Recently, a top US official came back from a southern state brandishing a small piece of metal, declaring it was the first rare-earth magnet produced in the US in 25 years.
He remarked that this was proof the US is breaking “Beijing's grip on our industrial pipeline.” Due to a new rare-earth mineral processing center in the state, the official continued, “We’re finally becoming independent again.”
Countering Beijing's Control in Essential Minerals
Ending 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. Through trade measures and other strategies, the US is counting on returning the industry back to American shores.
Such measures led Beijing to restrict rare-earth shipments to the US and pushed US leaders to forge agreements with Australia, a partner, Cambodia, and a key Asian economy.
While the US and China have now brokered a trade truce on rare earths, China—with approximately the majority of global mining and over 90% of global processing capacity—has a head start that may prove challenging to overcome.
“These materials are used in EV engines but also in guidance systems that have clear uses for the defense department,” notes a market analyst. “Any device that has a decent magnet in it uses rare earths.”
No Easy Fix for American Self-Sufficiency
It won't be simple for the US to reset its dependence on Chinese production of minerals essential to national security, semiconductor production, and the shift from fossil fuels to renewable sources. Data from federal reports, 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 reaches 99%. These elements are used in magnets essential for EV motors and power systems in renewable energy, along with uses in mobile devices, advanced 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 not entirely accurate because they’re relatively abundant in the planet's surface, but many deposits, including those in Ukraine, where a deal was made recently, are only in the initial phases of extraction.
“The issue isn't scarcity per se, it’s that Beijing can control how much is exported,” an analyst said, adding that securing export licenses from China can be a lengthy, difficult process.
The Arctic region, a key area of US attention, and Brazil, are additional nations with significant rare-earth deposits. In the continental US, there are reserves in California, the Midwest, and the central US, with the biggest active site operating at a key location, the state, about 60 miles from a major city.
Government Initiatives and Investment
Recently, the US Department of Defense took on the role of the major investor in a mining company, with plans to open a new “mine-to-magnet” plant, called 10X, to produce magnets crucial for military aircraft, drones, and submarines.
In North America, measured and indicated resources of rare earths were calculated at 3.6m tons in the US and additional millions in the northern neighbor—significantly lower than the 44m tons believed to be in China.
Following direct investment in the steel industry and domestic technology firms, the interior department said it was prepared to make targeted funding in strategic resource firms.
“The US is up against government-backed investment because Beijing is picking these strategically that they aim to control,” a cabinet member said during a address this spring.
He suggested that the US could utilize a sovereign wealth fund to accelerate production. “Why wouldn’t the wealthiest country in the world not possess the largest sovereign wealth fund?” he questioned.
Past Challenges and Future Outlook
American attempts to promote homegrown output have struggled in the past when Chinese producers cut costs, rendering unsupported rare-earth development uneconomic against Asia's competitive pricing and long-term strategic outlook.
Five years ago, an industry leader testified before a US Senate committee that “those who invest in battery capacity and supply chains now 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 international partnerships around rare earths is speeding up.
“In about a year from now, we’ll have an abundance of critical mineral and rare earths that supply will exceed demand,” a top leader told the media. That came eight months after a request for compensation in the form of minerals from Ukraine. In September, the government of Pakistan agreed to a deal with an US firm, giving it access to minerals such as antimony and copper.
Can the US Succeed?
However, is America able to close its shortfall and weaken China’s hold on rare-earth supply chains? “The US has taken major measures already,” a specialist says. The US, he continues, is unlikely to become “independent in the short term because it requires years to start operations and build refining capacity.”
