Recently, the US Treasury Secretary returned from South Carolina displaying a tiny sample of metal, proclaiming it was the initial rare-earth magnet manufactured in the US in 25 years.
The official stated that this was a sign the US is overcoming “China’s chokehold on our industrial pipeline.” Thanks to a new rare-earth mineral refining facility in the state, he added, “We’re finally becoming independent again.”
Challenging China’s Dominance in Critical Materials
Reducing China’s refining and production supremacy in these materials, which are crucial for advanced electronics, energy storage, and military equipment, is a key goal for the current US administration. Using trade measures and other approaches, the US is counting on returning the industry home to American shores.
These tariffs led China to restrict rare-earth shipments to the US and motivated the administration to sign deals with an ally, Malaysia, another nation, and a key Asian economy.
While the US and China have since brokered a temporary agreement on rare earths, Beijing—with approximately the majority of worldwide extraction and over 90% of global processing capacity—holds an advantage that will be difficult to overcome.
“These materials are essential for EV engines but also in guidance systems that have clear uses for the defense department,” says an industry expert. “Anything that has a decent magnet in it requires rare earths.”
No Easy Fix for American Self-Sufficiency
It won't be simple for the US to reduce its reliance on Chinese production of materials critical to defense, chip manufacturing, and the shift from fossil fuels to renewable sources. Data from official sources, the US brought in the vast majority of the rare earths it used in recent years.
In the case of rare-earth minerals such as dysprosium, used in chip production, and samarium, critical for military applications, Chinese refinement dominance reaches 99%. These elements are used in magnets crucial to electric engines and generators in renewable energy, along with applications for cellphones, advanced lighting, and energy plants.
Long-Term Efforts and Global Deposits
Efforts to cut the US’s dependence on Chinese production of rare-earth minerals may require a long time. Experts note that “Rare earths” is somewhat of a misnomer because they’re not that uncommon in the planet's surface, but many reserves, such as those in Ukraine, where an agreement was signed earlier this year, are only in the early stages of extraction.
“The issue isn't scarcity per se, it’s that China can limit how much is exported,” an analyst explained, noting that obtaining permits from China can be a complex and time-consuming endeavor.
The Arctic region, a key area of US attention, and Brazil, are additional nations with substantial rare-earth deposits. In the continental US, there are reserves in California, the Midwest, and the central US, with the biggest active site operating at Mountain Pass, the state, about 60 miles from Las Vegas.
Federal Efforts and Investment
In July, the Pentagon became the major investor in a mining company, with intentions to open a new “integrated” plant, named 10X, to produce magnets crucial for military aircraft, unmanned systems, and naval vessels.
Across the continent, estimated reserves of rare earths were estimated to include millions of tons in the US and additional millions in the northern neighbor—significantly lower than the vast reserves believed to be in the Asian giant.
Mirroring direct investment in the steel industry and US chipmakers, the federal agency said it was prepared to make targeted funding in critical mineral companies.
“The US is up against government-backed investment because China is selecting these as priority areas that they want to invest in,” a cabinet member stated during a speech this spring.
The official floated that the US could utilize a sovereign wealth fund to speed production. “How could the wealthiest country in the world have the biggest sovereign wealth fund?” he asked.
Past Challenges and Prospects
American attempts to support homegrown output have struggled in the past when Chinese producers lowered prices, making unsupported rare-earth development uneconomic against China’s lower cost of production and far-sighted planning.
In the past, a market expert stated before a US Senate committee that “those who invest in energy storage and supply chains now are likely to dominate this sector for generations to come. It is not too late for the US but action is needed now.”
Five years on, a race to build international partnerships around rare earths is accelerating.
“Soon, we’ll have an abundance of essential resources that supply will exceed demand,” the President informed the media. This followed eight months after a request for payment in the form of natural resources from Ukraine. More recently, the authorities in Asia signed a contract with an US firm, giving it access to minerals such as antimony and copper.
Prospects for Success
But, can the US make up its shortfall and loosen China’s hold on rare-earth supply chains? “The US has taken really significant steps so far,” a specialist says. The nation, he continues, cannot be “self-reliant in the near future because it requires years to start operations and establish processing plants.”
