Not long ago, the US Treasury Secretary came back from South Carolina holding up a tiny sample of metal, proclaiming it was the initial rare-earth magnet made in the US in 25 years.
He indicated that this was evidence the US is overcoming “China's dominance on our supply chain.” Thanks to a recently opened rare-earth mineral processing center in the state, he noted, “We’re finally becoming independent again.”
Breaking Beijing's Control in Critical Materials
Reducing Beijing's processing and manufacturing dominance in these minerals, which are essential for some semiconductors, energy storage, and military equipment, is a major focus for the American leadership. Using tariffs and other strategies, the US is relying on returning the industry home to domestic facilities.
Such tariffs led China to restrict rare-earth shipments to the US and motivated US leaders 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, China—with approximately the majority of global mining and over 90% of global processing capacity—holds an advantage that may prove challenging to diminish.
“Rare earths are essential for electric motors but also in defense technology that have obvious applications for the defense department,” says an industry expert. “Anything that has a strong magnet in it requires rare earths.”
Challenging Path for US Independence
It won't be simple for the US to reset its dependence on imports from China of minerals critical to national security, chip manufacturing, and the transition from fossil fuels to renewable sources. According to 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, essential for chip production, and samarium, essential to defense systems, Chinese refinement dominance rises to almost total. Dysprosium and terbium are used in magnets essential for EV motors and generators in renewable energy, along with applications for cellphones, advanced lighting, and nuclear reactors.
Long-Term Efforts and Global Deposits
Initiatives to reduce the US’s reliance on Chinese production of rare-earth minerals could take years. Experts note that “Rare earths” is somewhat of a misnomer because they’re relatively abundant in the earth’s crust, but many deposits, such as those in Ukraine, where a deal was signed earlier this year, are only in the early stages of extraction.
“It’s not that there’s a shortage per se, it’s that China can limit how much is exported,” an analyst said, noting that obtaining permits from China can be a lengthy, difficult process.
The Arctic region, a key area of American interest, and South America, are two other countries with significant rare-earth deposits. Domestically, there are reserves in the West, Wyoming, and the central US, with the biggest active site operating at Mountain Pass, California, not far from a major city.
Government Initiatives and Funding
Recently, the US Department of Defense took on the role of the major investor in an industry operator, with intentions to open a new “mine-to-magnet” plant, called a new facility, to produce magnets crucial for F-35 fighter jets, drones, and naval vessels.
In North America, measured and indicated resources of rare earths were estimated to include 3.6m tons in the US and additional millions in the northern neighbor—significantly lower than the vast reserves estimated to be in China.
Following government funding in other sectors and US chipmakers, the federal agency announced it was prepared to make direct investments in strategic resource firms.
“The US is up against government-backed investment because Beijing is selecting these strategically that they want to invest in,” a senior official stated during a address this spring.
The official suggested that the US could utilize a national investment pool to accelerate production. “How could the wealthiest country in the world have the biggest sovereign wealth fund?” he asked.
Past Challenges and Prospects
US efforts to promote domestic production have struggled in the past when China cut costs, making unsupported rare-earth development uneconomic against China’s lower cost of production and long-term strategic outlook.
Five years ago, a market expert stated before a congressional panel that “those who invest in battery capacity and industrial networks now are likely to lead this industry for the foreseeable future. There is still time for the US but action is needed now.”
Since then, a race to assemble international partnerships around rare earths is speeding up.
“Soon, we’ll have so much critical mineral and rare earths that supply will exceed demand,” the President told the media. This followed in the wake of a request for compensation in the form of natural resources from another country. In September, the authorities in Asia signed a deal with an US firm, securing rights to minerals such as key metals.
Prospects for Success
However, is America able to close its shortfall and weaken China’s hold on rare-earth global networks? “America has implemented major measures so far,” an analyst says. The nation, he adds, is unlikely to become “independent in the near future because it requires years to bring a mine online and build refining capacity.”
