🔗 Share this article

Last week, a top US official came back from a southern state displaying a small piece of metal, proclaiming it was the first rare-earth magnet produced in the US in 25 years.

He indicated that this was a sign the US is overcoming “China's dominance on our industrial pipeline.” Thanks to a recently opened rare-earth mineral processing center in the state, he added, “We’re finally becoming independent again.”

Breaking Beijing's Control in Critical Materials

Ending China’s processing and manufacturing dominance in these materials, which are essential for advanced electronics, energy storage, and armaments, is a major focus for the federal government. Via economic tools and other strategies, the US is relying on bringing the industry home to US soil.

These measures prompted China to limit rare-earth exports to the US and motivated US leaders to forge agreements with an ally, a partner, another nation, and Japan.

While the US and China have now brokered a temporary agreement on rare earths, China—with approximately the majority of global mining and over 90% of global processing capacity—holds an advantage that will be difficult to overcome.

“Rare earths are essential for EV engines but also in guidance systems that have obvious applications for the military,” says an industry expert. “Anything that has a strong magnet in it uses rare earths.”

Challenging Path for American Self-Sufficiency

There’s no easy fix for the US to reduce its reliance on imports from China of minerals essential to defense, semiconductor production, and the shift from fossil fuels to renewable sources. Data from official sources, the US imported the vast majority of the rare earths it used in 2024.

For some rare-earth minerals such as dysprosium, essential for semiconductors, and another mineral, critical for military applications, China's control over processing reaches almost total. Dysprosium and terbium are found in magnets crucial to electric engines and generators in wind turbines, along with uses in cellphones, advanced lighting, and energy plants.

Extended Timelines and Global Deposits

Efforts to reduce the US’s reliance on China's output of rare-earth minerals could take years. Experts note that “These minerals” is somewhat of a misnomer because they’re not that uncommon in the earth’s crust, but many reserves, such as those in Eastern Europe, where a deal was signed recently, are only in the initial phases of mining.

“It’s not that there’s a shortage per se, it’s that China can limit how much is sent abroad,” a specialist said, noting that securing export licenses from China can be a lengthy, difficult process.

The Arctic region, a key area of US attention, and South America, are two other countries with substantial rare-earth resources. In the continental US, there are deposits in California, the Midwest, and Missouri, with the biggest active site located at Mountain Pass, the state, not far from a major city.

Federal Efforts and Funding

In July, the Pentagon took on the role of the major investor in an industry operator, with intentions to open a new “mine-to-magnet” plant, named a new facility, to produce magnets crucial for F-35 fighter jets, drones, and submarines.

In North America, estimated reserves of rare earths were calculated at 3.6m tons in the US and more than 14m tons in the northern neighbor—significantly lower than the 44m tons estimated to be in China.

Mirroring government funding in the steel industry and US chipmakers, the federal agency announced it was ready to make direct investments in strategic resource firms.

“You’re competing against government-backed investment because Beijing is selecting these as priority areas that they aim to control,” a senior official said during a speech this spring.

He floated that the US could utilize a national investment pool to accelerate production. “Why wouldn’t the wealthiest country in the world have the biggest state investment fund?” he questioned.

Past Challenges and Future Outlook

US efforts to support homegrown output have struggled in the past when China lowered prices, rendering unsupported rare-earth development unprofitable against China’s lower cost of production and long-term strategic outlook.

In the past, a market expert stated before a US Senate committee that “nations that fund in battery capacity and industrial networks now are poised to dominate this industry for generations to come. There is still time for the US but action is needed now.”

Five years on, a scramble to build international partnerships around rare earths is accelerating.

“In about a year from now, we’ll have so much critical mineral and rare earths that you won’t know what to do with them,” a top leader informed the media. This followed eight months after a demand for payment in the form of natural resources from another country. More recently, the government of Pakistan agreed to a deal with an US firm, securing rights to minerals such as antimony and copper.

Can the US Succeed?

However, is America able to close its gap and loosen China’s hold on rare-earth supply chains? “America has implemented major measures already,” an analyst says. The nation, he adds, cannot be “self-reliant in the short term because it takes time to start operations and build refining capacity.”