Nick Myers - Is America too dependent on China for critical minerals?

The U.S. relies heavily on China for rare earth minerals used in military technology and advanced manufacturing. Could that dependence become a major vulnerability during global conflict?

Nick Myers is CEO of Phoenix Tailings, a Massachusetts based rare earth processing company. He joins the show to discuss America’s reliance on Chinese mineral supplies, the growing strategic importance of rare earth processing, and what is at stake as U.S. and Chinese leaders prepare for high level talks.

Transcript

SPEAKER_01 0:10

Welcome back to the Lars, Larson Joe. It's a pleasure to be with you, and I'm glad to get you your phone calls and emails. You know, America is fighting a war with Iran, although it's on ceasefire right now, and China controls the minerals that keep our fighter jets in the air. Is Donald Trump walking into his meeting with Chairman Xi, meeting with leverage or a weak hand? I thought we'd check in with somebody who's in the business, and that's Nick Myers, who's CEO of Phoenix Tailings, which is a Massachusetts-based rare earth processing company. Nick, welcome back to the program.

SPEAKER_00 0:43

It's an honor to be here, Lars.

SPEAKER_01 0:44

Thanks so much for having me. Wouldn't it be nice if President Trump walked in and said, Look, I'm from a capitalist country and you're a communist country, but there's an end of your country that's completely capitalistic. You like to sell stuff to us. Can we get some kind of new agreement with uh the Chinese president? Uh, or should we just say, no, we need to develop our own supply chain and get rid of China as a supplier altogether?

SPEAKER_00 1:09

Look, honestly, Lars, we have to get off of this drug of cheap metal, cheap minerals, cheap resources from China. It only cripples our industry and puts us in their hands. The reality is China currently controls the entire supply chain for the essential minerals that powers all of our jet fighters, medical systems, cars, computers, and everything. And all it takes is one word from Xi to make it so our entire infrastructure shuts down. America just has to get off that drug.

SPEAKER_01 1:37

And Chairman Chi knows that and he'll play it for everything he's worth. What does Donald Trump do in response that makes sense?

SPEAKER_00 1:45

Absolutely. Well, Trump has to uh put his foot down and say, under no circumstances will we bend on these type of things. He's already pushed forward with many mineral bills. He's funded MP materials, many other players in the United States, and established alliances with players like Japan and Korea that can we can do this. And American can be free of the Chinese influence in the next 18 months if Trump plays his hand right.

SPEAKER_01 2:10

Okay, so how do you I want you to explain the 18 months part of that because I'm curious, Nick. Uh yeah, as I understand it, it's not a problem necessarily to get the rare earths out of the ground, but getting them processed into the form where they actually can be put into the silicon chips, that's the trick. And how do we make that happen quickly?

SPEAKER_00 2:30

Correct. Well, it's about working together with the public-private partnerships to deploy the capital projects. So building buildings, building processing capability in America is absolutely key. But to do that, you have to have an actual supply chain. So you take the rock out of the ground, you basically run it through a bunch of chemicals, and that's what pulls out the different 17 different elements or rare earth elements, all of course, but they're impronounceable names. And those are what the metals are that are used as the magnets and the chips and everything else. But you have to put the equipment in place in America using American technology, American workers, American people, and put that there. And if we do the right thing, we have the people, we have the know-how, we have the capability. It's just about streamlining everything and making sure that America has a very clear stance on what we're going to do.

SPEAKER_01 3:16

Well, in fact, Nick, let me ask you something I've been curious about, and that is I almost think you could co-opt the the other side of the aisle. I mean, Donald Trump's been pretty good about that, doing issues where the Democrats always end up on the unpopular uh end of any given thing. Now, with the Iran War, the Democrats have taken the side of the mad mulas who want nuclear weapons. But when it comes to this, as I understand it, it's a really dirty process to both get the stuff out of the ground, but dirtier still, to process it into the finished product. And China does that by basically just sacrificing an entire region of their country and saying, yeah, we're going to make a giant mess here, but we don't really care about the environment. That the United States could say, well, we're going to make the clean rare earths. And if we could do it at somewhere close to, it wouldn't have to be the same price as what comes out of China. It's likely to be more expensive by doing it the right way. We could tell the rest of the world, hey, do you want to buy the dirty stuff out of China? And the closest comparison I could think of is the whole blood diamonds controversy in which people said I mean you got Americans saying, I am not putting a blood diamond ring on my fiance's finger. And you say, really? So the diamonds have to be extracted the right way, and if they're not, you won't even touch them. Now, I'm I'm aware that people still, you know, will buy blood diamonds or be fooled into buying it. But if we took that kind of thing, Trump could steal a march on the Democrats and say, hey, do you want to buy the clean stuff from us or the dirty stuff from the ChaiComs?

