Overview

This episode of Planet Money traces the complete arc of the American rare earths industry through the rise and fall of a single company, Molycorp, and its Mountain Pass mine in California. The central thesis is that the United States once monopolized the global rare earths market—critical metals used in everything from iPhones to fighter jets—but lost that dominance to China through a combination of corporate complacency, strategic Chinese industrial policy, and a failure to recognize the geopolitical stakes until it was too late. The conversation moves from a 1949 accidental discovery in the California desert to the present day, where the U.S. government is now frantically trying to rebuild a domestic rare earths industry using the same kind of state-driven tactics that China employed to take it away.

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0:00The Accidental Discovery and the Birth of an Industry

The story begins in 1949, when prospectors searching for uranium in the mountains between Los Angeles and Las Vegas stumbled onto something unexpected. Their Geiger counters clicked, but slowly—not the rapid-fire chatter of uranium deposits, but a measured *click, click, click* that told them something radioactive was present, just not what they were looking for. What they had found was a massive deposit of rare earths: obscure metals with tongue-twisting names like lanthanum, cerium, neodymium, and praseodymium, all tucked at the bottom of the periodic table.

One element in particular stood out: europium. As Mark Smith, a decades-long veteran of the mining industry, later explained, the name sounded almost fictional—like "unobtainium" from the movie *Avatar*. But europium was very real, and at the time, nobody had any commercial use for it. The prospectors had no idea what they'd found, and the world had no idea what these metals would become.

The site of this discovery was a dusty, deserty spot between two mountains on the California-Nevada border, just off an interstate highway. It was called Mountain Pass—a name that NPR international correspondent Emily Fang and host Kenny Malone agree sounds like something out of a fantasy epic. "Mountain Pass," Malone muses, "feels like a location on a fantasy map." That giant hole in the ground would become the world's biggest producer of europium and other rare earth metals for decades, and the cornerstone of America's rare earths dominance.

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5:41Molycorp's Monopoly and the Fateful Tour

By the 1960s, Mountain Pass had evolved into a highly successful mining operation run by a company called Molycorp (short for Molybdenum Corporation). The company produced a cheery atomic-age industrial video featuring grainy footage of exploding hillsides and a narrator extolling the virtues of "beautiful hillsides of America" being blasted for industrial progress. Molycorp had a near-total monopoly on the world's rare earths supply, and for years, that position seemed unassailable.

The breakthrough commercial application came from europium. As Mark Smith explains, "The europium is what caused the red color in the colored televisions. For a period of time, every single colored television that was made in the world had europium from the Mountain Pass deposit used to make that red color." This was the moment rare earths burst onto the global stage—not as obscure laboratory curiosities, but as essential components of a booming consumer electronics industry.

But somewhere during this golden era, Molycorp made a decision that would prove catastrophic in hindsight. In the 1960s, the company's CEO invited a group of visitors from China to tour the Mountain Pass facility. The Chinese delegation was allowed to wander around, take pictures, and observe the elaborate processes of mining and refining rare earths. They took all that information back to China, and as Smith puts it, "they became what is today the world's best processors of rare earth materials."

When asked whether he can make any sense of that decision, Smith admits he cannot. "I don't know what the right decision was at the time. All I know is what decision was made at the time." Emily Fang provides context: China in the 1960s was a very different country—still under central state economic planning, not yet the economic powerhouse it would become. Molycorp likely saw no threat. "I don't think that Molycorp saw them as a threat in any way," Fang says. "And it's possible that China also did not fully understand how important rare earths were going to be."

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11:53How China Built a Rare Earths Empire

To understand how China transformed from a curious visitor to a global dominator, the episode turns to Professor Rod Eggert of the Colorado School of Mines (whose Zoom screen name, "Rod Eggert - MINES," reflects the school's branding). Eggert co-authored a paper titled "China's Public Policies toward Rare Earths, 1975 to 2018," which attempts to peer through the "black box" of Beijing's decision-making by reading every publicly available Chinese policy document from the last 40 years.

What Eggert and his co-authors found was that China's rare earths strategy was not some grand geopolitical scheme from the start. Rather, it was a small part of a much larger strategy: transforming China into the world's manufacturing hub. Rare earths were simply inputs—the kind of raw materials needed to make other things. China established a "Rare Earth Office" around 1975, though Eggert cautions against imagining a bejeweled, treasure-filled room. "It was maybe one or two nondescript offices that were charged with undertaking activities and coordinating with other agencies to prioritize rare earth mining."

