This Is How The US Can Become a Player in Rare Earth Metals

Summary

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Odd Lots: "This Is How The US Can Become a Player in Rare Earth Metals"

Date: February 5, 2026
Hosts: Joe Weisenthal & Tracy Alloway
Guest: Heidi Krivo Rediker, Senior Fellow at the Council on Foreign Relations, former State Dept. Chief Economist, and co-author of a new CFR report on US rare earth strategy

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Episode Overview

This episode delves into the United States’ vulnerability in the supply of strategic minerals—especially rare earth elements—where China currently dominates the market. Joe, Tracy, and guest Heidi Krivo Rediker discuss why the US fell behind, what new technologies could allow America to leapfrog China’s grip, and what policy, innovation, and industry collaborations are needed if the US is to become competitive in critical minerals. The conversation is rich with analogies to past industrial challenges, as well as eye-opening details about how “waste” could become a major domestic resource in this sector.

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Key Discussion Points and Insights

1. The Rare Earths Problem and China’s Dominance

• Problem Identification:
  Joe and Tracy reflect on how Odd Lots often identifies US strategic "choke points" (e.g., China’s dominance in rare earths) without proposing actionable solutions. They set up the episode to explore feasible ideas to address America's vulnerability (01:01–02:35).

• China’s Strategic Advantage:
  Heidi explains that China’s dominance was the result of a “slow train coming at us for decades.” China invested heavily, created a full domestic ecosystem (from mining to manufacturing), and accepted lower profitability for strategic advantage (04:12–06:27).

  "[China] did a very good job of creating an entire ecosystem... both domestic extraction, processing, and then they came up with all of the products that would be the leading demand."
  —Heidi Krivo Rediker, 05:22

• US Missed Opportunities:
  The US once led in mining but offshored the environmental impact, becoming dependent on low-cost Chinese supply. Environmental and economic tradeoffs played a role (09:56–10:26).

2. How the US Can Leapfrog with Innovation

• The Need for Leapfrogging:
  Heidi stresses that the US cannot simply "out-mine, out-process, or outspend" China; instead, the US must leverage innovation (07:27–08:40).

• Role of National Labs:
  Many breakthrough technologies originate in US national labs, like the Ames National Lab, which fosters collaboration between science, academia, and startups (08:52–09:36).

• Groundbreaking Technologies:

  • Material Science Advances:
    The US Dept. of Energy’s ARPA-E funded research post-2010 led to new magnet materials that drastically reduce or eliminate rare earth requirements. Niron Magnetics, for instance, is scaling up rare earth–free magnets (11:38–13:00).

    "A scientist in Minnesota... created a rare earth free magnet... and it's actually scaling up massively."
    —Heidi Krivo Rediker, 12:20

  • Biotech Extraction:
    New companies (e.g., Alta Research Technology) engineer proteins or even viruses that extract specific elements from waste, offering clean and efficient extraction from U.S. waste resources (13:00–14:47).

    "It's a protein that is altered so that it can go in and micro-target specific rare earth elements…it's kind of revolutionary."
    —Heidi Krivo Rediker, 14:10

  • Mining the Waste Stream:
    Rather than mining fresh ores, the US has vast stockpiles of industrial waste, coal ash, and electronic waste (“e-waste”) that can be mined domestically for rare earths (13:00–14:47, 19:37–21:02).

    "We shouldn't consider waste at this point to be a liability. It's literally America's next mine."
    —Heidi Krivo Rediker, 13:36

3. Policy, Demand, and Commercialization

• Crossing the “Valley of Death”:
  Persuading investors to back early-stage rare earth startups is hard when Chinese suppliers are currently cheaper. The solution? Secure offtake agreements—guaranteed demand, often from the government or industry consortia—to foster commercialization (16:57–19:22).

  "You have to have... companies actually coming together more in a consortia type of arrangement to have collective offtake agreements."
  —Heidi Krivo Rediker, 17:07

• Success Stories and Examples:

  • Vulcan: A new example of a co-funded, vertically integrated rare earth recycler that has combined military funding, tech innovation, and private investment to accelerate US production (17:40–19:22).
  • Niron Magnetics: Partnering with auto manufacturers for forward-leaning offtake agreements (17:07).

• Who Owns “Waste”?
  There are legal/policy questions about who owns industrial or electronic waste, which will need to be resolved to unlock this resource for domestic rare earth supply (19:37–21:02).

4. Policy Levers and Structural Recommendations

• Holistic, Non-fragmented Strategy:
  The US must coordinate across agencies and sectors—a patchwork approach loses game-changing innovations. Capture and analyze data on domestic waste, restrict unassessed exports, and create a parallel “critical mineral innovation strategy” alongside traditional mining (21:58–24:31).

• Filling the Venture Capital Gap:
  Early-stage innovation is constrained by lack of capital. US government-affiliated VCs like In-Q-Tel (the CIA’s venture arm) are filling gaps, but broader government and private support is needed (24:31–25:48).

  "There's a specific equity valley of death that a venture-like entity could help solve... Until we have solved for that market failure, these [innovations] will just lie on the shelf."
  —Heidi Krivo Rediker, 24:31

• Lessons from History:
  Analogies to the WWII synthetic rubber effort illustrate that industrial policy, recycling, and urgent action can crack choke points (26:15–27:50).

