerals. Thank you for joining us.
Yeah, thank you for having me appreciate it.
First of all, tell us a little bit about what rare earth minerals are. Why do we call them rare.
Rare earth minerals. For the most part, actually aren't rare. They are pretty abundant. But what's difficult about them is you don't have a vein of them in the ground. So when you go get coal, you have a vein of coal, you can make it straight out. Rare earths are dispersed throughout the rock, so there's a lot of science that goes into pulling it out of the rock so that you can then separate out the minerals and ores that can be used in the metals and the magnets and so forth. So it's hard.
Some are super rare, some are lot so rare.
China, by the way, focused on the super rare ones, you know, to your point that they could really control, but they're critical to modern technology and they're critical to you know, really how we live today in surprising ways.
Yeah, especially because we see a lot of these, you know, it's gotten to the point we have these super magnets that are very small. Of course, we use them all kinds of things. You can have it with an airbud, speaker or all that. It's just so many different things.
And the fact that you can make very very small, very strong magnets, I think that's a large part of that and of course, with everything going electric magnets are absolutely essential to convert electricity into some kind of movement or some kind of transducer, whether it's moving a speaker or whether it's moving a car, you know, the motor or something like that. So it's really key to the
kind of devices that we have. It's really key to a lot of consumer electronics, key to military things especially. How did China tell me you probably know more. I've thought it was somewhere around seventy percent of the minerals or they've got ConTroll of, but of the refinement, they've got like nearly ninety percent. Those are the figures I've seen. Is that correct or correct me?
If that's correct? Yeah, that's correct. Now, then you have to separate into what rares. So well, I'll take one step back. The context of this is in the early nineties there was a vice premiere in China who said Middle East has oil, China has rarers.
This has been their focus for over thirty years.
Wow, And they've been very deliberate about it and built up a pretty strong supply chain.
To your point, today it used to.
Be over ninety percent mining as well, it's now about seventy percent mining. We have about fifteen percent of it here in the US of certain light rearers that are a little bit more abundant, but over ninety percent of the processing havespends in China. Not only ninety percent of the processing which is just to get the ore, but they also have over ninety percent of the metal making and they also have over ninety percent of the magnet making for all those magnets you were just describing, So
they really control all of the supply chain. And then when you focus it into specific minerals. This export list for example that just occurred about two weeks ago that went into play. Those minerals they control for the most part, not everyone, but for the most part over ninety eight percent. And the critical ones gatollinium, dysprosium, terbium, those are over ninety eight percent for sure.
Yeah, these are names that I never I don't know, I got alegrical engineering degree. I've never heard of these and they're.
So critical to our lives.
Gattolinium, way is the mineral that we use when you get an MRI scan. It's the mineral that creates the contrast around our organs. This is going to affect millions of MRI scans the country.
It becomes personal. This isn't just political.
Oh yeah, there's minerals in that list that are used to fight cancer. And then there's minerals like disprosium and terbium that are used they could handle a lot of heats that they're used in a rocket systems, they're used, they're used in in high performance magnets that you'd use in not only an EV but in high performance machinery and the defense or in drones.
You know. So these are really important.
Minerals and important magnets and technologies for our society today.
Now they've been very strategic. One of the things that I've heard and you talked about the fact that they're not so much rare as they are difficult to get. I guess, you know, we could have if we could marvel at unobtainium. You know, we get one of those things there, but that's not a real one, but that's straight out of Marvel comics. But it is kind of
like that. It's really hard to get this stuff. And one of the things that I've heard that China has done is you know, using very crude and dirty methods of extraction using slave labor and a lot of other places. That's helped them to get a monopoly on this as
well as just the grigraphical location of this stuff. So from that standpoint, where do we stand in the United States, Because we also have voluntarily in the West, we have given China a huge advantage on energy costs, you know, we have that they can again do as cheap and dirty a coal as they wish. We're not allowed to even have clean coal plants and that type of thing. Many places in the West. Everybody's shutting down their their manufacturing facilities. So we have a real issue with this.
