Reserves of critical minerals driving mining interest in South Dakota

South Dakota’s Critical Mineral Debate Heats Up Amid Global Demand

As worldwide demand surges for rare earth elements and critical minerals, South Dakota finds itself at the center of its own mining debate. The state hosts reserves of 15 minerals designated as “critical” by the U.S. government, drawing both interest from mining companies and opposition from environmental and Native American groups.

Critical minerals are naturally occurring metallic materials valued for their unique properties essential to modern technologies. While South Dakota doesn’t have any of the 17 elements classified as rare earths, it does possess 15 of the 50 minerals labeled “critical” by the federal government, including antimony, arsenic, barite, beryllium, lithium, graphite, and tungsten.

These resources are located primarily in western counties including Custer, Fall River, Harding, Lawrence, Pennington, and Perkins, as well as the central counties of Buffalo and Lyman, according to a 2024 analysis by the state Legislative Research Council.

“Given its long history of mining, and based on new studies, the Black Hills region is well-known as a place where usable critical minerals are present, which is attracting exploratory mining,” said Christopher Pellowski, geology professor at South Dakota Mines in Rapid City.

While these minerals can be abundant, they’re typically difficult to extract because they’re embedded within other minerals that require complex separation processes. Pellowski noted that the common Black Hills igneous rock pegmatite can contain lithium deposits, but he doesn’t expect large-scale mining operations until substantial, monetizable reserves are confirmed.

“Mining is important and it’s a real economic driver… But I don’t see us at a point where we’re ready for a large commitment,” Pellowski explained. “They’re just going to have to do this in steps. And what they’re doing now is the homework to get their heads wrapped around what’s there.”

Several exploration efforts are already underway across the state. Lithium has seen the most activity, with four exploration projects in the central Black Hills targeting pegmatite ore near Hill City and Keystone. Once mined in South Dakota during the mid-20th century for use in glass and ceramics, lithium is now highly sought for lithium-ion batteries used in smartphones, laptops, electric vehicles, and energy storage systems.

Other projects include a licensed pegmatite mine in Lawrence County seeking ore containing niobium, tantalum, tellurium, tin, and tungsten. Rapid City-based Pete Lien and Sons is pursuing graphite exploration by drilling 18 holes approximately 1,000 feet deep on federal lands near Rochford. Graphite has applications in electric vehicle batteries, lubricants, brake linings, and other products.

Recent legislative efforts to increase regulation on lithium mining have failed. Under current law, lithium mines can be classified similar to sand and gravel operations, which require minimal public notification and are exempt from the environmental and cultural impact studies mandatory for hard rock mines.

This regulatory gap has sparked controversy, similar to the ongoing dispute in Piedmont where a proposed limestone mine fell under sand and gravel permit laws, bypassing city notification requirements.

Opposition to mining expansion has grown among Native American tribes and environmental groups. The NDN Collective political organization has publicly opposed uranium and lithium mining, as well as Pete Lien and Sons’ graphite exploration. The latter site is located near Pe’ Sla, a sacred Lakota ceremonial area in the central Black Hills.

Water quality and quantity represent major concerns for opponents like the Black Hills Clean Water Alliance. Executive Director Lilias Jarding noted that over 250,000 acres of the Black Hills are already under active federal mining claims.

“It’s an issue of both quantity and quality of water,” Jarding told South Dakota News Watch. “We’re in a semi-arid area and mining uses huge quantities of water and makes the quality of the water worse.”

She emphasized mining’s broader environmental impacts: “Wildlife is displaced and people can be displaced. An open-pit mine destroys the landscape and contributes to global warming because mining creates 10% of the total carbon emissions worldwide.”

While South Dakota’s critical mineral development remains mostly exploratory, neighboring Wyoming demonstrates the potential economic impact of such resources. Rare Element Resources has invested $170 million in extracting and separating rare earth minerals from the Bear Lodge region in northeast Wyoming, just west of the South Dakota border.

The company has built a $70 million demonstration plant in Upton, Wyoming, employing over 20 full-time workers to process NdPr oxide (Neodymium-Praseodymium oxide), a key component in high-strength permanent magnets used in electric vehicles, robotics, electricity turbines, and medical devices.

“It’s no secret that China controls roughly 90% of rare earth processing, separation and production,” said Paul Bonifas, RER director of business development. “Because all of these things are essential to national defense, it is absolutely a national security imperative that we domesticate the rare earth supply chain.”

The potential economic value is substantial—RER’s market value reached nearly $440 million in January 2026, highlighting the high stakes in critical mineral development beyond regional concerns.