  "Without synthetic rubber we would not have won World War II... We did it with a rapid warp speed Manhattan Project."
  —Heidi Krivo Rediker, 26:36

• National Labs as Crown Jewels:
  US national labs and university research play pivotal roles and should be protected from funding cuts, especially in periods of urgent need (32:37–33:54).

• Embracing Risk:
  The hangover from Solyndra-like flops has stifled willingness to fund risky but necessary tech. Bipartisan buy-in and risk-taking are essential (34:09–34:30).

5. Environmental and Societal Trade-Offs

• Cleaner Mining Through Innovation:
  Traditional mining is inherently dirty, but new biotech and material science offer cleaner, faster, and more efficient alternatives. Example: Rio Tinto using proprietary microbes to extract copper from old mines (35:11–36:45).

• Win: National Security and Profitability:
  Technological breakthroughs may allow for both strategic security and economic competitiveness—even US exports—not just loss-making defense outlays (38:15–39:02).

  "It's interesting the prospect that there are technologies that not only could solve perhaps the sort of strategic element, but that actually could be cost competitive, perhaps could create export opportunities..."
  —Joe Weisenthal, 38:15

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Notable Quotes & Memorable Moments

• "We shouldn't consider waste a liability. It's literally America's next mine."
  —Heidi Krivo Rediker (13:36)

• "It's a protein that is altered so that it can go in and sort of micro-target specific rare earth elements. And that is, I think it's kind of revolutionary. It's super disruptive."
  —Heidi Krivo Rediker (14:10)

• "There is a specific equity valley of death that a venture-like entity could help solve this for because you don't have... risk takers that will invest in difficult technology." —Heidi Krivo Rediker (24:31)

• "Without synthetic rubber, we would not have won World War II... We did it both through a rapid warp speed Manhattan Project."
  —Heidi Krivo Rediker (26:36)

• "The US has the capacity, the know-how, the science, the natural resources, the money to do it. I only question... whether we have the sort of organizational capacity."
  —Joe Weisenthal (39:44)

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Timestamps for Major Segments

• Problem Setup & China’s Strategy: 00:36–06:27
• US Missed Opportunities and Current State: 09:36–10:26
• Leapfrogging with Science & Technology: 07:27–14:47
• Biotech in Rare Earth Extraction: 13:00–14:47
• Commercialization, Demand & Valley of Death: 16:55–19:22
• Who Owns Waste?: 19:37–21:02
• What Policy Needs to Change: 21:58–24:31
• Funding Gaps, In-Q-Tel Example: 24:31–25:48
• WWII Synthetic Rubber Analogy: 26:15–27:57
• Policy Continuity and Recent Urgency: 30:26–32:37
• National Labs’ Role and Funding Threats: 32:37–33:54
• Risk Tolerance Post-Solyndra: 34:09–34:30
• Environmental Trade-Offs and Clean Mining: 34:30–36:45
• Final Reflections on Potential & Coordination: 38:15–40:41

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Tone and Language

The tone balances urgency, optimism about US innovation, and pragmatic concerns about coordination and risk aversion. The hosts frequently inject humor and analogies (WWII rubber, Jurassic Park microbes), and showcase genuine curiosity and excitement about science and engineering.

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Key Takeaways

• China's advantage is deep and multi-faceted, but not insurmountable if the US uses its innovation edge.
• Game-changing tech already exists in labs; the challenge is scaling and de-risking commercialization.
• The US can’t outcompete China using traditional mining alone, but biotech and material innovation can “leapfrog” choke points—especially by mining waste.
• Strategic government intervention is crucial: VC-style investments, policy coordination, and demand assurance through offtake agreements.
• The window is open to turn a vulnerability into a strength—if the US acts boldly, coordinates efforts, and embraces risk.

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Transcript

[UKG Announcer]

Ukg. Their hr, pay and workforce management tools help business leaders empower their people. Because when work works, everything works. Learn [e-mail] work.

[Heidi Kribo Rediker]

Bloomberg Audio Studios Podcasts Radio News.

[Jill Weisenthal]

Hello, and welcome to another episod of the Odd Lots Podcast. I'm Jill Wiesenthal.

[Tracy Alloway]

And I'm Tracy Alloway.

[Jill Weisenthal]

Tracy, you know, we do these episodes on various areas of technology in which China is perceived to be ahead of the US they're very interesting and I learn a lot. It's not obvious to me like what lessons there are or anything. Some of these things, like, we're really far behind. I don't think we're ever gonna catch up. This is very interesting and academic, but what exactly is the point of talking about all this? I don't know if there's anything to do with this information.

[Tracy Alloway]

You know, what I thought you were going to say is that we are sometimes accused of identifying strategic choke points or areas of difficulty on the podcast and then coming up with absolutely no solutions for how to fix them.

[Jill Weisenthal]

I will be the first to admit I have no solutions. If someone accuses me of saying you have not offered any solutions, you know what I just say? That's not my job. I'm just a mere podcaster. I'm just asking questions.

[Tracy Alloway]

We enunciate the problem and leave it to others to figure out.

