🔗 Share this article

Last week, a top US official returned from a southern state holding up a tiny sample of metal, announcing it was the first rare-earth magnet made in the US in 25 years.

He remarked that this was evidence the US is overcoming “Beijing's grip on our supply chain.” Because of a new rare-earth mineral refining facility in South Carolina, he added, “We’re finally becoming independent again.”

Challenging Beijing's Control in Critical Materials

Ending China’s processing and manufacturing dominance in these materials, which are crucial for some semiconductors, energy storage, and armaments, is a key goal for the federal government. Through trade measures and other strategies, the US is counting on bringing the industry home to domestic facilities.

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

Although the US and China have since reached a trade truce on rare earths, Beijing—with approximately 70% of worldwide extraction and nearly all of global processing capacity—holds an advantage that will be difficult to diminish.

“These materials are essential for electric motors but also in guidance systems that have clear uses for the military,” says an industry expert. “Anything that has a strong magnet in it requires rare earths.”

No Easy Fix for US Independence

It won't be simple for the US to reset its dependence on Chinese production of materials essential to defense, chip manufacturing, and the shift from fossil fuels to renewable sources. Data from federal reports, the US imported the vast majority of the rare earths it consumed in recent years.

For some rare-earth minerals such as a key element, used in semiconductors, and samarium, essential to 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.

Extended Timelines and Global Deposits

Initiatives to cut 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, including those in Eastern Europe, where a deal was signed earlier this year, are only in the early stages of extraction.

“It’s not that there’s a shortage itself, it’s that Beijing can control how much is sent abroad,” an analyst explained, noting that obtaining export licenses from China can be a lengthy, difficult process.

Greenland, another focus of US attention, and Brazil, are two other countries with significant rare-earth deposits. In the continental US, there are deposits in California, the Midwest, and the central US, with the biggest active site operating at Mountain Pass, the state, about 60 miles from a major city.

Government Initiatives and Investment

In July, the US Department of Defense became the major investor in a mining company, with plans to open a new “mine-to-magnet” plant, named a new facility, to make magnets essential for military aircraft, drones, and naval vessels.

In North America, estimated reserves of rare earths were calculated at millions of tons in the US and more than 14m tons in Canada—far less than the 44m tons estimated to be in the Asian giant.

Mirroring government funding in the steel industry and US chipmakers, the federal agency said it was ready to make targeted funding in critical mineral companies.

“The US is up against state capital because China is picking these as priority areas that they aim to control,” a senior official said during a address in April.

He floated that the US could use a sovereign wealth fund to accelerate production. “How could the richest nation in the world not possess the largest state investment fund?” he asked.

Past Challenges and Prospects

American attempts to promote homegrown output have floundered in the past when China lowered prices, making unsubsidized rare-earth development uneconomic against Asia's competitive pricing and far-sighted planning.

In the past, a market expert stated before a congressional panel that “nations that fund in battery capacity and supply chains today are likely to lead this industry for generations to come. It is not too late for the US but action is needed now.”

Since then, a scramble to assemble trading alliances around rare earths is accelerating.

“In about a year from now, we’ll have an abundance of essential resources that you won’t know what to do with them,” the President informed the media. That came eight months after a request for compensation in the form of natural resources from Ukraine. More recently, the government of Pakistan signed a contract with an US firm, securing rights 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? “America has implemented major measures already,” an analyst comments. The US, he adds, cannot be “independent in the short term because it takes time to bring a mine online and build refining capacity.”