And and so you know, how do we how do we get out of this situation, even if we've got fifteen percent of them? You know, what is that going to How is that going to affect our country if our costs of manufacturing what tribe because our energy costs are higher, If we are going to have a clean and responsible way to get to handle these things rather than just doing it and who cares what happens approach that the Chinese have had in other countries.
Yeah, and I think that's a great question. And you know, as Americans, as humans, we want to do this as responsible as possible as we bring it back to the US, we can, there's ways to do it much cleaner. So for example, in rare earth mining, of course you're mining, you're taking things out of the ground.
Maybe you can't avoid that for sure, But.
What you can do is you can reduce dust levels. You can use a lot of acids and reagents within this process to get the minermals out of the rock and separate them. You can recycle those reagents. There's ways you can recycle the water that you're using within the plant. So there's things that we can do to be much more responsible about it than certainly they are in China and Sean not on. They are responsible, and then of course the government's also subsidizing it and just accelerating. And
what we can do here in the US. It's one we've been more responsible, but then we have to create a moat.
Though.
We have to protect the industry that we're trying to build here now because we do need it. Domestically. You can argue in favor or not of the current TERFF regime. What I can tell you is when it comes to rare earth's rare earth magnets, not only rare but also to other critical minerals that have been in the news a lot lately.
We do need to create a mote. We need to build this industry back here in the US.
It's too important to our day to day lives, is too important to our defense, and to rely on one single choke point like China, it's just a mistake.
Well you know, lover hate China that moment, there.
Is a mistake that we need to fix and creating this moat, whether it's through support through the government, whether it's through a terif regien, whether it's through making it less onerous to build a mind for example, permitting and so forth. But while making sure we're still responsible humans. You know, we still need to be responsible, but we don't need to kill a business to be responsible, right, which is what we've been doing in the mining world for all these decades.
Oh yeah, yeah, I guess my question is I look at it is how do we get from where we are right now to a position of you know, where we have some self sufficiency in this and you know that would apply to pretty much everything, but in the rare earth, the situation we you know, we look at this abrupt change that is here and you know being shut down right away by China. How do we get through this transition? What does the interim situation look like?
You say, we've got fifteen percent supply here? How much is how much pain is that going to cause in the US during a transition period, because it's going to be a period of time that you've got to get your mining up and working and got to get manufacturing up and working. That's not going to happen overnight. So what happens in the interim? Are we going to see sky high prices in the interim?
And it's that's fifteen percent of overall rare earth? But fortunately we have fifteen percent of the easiest the ones in the export percent this export list we have zero.
Wow.
So this is a challenge for US and it's going to affect us in the very short I mean, there's some some stock files right we have I wouldn't call it a stock bile. There's some inventories of these minerals and these metals here in the US, some.
In friendly countries for instance, like Australia or whatever that I think aren't there some there they have the important ones?
Or yeah, they don't have this export list. Necessarily there's some coming out of Brazil, but they get sent to get processed in China, and you know, all the processing goes through China. So we're going to have this period. I don't know what we're going to do. I mean, maybe we're going to work out ways to do it through intermediaris. Maybe we'll come to some kind of agreement so we can start to get some of these minerals back for a while. The short term is tough because
there's no short term answers. And if you break apart this supply chain, and this is what we're working on as a company, is this entire supply chain trying to do it domestically. If you start, I'm going to start with metals and magnets those you know. What I've been talking to the government about is it's time for a Marshall Plan, Like we need to look at this as something that has to happen quick. We need to invest in it. We need to bring private investment. That has
to be private public partnership. We need to make this happen as quickly as possible. And on the metals and magnet side, we can surge that and over the next year or two make a big difference, right, not solve the entire problem that we have, but we can make a big dent for sure over the next couple of years.
Certainly we have.