[Jill Weisenthal]

We leave the problem to others to figure out. But there are people who are doing more than identifying choke points. There are people who are identifying areas and vulnerabilities, et cetera. Some people actually are thinking about solutions. So they're not all pie in the sky. You know, I've seen people on Twitter. It's like, oh, I know how to be more like Chinese. And, you know, why don't we just.

[Tracy Alloway]

Adopt how to be more. You've seen people on Twitter figuring out how to be more Chinese?

[Jill Weisenthal]

Yeah, they just adopted.

[Tracy Alloway]

Is it Chinese? Chinese, jo wise?

[Jill Weisenthal]

No, they just say, why don't you just. Why doesn't the US just adopt Marxist Leninism with Chinese characteristics? It's really that simple.

[Tracy Alloway]

No.

[Jill Weisenthal]

And then we can do that on a serious note.

[Tracy Alloway]

The one you see most often is, well, why doesn't the US just ease up on some of its regulation like China in order to get things done quickly? That's the truth.

[Jill Weisenthal]

Spend more money or something like that, encourage actors to pursue things that aren't necessarily so short term, etc. Yes, there are, in theory, solutions. Anyway, let's have a conversation, which we actually talk about ideas that may be somewhere in the realm of feasible.

[Tracy Alloway]

Excellent. I'm ready. And this is also, this is on an interesting topic that's come up a number of times on odd lots at this point.

[Jill Weisenthal]

That's right. So we're going to be talking about a very core topic. And of course, this is the US Vulnerability to strategic minerals, rare earths, et cetera, which we know that China dominates, which in theory, if China were to completely shut off access, you know, military, high tech, et cetera, all kinds of problems, what could actually be done to alleviate this vulnerability?

[Tracy Alloway]

And China's dominance was also a crucial turning point in the trade negotiations with the US and also I think you get a sense of, I don't want to say desperation on the US Side, but like maybe urgency on the US Side just by looking at the headlines that seem to come out on a nearly daily basis about like, oh, we found a huge critical mineral deposit in Utah, so you know, we're all saved.

[Jill Weisenthal]

It's also worth noting before we go further, this is an area in which there's probably a decent amount of overlap from the last administration to this one. We did an episode a little while ago with Peter Harrell, who talked about some of these deals that the administration is making with equity stakes and private companies. I think Vulcan came up as one of them. And so, yes, we're going to be talking about what, where further we can go in terms of actually having a healthy, robust domestic environment for our own strategic commodities, et cetera. Anyway, we really do have the perfect guest. We're going to be speaking with Heidi Kribo Rediker. She's a senior fellow at the Council on Foreign Relations, a former chief economist at the State Department, and she is the co author of a brand new report for the CFR looking at exactly this question, what can the US do in this realm? So, Heidi, thank you so much for coming on the Odd Lots podcast.

[Heidi Kribo Rediker]

Thanks for having me on.

[Jill Weisenthal]

Tell us, what's this new report all about?

[Heidi Kribo Rediker]

So you're right that everyone's identified the problem in that it's been a long time coming. This is like a slow train coming at us for decades at this point. It's not a surprise that China has dominated this market for a variety of reasons. And it's not a surprise that they've weaponized it. They've done it over the years. We did pay attention, but we forgot about it in many ways. But right now we have an inflection point where we really need to get this sort of Damocles off of the United States and actually Our challenge is the same challenge that a lot of other advanced economies have right now with this incredible chokehold not just on critical minerals, but particularly rare earths, particularly heavy rare earths that are the foundation of magnets which go in everything.

[Tracy Alloway]

Can I just back up in history for a second? Because I think it will help us contextualize where we are right now. But what were the conditions that allowed China to basically gain dominance in this particular area? Did they make a strategic decision at some point saying, you know, we're going to be the world's not manufacturer of rare minerals and rare earths, but we're going to make this, you know, a priority for ourselves?

[Heidi Kribo Rediker]

Yes, made in 2025 was their big strategic plan. They had invested a lot in rare earths, you know, particularly their domestic rare earths, many, many years before that. But they decided they wanted to dominate and they really, they did a very job of creating an entire ecosystem. So both domestic China extraction, processing, and then they came up with all of the products that were, that would be the leading demand which you really need to have for the creation of a market. And the demand meaning the, you know, new energy wind turbines, particularly their, you know, their EVs and also defense. So you have a whole like demand pull. And you also have state companies that don't have to be profitable. And that's pretty key if you're competing around the globe to actually mine and process. They also have a lock hold on the technology for processing. And so in traditional mining, you know, they have really, they've made a massive strategic investment and we, for a variety of reasons did not.

[Tracy Alloway]

Joe, this reminds me of the episode we did with Dan Wong where he made sort of similar points about the tech ecosystem that's developed around Shenzhen and how that allows innovation to really thrive. And then also this idea that, well, if you don't necessarily care about returns on capital as much as the US certainly then you kind of have a leg up when you're developing something like this that might not pay off for a very long time.

[Jill Weisenthal]

And this always seems to be an issue when we're talking about matters of national defense, because right when it comes to national security, you have this other priority that is not profit related. Everything that we've done, every episode we've talked about this comes up with the word talk about literally the defense industries and the defense suppliers or other strategic things. Here is this other goal that you have in which you have at least two bottom lines. One's related to security and one's related to profit. And so you have this tension. Tell us, how did you do this report? What was the process by which you researched this, who did you talk to, et cetera, so that you could publish this?

