🔗 Share this article

Recently, the US Treasury Secretary returned from a southern state holding up a small piece of metal, declaring it was the first rare-earth magnet made in the US in 25 years.

He remarked that this was a sign the US is breaking “China's dominance on our industrial pipeline.” Thanks to a new rare-earth mineral manufacturing plant in the state, he noted, “America is reclaiming its self-sufficiency.”

Challenging China’s Dominance in Critical Materials

Ending Beijing's refining and production supremacy in these minerals, which are crucial for advanced electronics, batteries, and armaments, is a key goal for the American leadership. Using trade measures and other strategies, the US is betting on returning the industry home to US soil.

Such tariffs led Beijing to restrict rare-earth shipments to the US and pushed the administration to forge agreements with Australia, a partner, another nation, and Japan.

While the US and China have since reached a trade truce on rare earths, Beijing—with approximately 70% of global mining and nearly all of international refining—holds an advantage that may prove challenging to erode.

“These materials are used in EV engines but also in guidance systems that have clear uses for the defense department,” notes a market analyst. “Anything that has a decent magnet in it requires rare earths.”

No Easy Fix for US Independence

There’s no easy fix for the US to reset its reliance on imports from China of minerals critical to defense, chip manufacturing, and the transition from traditional energy to renewable sources. According to federal reports, the US brought in 80% 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 military applications, Chinese refinement dominance reaches 99%. These elements are found in magnets crucial to electric engines and generators in renewable energy, along with applications for mobile devices, high-intensity lighting, and energy plants.

Long-Term Efforts and Global Deposits

Efforts to reduce the US’s dependence on Chinese production of rare-earth minerals could take years. Analysts point out that “These minerals” is somewhat of a misnomer because they’re relatively abundant in the planet's surface, but many reserves, such as those in Eastern Europe, where a deal was signed recently, are only in the initial phases of extraction.

“The issue isn't scarcity per se, it’s that China can limit how much is exported,” an analyst explained, noting that securing permits from China can be a lengthy, difficult process.

The Arctic region, another focus of US attention, and Brazil, are additional nations with substantial rare-earth resources. In the continental US, there are deposits in California, Wyoming, and Missouri, with the largest operational mine located at a key location, California, not far from a major city.

Federal Efforts and Investment

Recently, the US Department of Defense became the major investor in a mining company, with intentions to open a new “integrated” plant, named a new facility, to produce magnets crucial for F-35 fighter jets, drones, and submarines.

Across the continent, estimated reserves of rare earths were estimated to include 3.6m tons in the US and more than 14m tons in Canada—significantly lower than the vast reserves estimated to be in China.

Mirroring government funding in other sectors and US chipmakers, the interior department announced it was ready to make direct investments in strategic resource firms.

“The US is up against government-backed investment because China is picking these as priority areas that they want to invest in,” a senior official stated during a address this spring.

The official suggested that the US could utilize a sovereign wealth fund to accelerate production. “How could the wealthiest country in the world not possess the biggest state investment fund?” he asked.

Historical Obstacles and Future Outlook

American attempts to promote homegrown output have struggled in the past when Chinese producers lowered prices, rendering unsupported rare-earth development uneconomic against China’s lower cost of production and far-sighted planning.

Five years ago, a market expert testified before a congressional panel that “nations that fund in energy storage and industrial networks today are poised to lead this industry for the foreseeable future. There is still time for the US but immediate steps are required.”

Five years on, a race to build international partnerships around rare earths is speeding up.

“In about a year from now, we’ll have so much critical mineral and rare earths that supply will exceed demand,” the President told the media. That came in the wake of a demand for payment in the form of minerals from another country. In September, the authorities in Asia signed a deal with an American company, securing rights to minerals such as antimony and copper.

Prospects for Success

However, can the US make up its shortfall and loosen Beijing's grip on rare-earth supply chains? “The US has taken major measures so far,” a specialist comments. The US, he continues, is unlikely to become “independent in the short term because it requires years to start operations and build refining capacity.”