🔗 Share this article

Recently, the US Treasury Secretary returned from a southern state holding up a small piece of metal, announcing it was the first rare-earth magnet manufactured in the US in decades.

The official stated that this was a sign the US is overcoming “China's dominance on our supply chain.” Due to a new rare-earth mineral manufacturing plant 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 crucial for advanced electronics, batteries, and military equipment, is a major focus for the American leadership. Via trade measures and other strategies, the US is relying on bringing the industry back to domestic facilities.

These measures prompted Beijing to limit rare-earth shipments to the US and motivated the administration to sign deals with an ally, Malaysia, another nation, and Japan.

While the US and China have now reached a trade truce on rare earths, Beijing—with approximately 70% of global mining and nearly all of international refining—has a head start that will be difficult to overcome.

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

No Easy Fix for US Independence

There’s no easy fix for the US to reset its dependence on Chinese production of materials critical to defense, chip manufacturing, and the shift from fossil fuels to wind and solar. Data from federal reports, the US brought in the vast majority of the rare earths it used in recent years.

For some rare-earth minerals such as dysprosium, essential for semiconductors, and samarium, critical for military applications, Chinese refinement dominance reaches almost total. Dysprosium and terbium are used in magnets crucial to electric engines and power systems in renewable energy, along with uses in cellphones, high-intensity lighting, and nuclear reactors.

Extended Timelines and International Resources

Efforts to cut the US’s reliance on Chinese production of rare-earth minerals could take years. Analysts point out that “Rare earths” is somewhat of a misnomer because they’re not that uncommon in the planet's surface, but many reserves, including those in Ukraine, where an agreement was signed earlier this year, are only in the early stages of extraction.

“The issue isn't scarcity itself, it’s that Beijing can control how much is sent abroad,” a specialist explained, noting that obtaining export licenses from China can be a lengthy, difficult process.

Greenland, another focus of American interest, and Brazil, are additional nations with significant rare-earth deposits. Domestically, there are reserves in California, the Midwest, and the central US, with the largest operational mine operating at a key location, the state, not far from Las Vegas.

Federal Efforts and Investment

Recently, the Pentagon took on the role of the largest shareholder in an industry operator, with intentions to open a new “mine-to-magnet” plant, called a new facility, to produce magnets essential for military aircraft, unmanned systems, and naval vessels.

Across the continent, measured and indicated resources of rare earths were calculated at 3.6m tons in the US and additional millions in Canada—far less than the vast reserves believed to be in China.

Following government funding in other sectors and US chipmakers, the interior department said it was prepared to make targeted funding in critical mineral companies.

“You’re competing against government-backed investment because China is selecting these as priority areas that they want to invest in,” a cabinet member said during a speech in April.

The official floated that the US could utilize a national investment pool to accelerate production. “How could the richest nation in the world have the largest state investment fund?” he questioned.

Historical Obstacles and Future Outlook

American attempts to promote domestic production have struggled in the past when Chinese producers cut costs, making unsupported rare-earth development unprofitable against China’s lower cost of production and far-sighted planning.

Five years ago, a market expert stated before a US Senate committee that “nations that fund in energy storage and supply chains now are likely to dominate this industry for generations to come. It is not too late for the US but immediate steps are required.”

Since then, a scramble to build international partnerships around rare earths is accelerating.

“In about a year from now, we’ll have so much essential resources that you won’t know what to do with them,” a top leader told the media. That came in the wake of a request for payment in the form of minerals from Ukraine. In September, the authorities in Asia signed a contract with an American company, giving it access to minerals such as antimony and copper.

Can the US Succeed?

But, is America able to close its shortfall and weaken Beijing's grip on rare-earth global networks? “The US has taken major measures already,” a specialist comments. The US, he adds, is unlikely to become “independent in the near future because it takes time to start operations and establish processing plants.”