[Heidi Kribo Rediker]

The report itself is on how while we put all of the emphasis on, on mining, on the extraction, coming up with the processing and the, the end products, for example, magnets, the thing is we can't actually out mine, out process and outspend China. Certainly not at scale and not in a cost effective way. So what is another. We have basically a huge timing mismatch. Will we get there eventually with friends, allies, you know, all of the different countries that are working on the same problem together? Eventually, but it's going to take a very long time and we don't really have time. So we looked at how innovation could actually leapfrog the China chokehold on critical minerals and particularly rare earths. And so that was really the starting point. How do you solve for national and economic security in a way that really plays to us strength in innovation? And then when we took a look around, we found there were some really exciting companies that had taken research and development from like 15 years ago and they were ready to scale and starting to scale. And so that was really what the excitement was about.

[Jill Weisenthal]

Just real quickly when you say you took a look around, like who did you talk to and how did you identify the people who pointed you to look? There's a lot of interesting genuine science and tech that can be scaled up. How did that process work?

[Heidi Kribo Rediker]

So I started with the national labs because we don't give enough credit to the fact that a lot of the great innovations that come out and are commercialized that we all know and love actually had their origin in our national lab system. It's sort of a national jewel. And so Ames National Lab has this critical material innovation hub and a lot of the companies that are doing the various types of breakthrough technology came out of or are working with Ames National Lab. And so I started like poking around from there and then really word of mouth. As soon as we got the word out that we were working on this, it it's a very enthusiastic, mission driven community that wants to all leapfrog this challenge through innovation.

[Tracy Alloway]

Plus people like talking about their problems. Right. Describe for us the state of the U.S. i guess rare earths industry at the moment. And then also what you would describe as the key choke point in this particular strategic choke point, like where is the biggest source of trouble or inability to actually do this at scale.

[Heidi Kribo Rediker]

So in terms of there are two different parts The US Used to produce a significant amount of rare earths, primarily light rare earths. MP materials in Mountain Pass Mine had a variety of challenges, including not being commercially viable. But that was not the only reason. But we do actually have rare earths in the United States. And we were a mining powerhouse many years ago. I mean, remember like California 49ers and people going out with picks and shovels?

[Tracy Alloway]

Oh yeah, many, many years ago.

[Heidi Kribo Rediker]

Many years ago. So we do have mines and we have resources, but there are always, you know, there are always consequences and trade offs there. You know, to mine is often toxic. You have environmental concerns, you have a lot of waste that through traditional mining gets generated. So we were more than happy for the Chinese to take on those set of problems and then sell them to us at a very low cost. That's how we all became dependent on them. And I think where we are right now, we do have a lot of partnerships that are being formed. And you know, with Saudi, with South Korea, Australia, I mean, we're doing what we can to go the traditional mining route. But the, I think the really interesting thing is how we can get there, like much faster, much cleaner and with much more cost effectiveness and even competitiveness, cost competitiveness with China through some of these new technologies, mining in the US.

[Jill Weisenthal]

Let'S talk about them. When you talk about the technologies that could actually get us to parity or something like that, are they more on the mining side, are they more on the refining side or both? Like, let's talk about these technologies.

[Heidi Kribo Rediker]

Okay, so let me give you, let me give you a couple of examples. So back when China cut off Japan's rare Earth access in 2010, the Department of Energy, I mean people don't know ARPA E generally they think of DARPA, but Department of Energy has its own research grant facility and they do big problems and put them out there. So they did this in 2011. They sprinkled around a lot of grant research funding for materials that you could create a magnet with that did not require rare earths. And lo and behold, a scientist in Minnesota, University of Minnesota, created a rare earth free magnet. So there's a material design approach to this that either drastically reduces how much rare earth you actually need in magnets and there's a company called Niron Magnetics that actually is, it's commercialized, it's scaling, it actually is scaling up massively. A new facility in Minnesota. So that's sort of the material engineering approach to it. And then there's this whole other basket of biotech innovations. And you know, if you want me to go into this, please. Yeah, okay. So, you know, there are companies like Alta Research Technology and they again are affiliated with this Ames National Lab. They have programmed proteins. So those proteins are basically like robots that go in to waste. And I'll get to the importance of waste in a minute. But they will go into waste or other types of tailings, things that come out of mines. And they will go in and specifically target the protein, will target a specific rare earth and extract it. And so it is clean, it's fast. It relies on a very large resource that we have. We have a lot of waste. So, you know, it's a domestically sourced resource. There are a number of other ways that we are very, in a very clean, fast and cost competitive way using technology to actually mine waste. And that's actually one of our. It's like we shouldn't consider waste at this point to be a liability. It's literally America's next mine.

[Tracy Alloway]

So I have a serious question, but first, no, first, I'm so curious about the little protein robots. What does that process actually look like?

[Heidi Kribo Rediker]

So I don't know. I'm not a molecular technologist and any.

[Jill Weisenthal]

Molecular technologists out there listening, that'll be the follow up episode.