SPEAKER_00 4:47

Absolutely, Lars. That's 100% true. And it's really an awareness thing. This is a completely bipartisan issue because the way the Chinese take that rock and turn it to metal discharges 2,000 tons of toxic radioactive waste for every ton of metal. Their population around Bowtown Mine has a 40% increased amount of thorium in their blood. Thorium is a radioactive element. Those people are dying from cancer in those regions. No one in America politics, whether you're right or left side, wants that to happen in America. And I think if people are aware of those challenges that are currently happening in China for the metals that power everything that we need and are willing to take a stance and say, hey, we're not going to do this. This is exactly like blood diamonds. We can bring it to the here, into the United States and do it right, do it sustainably, do it ethically, and do it real the American way, I think it'll be very successful.

SPEAKER_01 5:35

Well, in fact, would you be and and Nick, I would love to be armed up with some of the numbers that would describe this. In other words, if I want to buy rare earths, and you're right, they're all unpronounceable, uh, and and but I want to buy the clean stuff instead of the dirty stuff. How much more does the clean in other words, if I want to buy a cell phone and it has those rare earths in it, if the current rare earths coming out of China, the dirty process, cost$30 of the cell phone's cost or$50 of the cell phone's cost, can you tell me how much it would cost to buy the clean stuff? Because people make those kind of choices, especially in America, all the time. Uh I don't necessarily agree with organic produce, but they say, oh, I'm buying the organic apples. Okay, great. And you're playing three times as much for basically the same apple because it was organic. Some of that is a scam. But is can anybody put a number on that? Because I'll bet if you went to most Americans and said, You're going to spend a thousand bucks on a cell phone, would you spend a thousand fifty to know that it's certified clean, or do you want to buy the dirty one for 50 bucks less?

SPEAKER_00 6:39

Absolutely. Well, so you have to remember that rare earths are very important. They're very expensive, but there's a very small amount of them used in the end application. So the example I always give is the F-35, big major defense application. It costs around$150 million for a single F-35. The amount of rare earths in an F-35 is around$40,000. That's it. So if the poll that's it, it's like the chrome trim on a car or something, isn't it? I know. It's all tiny bits. In some of these systems, you're looking at less than a gram of material, less than a dollar. Stange. And that's what's shutting down the entire economy.

SPEAKER_01 7:18

But but that means that let's say it costs twice as much to do it clean and American. It's got an American flag on it, it's got a certified clean on it from whatever environmental group you want to use. And you say this stuff is certified clean, and instead of$40,000 into that$150 million jet, it's$80,000. I think most Americans would shug and say, buy the clean one, wouldn't they?

SPEAKER_00 7:42

They would. It's almost negligible to the end consumer. And the main difference is the key is to just make sure we understand where it's coming from. Most people don't really know what rare earths are, and technically until recently, they didn't even know they existed.

SPEAKER_01 7:56

Do you know what, Nick? It reminds uh it reminds me of something that never really took off the way I thought it would. But long before the pandemic, there was a guy who was trying to build, buy or make, build, or built in America made American houses. And I said, What does that mean? He says, We're not buying any of this other stuff from overseas. It is 100 percent American. I said, How much more is it? He says, 3 to 5 percent. I said, so you buy a$400,000 house, which is the typical cost nationwide, and you say it's gonna cost$20,000 more to buy it all made in America, as opposed to sheetrock screws and everything else coming from China? He said, Yeah, it it's extra three to five percent. I said, so it works out to about ten dollars on your mortgage. He said, it's exactly what it is. I think we can do that kind of deal. Nick, thanks very much. That's Nick Myers, CEO of Phoenix Tailings, a Massachusetts based rare earth processing company, and you're listening to the Lawrence Show.