A plan that we could uplift this within a couple of years. We could build our whole magnet facility, which will make hundreds of millions of these magnets. We could build metal making here in the US. This can happen. We can be the first domestically, you know, the full
domestic source of this here in the US. But on the deposit side, on the mining side, on the processing side, you can build a mine, you know that might not take so long to break up rock and grind it, but the processing of that rock to get out of the minerals. There's a science behind that that we've lost. We've been working on it for years. A couple of our peers been working on it the last few years. We've made progress, but there's still work to do, and
that doesn't happen overnight. You know, even if you have a great depot, like our deposit in West Texas is an incredible deposit with all these rarers on this export list, that's what we're heavy we're heavy in the heavies is what I call. These are called heavy rare earths, fifty seventy heavy rare earths. But we have to we still have to work through the science of that. Then we have to build the processing techniques we're going to use.
We are building it. We have to build that first demo plant and then build a mind.
None of that.
Happens over it, right, well, but we consurge it, we can get support from the government, we can shorten that cycle. It's not decades. I think it's over the next few years. We can build it. Let's go to take a little bit of time. So we got this period we got to figure out for sure.
So what you're saying is even though we have some in Texas that we know of the minerals there, the whole processing, refinement, manufacturing process that's been we don't have that. We don't have that knowledge and we've got to discover that, right as well as build the factories.
Is that correct? That's right, that's correct. And every deposit's different as well.
Right, there's different mix of minerals, there's different impurities, there's different science. You have to be used to approach it. So it's a you know, it's a puzzles. You got on crack at every deposit, so it's just not an overnight thing.
But we have to rebuild this in the US. There's absolutely we got figure out.
Really caught us flat footed, didn't they. I mean, they thought strategically about this, and we've just been kind of taking the path at least resistance for quite some time, and all of a sudden because of trade dispute, it looks like it's going to be shut down, and you know, we it's going to take years for us to get
this thing together. So your company is working on the entire supply chain then right from getting it out of the ground to processing and refining it and then manufacturing and to finish product maybe even into magnets.
Is that correct, that's right?
In fact, yeah, we're looking at taking out of the ground in West Texas, processing in West Texas, and then metal making and magnet making here.
I'm in Oklahoma today. Out here in Oklahoma, we're building up.
We're in the process of building a large three hundred thousand square foot facility, magna making facility and future metal making facility here in Oklahoma.
It's gonna be the first.
Large facility really to serve the entire magnet market here in the US. It's gonna make hundreds of millions of magnets. And we're commissioning our first line beginning of next year, and we're already making magnets. We have a big lab industrial lab that we're working through to start working with customers, and we commissioned last month. So we're moving pretty quickly. And the question is is now how quickly can we move?
It's all about capital and execution, and we need to get the capital in government, private all together.
Push this fast.
We can build as fast as we can get capital and to build it, but will be a significant, significant asset here in the US here in the short.
Term for sure.
Yeah, of coach, I think back to World War Two, we got caught flat footed and a lot of critical things like rubber stuff like that, and you know, we lost the supply of those types of things that came up with synthetic rubbers and stuff like that. Is there any possibility that you know, these things can be replacious, likely replaced natural rubber with synthetic rubber, or is there any are you looking at alternatives to rare earth that might be substitutes that could get there.
It's hard.
You know what's special about rare earths are what if it's a metal alloy is the properties that they have. They have special properties that can withstand heat, that have super conductivity. We take a critical metal like gallium, which was also banned a few a few months ago. Also, we're very rich in gallium in our deposit. Gallium is used in the Patriot missile system for examples. This is
why trying to target it. It's also used in semiconductors because of its conductivity and it's ability to stand heat. It helps miniaturize semiconductors and speed them up.
So yeah, we can still make.
Sem Yeah, I'm familiar with gallium. That's that's been used in semiconductors for quite some time. Yeah. Yeah, and we just never bothered to have a supply of it. That's pretty amazing.
Yeah, And it's playing on the plane's day that we should have done this.
So this is not a surprise to the industry at all, by the way, But when it comes to rare earth magnets, the key is in some areas you can replace them, but the key is are so powerful and so small. The power and how small they are. You know, it's like ten times smaller. And so when you think about a drone and the magnet it needs in a drone, like there's limitations because you can't put something too big. It makes it too heavy. If you think about a speaker,
same problem. Right now, you can make a less a speaker.