[Heidi Kribo Rediker]

But this is something that's been again long in the making in terms of the tech that's been developed. And so it's basically this particular company is commercializing the technology, but it is, it's a protein that is altered so that it can go in and sort of micro target specific rare earth elements. And that is, I think it's kind of revolutionary. It's super disruptive. And the same with all of these companies that were part of this study that we did. They are at the cusp of being ready to scale and scale fast.

[Tracy Alloway]

All right, this is my next serious question which is, you know, all of this sounds great. Protein robots, sounds amazing. Why aren't we doing this already if the technology exists?

[Heidi Kribo Rediker]

So we're focused on. And this is, you know, this takes a strategy and a strategy that focuses on the innovation side. We're very focused on the how do we compete head on with traditional mining. And that's good and it's important. This is a huge compliment to that. We haven't really done it yet. We've done it piecemeal. So you have a lot of people in this community that are highly focused on the technology, commercializing it early stage and then figuring out how to go from there. I think we have again, it's a huge Opportunity that's out there. When I think about where we are, I think about the shale revolution and how we had fracking technology for like decades. And then we reached a point where that technology unlocked an energy revolution in the United States. And it was like an overnight switch flipped and suddenly we're an energy giant, an energy producing giant. And so I do feel there's something similar in what we're seeing right now in the technology around critical minerals and rare earths.

[Jill Weisenthal]

I think we could really use a big switch flip to suddenly have abundance. Those don't come along very often. We should. People have to appreciate that more. I'm read press release from Berkeley. As reported in Nano Letters, the researchers genetically engineered a harmless virus to act like a quote, smart sponge that grabs rare earth metals from water and with a gentle change in temperature and acidity releases them for collection. Sounds really cool. I'll have to go watch YouTube later. Talk to us about one of the themes that comes up in a lot of these conversations is the importance of offtake agreements. Yes. So right, like right now, American companies, they currently do have access to Chinese rare earths. And so it might be very risky for anyone to invest in these technologies knowing that at least for the very, you know, the beginning years when before the cost curve has come down, the competitors might be cheaper.

[Tracy Alloway]

The proverbial valley of death.

[Jill Weisenthal]

Yeah. How do you solve that problem of guaranteeing that there is demand when these companies release harmless viruses that act like a smart sponge and crab rare earth metals from water.

[Heidi Kribo Rediker]

So first there has to be. This is not just on government to do. I mean, a lot of people point at the massive, you know, very muscular industrial policy that the Trump administration is using right now. And I think that is a very good thing. But it also takes, it takes companies actually coming together more in a consortia type of arrangement to have collective offtake agreements. You have certain companies that have been very forward leaning in their offtake agreements with certain, I mean, Niron is a good case that they have some auto OEMs that have been working with them for years now. You have, I mean, Vulcan you brought up earlier, but Vulcan is kind of the poster child for when you get the technology, the industrial policy and the commercial all together working to solve. And they actually are, I think they're the first innovation, targeted industrial policy. Scale up, rapid scale up. Vulcan's only three years old. They closed their Series A in August. I mean, we're talking about 1.4 billion that they got in a consortium together with a company called Re Element that recycles magnets, they take the rare earths and they actually manufacture magnets. That is incredibly interesting. They do it on a, they're doing it on a, like a super fast scaling time horizon. I think they are aiming for 2027 to start rolling product out and have been going through the validation process with all of their different types of magnets. So they're doing this on an accelerated basis. They got funded by every branch in the military. So they have a built in supply, a demand from the US military right there. They also have semiconductor and aerospace. They're really looking to target the national security and the top economic security challenges and they have the partners to do that. So I think that's a good example of how we want to do this moving forward.

[UKG Announcer]

UKG Their HR pay and workforce management tools help business leaders empower their people. Because when work works, everything works. Learn [e-mail] work adjacent to the offtake issue.

[Tracy Alloway]

Who actually owns the wastewater that we could potentially be, you know, extracting valuable things from?

[Heidi Kribo Rediker]

So we have lots of different types of waste. So we have industrial waste that comes from mines where you have primary metals that are, that are extracted, but you have the piles of tailings that sit there on the side because they're either there's no commercial viability to extract them or they are, you know, they're just considered, they're considered piles of waste both in operating mines and in mines that have closed down. You have coal ash that is toxic leftover waste from coal mining. You have E waste, which is I think one of the more promising areas. We actually, if you look at old hard drives and cell phones and batteries and the like, there are tons of rare earths that are in there and actually magnets that are in there from years, you know, when we actually had much greater rare earth's, you know, intensity in those magnets before we started to like having to have to scale back. So if you look at the waste ecosystem, we have a lot of domestic opportunity. And that's actually why I think Balkan is a really good example. They pull from domestic recycled E waste and then they process and manufacture magnets in a completely domestic cycle.

[Tracy Alloway]

Joe, that's interesting about coal ash. I could have been mining my ashes from burning the coal stove in Connecticut that first year, mining them for rare earths. If only I had known yet another.

