Inside the US Administration's Scramble to Cut US Dependence on China's Rare-Earth Metals

Recently, a top US official came back from South Carolina brandishing a tiny sample of metal, proclaiming it was the first rare-earth magnet produced in the US in 25 years.

He indicated that this was proof the US is ending “China’s chokehold on our industrial pipeline.” Due to a recently opened rare-earth mineral refining facility in the state, he added, “America is reclaiming its self-sufficiency.”

Breaking China’s Dominance in Essential Minerals

Ending Beijing's refining and production supremacy in these materials, which are crucial for advanced electronics, batteries, and military equipment, is a key goal for the American leadership. Through tariffs and other approaches, the US is counting on bringing the industry back to domestic facilities.

Such measures led China to restrict rare-earth shipments to the US and motivated US leaders to sign deals with an ally, a partner, Cambodia, and a key Asian economy.

Although the US and China have now reached a trade truce on rare earths, Beijing—with approximately the majority of worldwide extraction and over 90% of international refining—holds an advantage that may prove challenging to diminish.

“Rare earths are essential for electric motors but also in defense technology that have clear uses for the defense department,” says an industry expert. “Any device that has a decent magnet in it uses rare earths.”

No Easy Fix for US Independence

It won't be simple for the US to reset its dependence on Chinese production of minerals essential to defense, chip manufacturing, and the shift from fossil fuels to renewable sources. According to federal reports, the US imported 80% of the rare earths it used in recent years.

For some rare-earth minerals such as a key element, used in semiconductors, and samarium, essential to defense systems, Chinese refinement dominance rises to almost total. Dysprosium and terbium are used in magnets crucial to electric engines and power systems in renewable energy, along with uses in cellphones, advanced lighting, and energy plants.

Extended Timelines and International Resources

Efforts to cut the US’s reliance on Chinese production of rare-earth minerals may require a long time. Experts note that “These minerals” is not entirely accurate because they’re relatively abundant in the planet's surface, but many deposits, including those in Ukraine, where an agreement was signed earlier this year, are only in the early stages of mining.

“It’s not that there’s a shortage itself, it’s that Beijing can control how much is sent abroad,” an analyst said, noting that obtaining permits from China can be a complex and time-consuming endeavor.

The Arctic region, another focus of US attention, and South America, are two other countries with substantial rare-earth resources. Domestically, there are reserves in the West, the Midwest, and the central US, with the largest operational mine located at Mountain Pass, California, about 60 miles from Las Vegas.

Government Initiatives and Funding

In July, the Pentagon became the largest shareholder in a mining company, with intentions to open a new “integrated” plant, called a new facility, to make magnets crucial for F-35 fighter jets, drones, and submarines.

Across the continent, estimated reserves of rare earths were calculated at 3.6m tons in the US and additional millions in Canada—significantly lower than the vast reserves believed to be in the Asian giant.

Mirroring direct investment in the steel industry 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 cabinet member stated during a speech in April.

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

Past Challenges and Prospects

American attempts to promote domestic production have struggled in the past when Chinese producers lowered prices, rendering unsubsidized rare-earth development uneconomic against Asia's competitive pricing and far-sighted planning.

Five years ago, a market expert stated before a US Senate committee that “those who invest in battery capacity and supply chains today are likely to lead this sector for the foreseeable future. It is not too late for the US but action is needed now.”

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

“Soon, we’ll have so much essential resources that supply will exceed demand,” the President told reporters. This followed eight months after a request for compensation in the form of natural resources from Ukraine. More recently, the authorities in Asia agreed to a deal with an US firm, securing rights to minerals such as key metals.

Can the US Succeed?

But, can the US make up its gap and loosen Beijing's grip on rare-earth global networks? “The US has taken major measures already,” an analyst comments. The nation, he continues, is unlikely to become “self-reliant in the near future because it requires years to bring a mine online and establish processing plants.”