You can just make it.
We didn't always use these magnets. You could just make it a less powerful speaker. You know, a permanent magnet. These rarest magnets and the speaker are super small. They create fifty percent more base and they're like a third the sign or tenth the size or something like it. There's a huge difference in power with these. If you think about a tesla, you put it in beast mode and you put on the accelerator and it feels like you're in a roller coaster. That's these these magnets, these
permanent rarest magnets, turn that on and turn that drive. Oh, you're off right, and you can't do that. The weight and the size you're going to be too big. And so there's limitations in terms of how far we can take it. That's why these are important. I think we just need to figure it out here.
That's domestic.
It is amazing. I mean we're in I guess you say we're in a tight spot now with this stuff. Let me just ask you this is kind of a wild question, you know. I always looking at this Greenland stuff and everybody's like, there's a lot of stuff out there is But I also hear that it's extremely hard to get the stuff out of the frozen ground everything. I mean, that's not going to factor in anything, is it or is that a factor anything?
No, I think it's I think it's great marketing. But the reality is Ukraine Greenland.
They do have a lot.
Greenland has a lot, right Ukraine doesn't have anywhere much in What they do have is.
In Russian controlled territory. Yeah, but all those countries they're decades away. So what we need to do is work on what we have right here. We have it here. I mean we have when you.
Break apart the light rare earths, which are syrium and lanthanum are using a lot of technologies and ceramics and these LCD screens we're looking at now, all sorts of places you use these Latham's also used in batteries, is very important. We have a ton of that stuff, and we make a lot of it here, we just don't process it here. Odymium, praisiodemia, the key minerals that go in or that goes into these magnets, we make some here.
We have other deposits that we can develop that we know of, and then we have a heavy deposit like ours that we know we can develop. It's going to take two or three years or four years, but we can do it a lot faster than the decades away that will happen in a Greenland, Eura or Ukraine or choose your other country. There's lots of known deposits, not many of them are close.
Yeah, you here, let's go for it.
Well, it's good to hear you verify that. And that's what I reported too. I's had a lot of sources said, you know, there's not that much in Ukraine, and what's there is not in the territory that's controlled by the Ukrainian government, and so yeah, there is a There seems to be a real disconnect with reality in many cases
as we look at this stuff. But the reality is is that it's going to be a difficult position, and they've really got a strategic advantage in this, and they're willing to use that as as leverage and so and we have given them not only have we walked away from these things like a gallleon for example, that is something that we have been used for decades in semiconductors, and yet we didn't bother to secure a supply of it. And it's amazing that we let ourselves get into this
kind of a situation. And it's going to be very difficult, especially just going cold Turkey, and that's really what's happening now. It's going to be cold Turkey to do this and to create an entire supply chain. Again, your company iss a R dot com. It's where people can find you as us A Rare Earth and so it's us A R is in rare earth dot com and on Nasdaq. You were there at us AR. Is there anything else that you would like to tell us about this as we look at this monumental task in front of us.
Yeah, I just like to tell EBN and we're working hard to solve this. We want a domestic supply chain. We want to be the first to have a fully domestic supply chain. We're very serious about it and we're going to execute on it, and it's it's an exciting time for us.
For sure.
It's been very interesting, but we're going to deliver on for the American people and for our shareholders.
So that's great, good time. We're going to make it that well.
As I say, you know, the Chinese curses that maybe you live in interesting times, and I guess that Chinese are cursing us by giving us some real interesting times to try to adapt to things on the spare of the moment without any preparation or forethought. It seems to be where we are right now. But I thank you. I hope you're successful. I hope you get this through
very quickly. Thank you so much for joining us again U s a r E as in USA Rare Earth U s a r E dot com and on Nasdaq at U s A R. Thank you so much, Josh. I appreciate it.
Thank you for having med appreciate it.
Great best of luck to you. Thank you,