[Jill Weisenthal]

Yet another missed opportunity to exploit, to monetize my natural resources, to monetize all the natural resources, resources on your land that you had in Connecticut. Let's talk about. Okay. So we understand there's various measures and opportunities and resources and technological opportunities, things that work in a lab, things that are already scaling up, et cetera. Talk to us more like from a policy perspective, what do we need to do to get from what we already have cooking and what's already in the works to where we feel good about where we are and from? Does policy, would it need to happen in the form of legislation or, or does the government, the federal government as currently constituted, have the cash and the policy levers to pull without new laws being passed?

[Heidi Kribo Rediker]

So policy plays an enormous role and the first thing we need to do is actually understand that we can't do a fragmented approach to this because you end up losing innovation that might actually change the chessboard entirely. With China, you also have to deal with waste from a policy basis because we actually don't track waste. It was very hard to find data on how much E waste the US produces. We ship some of it to Asia. That is very likely fed back into China's massive recycling machine. We shouldn't be exporting. If you consider this as America's next mine, there are ways to address policy that can provide the data, maybe restrict the exports till we know exactly what value is hidden inside all of the stuff that we're exporting, and then come up with a whole strategy that is a critical minerals innovation strategy that sits alongside our other critical mineral strategy and develop that through not only the policy tools around waste, but also financial tools. Where are the valleys of death? Where do we find them? How can we solve them? How can we use government as a pull to get companies together in consortia to actually have those offtake agreements early on and also work with the material engineers to design what they're going to need earlier on in the process. There are a lot of good ways to do this. One of the big takeaways is that there is a specific equity valley of death that a venture like entity could help solve this for because you don't have the venture outside of some really big frontier risk takers that will invest in difficult technology. So I think having some kind of counter that we have now in the instruments that DOD has, you know, we have a whole range of different agencies that have all loan based, they're almost all loan based instruments. And that's not what it this is. These are tech companies and they really can't sustain debt. They're not, they're. You need to have that VC come in early on and help them through various series of fundraising, partner with others, bring in other like private VCs throughout the process. And we need to. And we do have one of those right now that is in Q Tel. It is not technically. I don't know if you've heard of In Q Tel before.

[Jill Weisenthal]

Is it the CIA's VCRM?

[Heidi Kribo Rediker]

It is. Okay, very good. They are actually. They recognize this gap in the capital structure and the actual ability for these breakthrough technologies to fundraise. And so they actually created a separate fund within In Q Tel called their Compass Fund. And they're not just the. It's not just the CIA. They're a nonprofit. They work sort of across the intelligence agencies. And they've grown over the past 25 years from what they started out, which was really a very like a boutique VC for specific. Solving specific problems for the intelligence world. So they have invested in. Actually, going back to one of your earlier questions, how did I find these companies? Well, it ends up that they have invested. They invested in two companies that I had found through Ames National Lab. And so I think they were extremely helpful in thinking through what the gaps actually were. And we really nailed this early stage VC needing to come from government. It's a market failure. Until we have solved for that market failure, these will just lie on the shelf.

[Tracy Alloway]

In Q Tel has one mission. To be the most sophisticated source of strategic technical knowledge and capabilities to the US Government and its allies. That's through capital. That's an interesting one. We should do an episode on it.

[Jill Weisenthal]

We should for sure.

[Tracy Alloway]

Okay, so since we're talking about the CIA and you brought up the military earlier, this is going to be a natural segue, I promise you. Bring up a historical analogy in your paper, a previous choke point that was militarily very, very significant for the US At a very, very historical time, which we actually managed to solve through industrial policy. How much relevance does that particular analogy have to our current situation?

[Heidi Kribo Rediker]

Well, I love this analogy because as we were contemplating entering World War II, the Japanese cut off the supply chain for natural rubber in Southeast Asia. And we were dependent on this flow for 90% of our rubber.

[Tracy Alloway]

Right. And we can't grow rubber trees. Right.

[Heidi Kribo Rediker]

Rubber came from Southeast Asia for a reason. And what we did was we actually, we took technology, synthetic rubber technology, and we scaled it like crazy. So we actually were able to provide for, you know, for trucks and tanks and everything that rubber goes into that we had never even thought about, but until it was gone. And we were not able to actually enter World War II without the ability to provide something in replacing that rubber supply. And so we did it both through a rapid warp speed. Manhattan Project. I mean we think of Manhattan Project for the atomic bomb, but at the same time I think there's a good case to be made that without synthetic rubber we would not have won World War II. The other side of that was that we did a huge, you know, all of the population should chuck in their extra rubber tires and their raincoats and their garden hoses and whatever you could for the war effort so that we could actually use and recycle rubber that we had already here. So it's a two prong, I think analogy that works.

[Tracy Alloway]

There are some great posters from World War II about recycling your tires and things like that. Nice graphic design.

[Jill Weisenthal]

I have boxes of like old iPhones and stuff that randomly in the car.

[Tracy Alloway]

Recycle them for the rare earth.

[Jill Weisenthal]

I Bet I have 10 old laptops and random stuff.

[Heidi Kribo Rediker]

And the way that the cycles of upgrades happen, I mean everybody has tons of old laptops where the software doesn't work anymore. And so this is actually a huge opportunity. So we could actually make it a national priority. And there are ways to do that through government incentives. There are ways that companies can do that through paying for old, unused, unusable technologies and then have maybe get a government credit. There are like a lot of ways you can be creative about getting this, this entire system to rev up.