In its early stages, China's rare earths industry was anything but sophisticated. Fang describes it as "the most dirty, unregulated, backyard kind of side industry"—just people digging holes in the ground to make money. But then the Chinese government began implementing policies that made it impossible for non-Chinese producers to compete. Eggert calls it "a kind of supercharged industrial policy experiment."

The policies included: cheap government financing for anyone wanting to start a rare earths operation (which spawned many competing companies within China, driving down prices and incentivizing innovation); a consistent focus on educating and training scientists and engineers with rare earths expertise; and perhaps most critically, policy walls around processing. China decreed that rare earth ore could not leave the country in large amounts—it had to be refined in China first. Foreign companies wanting to participate had to jump through bureaucratic hoops and set up facilities within China, effectively moving their entire supply chains there.

By the 1990s, China had taken virtually the entire rare earths industry away from Molycorp and the United States. China could mine and process rare earths as well as the U.S., and at a cheaper price—partly because of lower labor costs, cheap access to money, and initially lower environmental standards. As the industry matured, Beijing consolidated it into a handful of state-owned or state-backed companies. In just 30 years, China went from touring the Molycorp facility to supplying the vast majority of the world's rare earths.

Mark Smith, who watched Molycorp's decline from inside the company, doesn't blame the 1960s tour. "Knowing how good the Chinese were and still are at taking a process and just maximizing its efficiency and its throughput, I think they would have figured this out anyway." The moment he knew America had lost came when Molycorp shut down its Mountain Pass operation entirely. "We couldn't find enough people to sell the products to. And then there was no question at that point, because there was no other production really in the world other than China."

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19:50The Fishing Boat Incident and the Awakening

For years, the world seemed mostly okay with China's monopoly on rare earths. Then came what the episode calls "the fishing boat incident." The year was 2010. China and Japan had long been sparring diplomatically over a cluster of islands in the East China Sea—called the Diaoyu Islands by China and the Senkakus by Japan. A Chinese fishing boat captain sailed through these waters, Japan claimed he entered their territorial waters, a standoff ensued, and the Chinese captain rammed a Japanese coast guard vessel. Japan detained and arrested him, sparking huge protests in China.

China made a political decision to take a stand. Most notably, it quietly and informally stopped selling all rare earth products to Japan. Japan suddenly realized that its car industry and electronics industry were totally dependent on rare earths. As Fang notes, "everything has quietly become dependent on rare earth products"—the Apple iPhone used them for tiny glass camera lenses, tiny speakers, and bright screens. Japan's high-tech manufacturing sector was suddenly vulnerable.

The export ban hit global news, and the world had to learn about rare earths for the first time. Two key lessons emerged: the world had become incredibly reliant on this weird class of metals, and China had enormous power over the global economy as a result. Around the same time, China also reduced its overall rare earths exports, saying it needed the materials for its own manufacturing. Prices jumped 600 to 700 percent.

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23:01Project Phoenix and the Second Fall

For Mark Smith, the crisis was an opportunity. He had been keeping what was left of Molycorp alive for about a decade, serving as CEO of a company with a boarded-up mine. But with sky-high rare earths prices and increasing demand, he saw a chance to revive the American industry. His first decision was to reopen Mountain Pass under a plan he called "Project Phoenix"—a name that Malone and Fang agree is "rad."

Smith went on Bloomberg in 2010, full of optimism. "The Chinese are only exporting 30,000 tons of material to the rest of the world right now. The rest of the world needs 50,000 tons of this material a year. If anyone is Economics 101, what's going to happen? Prices are going to go up." The first phase of Project Phoenix—small-scale mining and processing—went great. But then Smith announced a phase two that would double the facility's capacity to 40,000 tons by the end of 2012.

That's when China seemed to take notice. Very quickly, China released a huge amount of rare earth product onto the global market—exactly the kind Smith was planning to refine. Prices cratered. Smith acknowledges there's no smoking gun proving China deliberately undercut him, but he says, "I don't think there's anybody in the rare earth world that would suggest something other than what I just suggested." Fang adds that while there's no definitive proof, China's industry is coordinated to a high degree because most of it is state-owned.

The price collapse was the demise of Molycorp. Looking back, Smith says he thinks about that moment almost every day. "What could I have done differently? I think what I should have been was satisfied with phase one, getting really good at what we did, worry about the expansion later." The lesson he took away was not just about business strategy, but about the fundamental risk of depending on China for critical materials. For nearly 20 years, he has been warning anyone who will listen—at dinner parties, on airplanes, in airports—about the danger. "I was certainly one of few who understood what that could ultimately mean if they wanted to use it as a political card."