[Tracy Alloway]

You mentioned warp speed just then. And so, you know, the obvious thing that comes to mind is also the vaccine, the COVID vaccination efforts. Can these types of programs exist without a coinciding national emergency to galvanize everyone into action? And I totally take it that competing with China is one of those rare areas of bipartisan agreement nowadays. But at the same time, shortages, potential choke points in rare earths has been a long running issue. We've been aware of it for a while. So far we haven't really done that much. What's going to galvanize people now and really lend this whole effort a sense of urgency.

[Heidi Kribo Rediker]

So I think we actually do have a national emergency. And certainly, you know, policymakers and companies understand that when China shut off access and so you have.

[Tracy Alloway]

So that was the moment, I think.

[Heidi Kribo Rediker]

That was the moment where it really hit that not only over reliance, but up to 100% reliance that's like that. I mean, the Chinese cut off access to the technology that they had developed for refining, for extracting. They actually, when we had that one year pause, one of the things that the Council on Foreign Relations partner, Silverado policy accelerator, they had done a lot of work on what China was actually exporting after, after that October lifting of the, of the export controls. They're exporting magnets, but they're not exporting those rare earths or the technology that we need to actually produce the same for ourselves.

[Tracy Alloway]

Yeah, it's interesting that like they won't export the rare earths, but they'll export the finished material, which is the end component.

[Jill Weisenthal]

Yeah, yeah. Well, you want to, you want to climb the value chain. Yeah. And they're doing away the low margin sales. You know, I mentioned it seems like there are some continuity on some of this stuff from the last administration to this one. When you're in D.C. talking to people, do you send from the, on the policy side or on the government side, do you feel that there is a sort of intensity and focus? Because again, when you, you know, you go back to World War II, one thing I associate with that time is just an incredible amount of like focus on solving specific things and coordination. Do you sense that that exists right now?

[Heidi Kribo Rediker]

So just as with World War II, there were, there were a lot of officials flagging the fact that we were over dependent on single sources or the choke point was the shipping lanes. And there's a huge parallel here. During the Biden administration, one of the first things. During the first hundred days, the Biden administration did a resilience study and basically looked at where the choke points were. This was after Covid. It was looking at pharmaceuticals. It was looking. But one of the big takeaways was that we were so overdependent on China for rare earths and critical materials, critical minerals, that we had to do something asap. The Trump administration and Trump one also understood that we had this huge vulnerability in critical minerals. And they passed a number of executive orders and tried to get the whole process started for mining, permitting, reducing permitting times, environmental restrictions and timelines. But again, it's a complete parallel with what happened in the run up to World War II. We actually have seen this coming for a very long time. And it wasn't until China shut off the access that it, that the US and Europe kind of woke up to the fact that this is a big problem.

[Jill Weisenthal]

You know, one, one thing you mentioned, the national labs, they're under threat, right. I mean, like you talked about them as being this important crown jewel of the US Economy, US Industry, all these stories about funding cuts, et cetera. What is the intersection there? And from your perspective anyway, are we undercutting our own efforts through some of these budgetary choices?

[Heidi Kribo Rediker]

Absolutely. I mean, this is something that we do really, really well. The whole world looks at the way that DARPA and ARPA E and the national labs that are associated are actually huge innovation engines. Often it's a matter of people coming in, entrepreneurs coming in and understanding what the applications of the science can be to commercialize it. But this is exactly the time where we have to double down on the innovation and the investment in R and D that is not only in the national labs, but also universities, because that's where this is coming from as well. Niron's breakthrough came from the University of Minnesota. So I think, you know, you want to, you want to make sure that right now, in this particular moment, the solutions can come from biotech as opposed to mining tech. You don't want to be cutting off any channels of investment in R and D right now.

[Tracy Alloway]

How often do you HEAR People in D.C. talk about the potential for capital misallocation when it comes comes to rare earths? Or is the idea of like a Solyndra with magnets? Is that not as much of a looming concern given the urgency of the problem?

[Heidi Kribo Rediker]

I think that the demonization of risk taken on Solyndra has really plagued us for a long time. We have to be much more ready to take risk and be like, hold hands on a bipartisan basis and realize that this is a big moment where we have to actually take more risk.

[Tracy Alloway]

So I do love all the analogies we've used in this conversation. So obviously synthetic rubber. But you mentioned fracking before and a lot of people will concede that fracking was incredibly crucial to America's, you know, economic well being nowadays and we become an energy exporter. But at the same time there's an externality, a negative externality associated with fracking, which is environmental damage. And there's a lot of concern and also controversy about how much impact that actually has. What are the trade offs that the US would have to think about as we encourage more of a domestic rare earth industry?

[Heidi Kribo Rediker]

So again, there are trade offs and I think one of the, you know, I'm going to pivot back to the innovation because I think one of the ways we can do this in a clean way is through some of these new technologies. You were talking about Berkeley and their. So Rio Tinto is using a proprietary new microbe that they've just started utilizing in some of their old mines in Arizona where they didn't have the ability to economically extract copper, but using microbes, they are able, in a clean way to use a biotech solution to actually extract copper. Copper on a cost competitive basis that they were not able to extract. And they're rolling this out right now. They'll be doing it in the months ahead. And I think it's really noteworthy that you have a large mining company that is taking a plunge into a biotech solution to how to unlock value that they thought the mine was basically it was closed. So we can do that in a way that is clean. We can do it in a way that's fast and cost competitive. And so I think that there are ways to do that with using innovation. I think we need to be very mindful of that because mining and refining are dirty businesses. That's just, that's life. And if we can do them, if we do them in a cleaner way, then that is a much more sustainable way to actually have an industry moving forward that actually suits the national interest.

[Jill Weisenthal]

We did that biotech VC episode. So much interesting biotech stuff that I never really thought about.

[Tracy Alloway]

Like I never thought mining would be.

[Jill Weisenthal]

Much more to do. On learning about some of the science. Heidi Krivo, Rediker, thank you so much for coming on Odd lots. Fascinating report. Encourage everyone to go read it and check it out. There are actually some ideas out there, not just people identifying problems. That was great.

[Heidi Kribo Rediker]

Thank you so much. Great to be with you.

[Jill Weisenthal]

Tracy. I really want to learn more about industrial biotech now. I mean, we mentioned it during the conversation, but I feel like there could be tons of interesting episodes on the crossover of that sort of natural science and mining and stuff like that.

[Tracy Alloway]

Well, I'm looking at a page on Rio Tinto's website right now and the title is Life Finds a Microbes. And then it says, while dinosaurs vanish, their tiny companions microbes adapted and thrived, proving their resilience over time. And now they can be used as some of our most groundbreaking advancements in mining. So that's pretty cool. Yeah, that's exciting. Let's.

[Jill Weisenthal]

Let's get a scientist or something on there. Talk about Microbus.

[Tracy Alloway]

I kind of want to see how all of this works. But of course you can't actually see the microbes. So I'll just have to think about it.

[Jill Weisenthal]

Just imagine there's got to be YouTube at least we could go on the road to some mine. Right? I'm sure. And like it's just going to be.

[Tracy Alloway]

Water passed just some water.

[Jill Weisenthal]

I know that's what it would just look like, some water. No, but I thought that was really interesting. I guess I thought, you know, in my mind, when I think about some of the. When I thought about the Rare Earths challenge before, I sort of assumed, I suppose that, okay, the U.S. probably could overcome our industrial reliance at the cost of a lot of money, basically a lot of loss making investment because again, that's the nature of defense. National security is okay, you just have to sometimes spend money, et cetera. So it's interesting the prospect that there are technologies that not only could solve perhaps the sort of strategic element, but that actually could be cost competitive, perhaps could create export opportunities, could perhaps also be for profit. That's very interesting. And I hadn't really appreciated that prior to Heidi's report.

[Tracy Alloway]

Yeah, I think the overall thrust of the report, this idea of like, okay, you're not going to beat China necessarily on its own territory, or you're certainly not going to beat them in the same way that China has developed this industry by, you know, basically ignoring a lot of environmental concerns and things like that. So you have to turn to the US's own competitive advantage.

[Jill Weisenthal]

Yeah.

[Tracy Alloway]

Which is research and development and also like huge amounts of government capital which, you know, sometimes we have an issue deploying, sometimes we don't. It was super interesting that Heidi described, you know, the recent cutting off of China's rare earths as like the moment where people have really realized this is an issue. And so there is the potential to actually galvanize some action.

[Jill Weisenthal]

I have no doubt in my mind that the US has the sort of capacity, the know how, the science, the natural resources, the money, et cetera, to do it. I only question, of course, whether we have the sort of organizational capacity. And of course the national research labs are sort of the prime example of the concern here is the site with which a lot of these innovations come from. There is this widespread acknowledgment that this is a very serious thing and apparently they're seeing their budgets impaired at the same time. Can everyone get on the same page? Can we prioritize things? Can we say, no, we want to like move in concert? Or do you just have these like various, like political fights and these various factions, et cetera, that are not coordinated, they're not on the same page, that are working at cross purposes. That remains my main source of concern, but perhaps a legitimate concern. I would say perhaps to your point, maybe there has been some galvanization and maybe there are some paths here.

[Tracy Alloway]

Wow, I'm still on this Rio Tinto side.

[Jill Weisenthal]

Yeah, you're seeing it as a.

[Tracy Alloway]

It is great. It's. They keep making references to Jurassic park, which is not something I expected from Rio Tinto. But anyway, shall we leave it there.

[Jill Weisenthal]

Let's leave it there.

[Tracy Alloway]

All right. This has been another episode of the Odd Lots podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

[Jill Weisenthal]

And I'm Jill Weisenthal. You can follow me at the Stalwart. Follow our producers Carmen Rodriguez at Carmen, Armand, dashiell Bennett at Dashbot, and Kale Brooks at Kalebrooks. For more Odd Lots content, go to bloomberg.comoddlod for the day newsletter and all of our episodes and you can chat about all these topics 24. 7 in our Discord, Discord, GG, Oddlauds.

[Tracy Alloway]

And if you enjoy Odd Lots, if you want us to go on a micro mining tour then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. All you need to do is find the Bloomberg Channel on Apple Podcasts and follow the instructions there. Thanks for listening.