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29:32The U.S. Awakens—Again

More than a decade after China first flexed its rare earths power against Japan, the United States is finally taking the threat seriously. The wake-up call came in April 2025, when President Trump announced "Liberation Day" tariffs—including enormous tariffs on Chinese goods. Not long after, China once again limited the export of critical rare earths. Fang reports that the U.S. Defense Department realized it had no replacement for some of the magnets and products China was making that went into American defense equipment. "It was a punch that the U.S. did not expect."

Over the past year, the federal government has poured billions of dollars into rare earths companies through grants and loans, and has even bought stakes in American firms. The U.S. is trying to get Mexico, Europe, and Japan to agree to a rare earths price floor so China cannot crater prices again. What strikes Fang most is that this is a state-driven effort—the U.S. government setting prices, investing money, buying stakes. "This is how China dominated the rare earth sector. This is what the U.S. is now doing, let's say rhyming with what we heard in China."

And who is on the receiving end of this new American industrial policy? Mark Smith. He now runs a different company called NioCorp, trying to get a rare earths mine up and running in Nebraska. It's a far cry from the days of Molycorp's monopoly. "We do have to get a little scrappier and we have to figure out how to pay the bills and keep the lights on," Smith says. His company has received millions in government loans, and he's meeting with the Departments of Defense, Commerce, Interior, and the White House. When asked if he would accept the U.S. government taking a 10 percent stake in his company, Smith gives a classic CEO answer: "I can't think of a better equity partner to have in a company like that than the U.S. government."

But Smith is also cautious. He's been burned before, and most analysts estimate it will take at least five years, possibly a decade, to get the American rare earths industry back on solid footing.

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35:07The Strange Fate of Mountain Pass

The episode ends with a final twist involving the original Mountain Pass mine. After Molycorp shut it down, the mine was sold to a company called MP Materials. Then a Chinese state-owned company bought a stake in MP Materials. Until last year, MP Materials would send its rare earth ore to China to be refined and processed. But then the Department of Defense took a 15 percent stake in MP Materials, and the company is now looking to refine everything in the United States.

So the Mountain Pass Rare Earths mine—the site of the original 1949 discovery, the birthplace of America's rare earths industry, the location of Molycorp's fateful tour—is now partly owned by a state-backed Chinese company and the government of the United States of America. As Malone puts it, "Shareholder meetings are going to be fascinating."

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Conclusion

What stays with the listener is the sheer improbability of the entire story: that a handful of obscure metals, accidentally discovered by prospectors looking for something else, could become the foundation of modern technology and a flashpoint in geopolitical conflict. The episode matters because it shows how quickly strategic industries can be lost through complacency, and how difficult—and expensive—it is to rebuild them. The cautionary tale of Molycorp is not just a corporate saga; it's a warning about the consequences of taking critical supply chains for granted. And the strange, shared ownership of Mountain Pass—part Chinese state, part U.S. government—is a perfect symbol of where we are now: entangled, dependent, and only beginning to reckon with what that means.

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Key takeaways

• Rare earths are a group of 17 obscure metals essential for modern technology, from smartphones and electric vehicles to fighter jets and missile guidance systems.
• The United States once had a near-total monopoly on rare earths through Molycorp's Mountain Pass mine in California, but lost that dominance to China over several decades.
• China's rise in rare earths was not initially a grand geopolitical scheme but rather a small part of a larger strategy to become the world's manufacturing hub, supported by cheap financing, education investment, and policy walls that forced processing to happen inside China.
• The 2010 fishing boat incident between China and Japan was the first major demonstration of China's rare earths power, when China quietly cut off Japan's supply and caused global prices to spike 600-700 percent.
• Molycorp's attempt to revive the American rare earths industry under "Project Phoenix" in 2010-2012 failed when China flooded the market with supply, cratering prices and driving the company into bankruptcy.
• The U.S. government is now using the same state-driven tactics as China—grants, loans, equity stakes, and price floors—to try to rebuild a domestic rare earths industry, but analysts estimate it will take 5-10 years.
• The Mountain Pass mine is now jointly owned by a Chinese state-backed company and the U.S. Department of Defense, symbolizing the tangled and precarious state of global rare earths supply chains.