🔗 Share this article

Recently, a top US official returned from a southern state holding up a tiny sample of metal, declaring it was the first rare-earth magnet manufactured in the US in 25 years.

He indicated that this was a sign the US is breaking “China's dominance on our supply chain.” Because of a recently opened rare-earth mineral refining facility in South Carolina, he noted, “America is reclaiming its self-sufficiency.”

Countering China’s Dominance in Critical Materials

Ending Beijing's processing and manufacturing dominance in these minerals, which are essential for advanced electronics, energy storage, and armaments, is a major focus for the American leadership. Using economic tools and other approaches, the US is counting on bringing the industry home to US soil.

These tariffs led China to limit rare-earth shipments to the US and pushed US leaders to forge agreements with an ally, a partner, Cambodia, and Japan.

Although the US and China have since reached a temporary agreement on rare earths, Beijing—with around 70% of global mining and nearly all of global processing capacity—has a head start that may prove challenging to overcome.

“Rare earths are used in electric motors but also in guidance systems that have clear uses for the military,” notes a market analyst. “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 national security, chip manufacturing, and the transition from traditional energy to renewable sources. Data from federal reports, the US brought in 80% of the rare earths it consumed in 2024.

For some rare-earth minerals such as a key element, used in chip production, and samarium, critical for defense systems, China's control over processing rises to 99%. These elements are found in magnets crucial to electric engines and generators in renewable energy, along with uses in mobile devices, high-intensity lighting, and energy plants.

Long-Term Efforts and Global Deposits

Efforts to cut the US’s dependence on China's output of rare-earth minerals could take years. Analysts point out that “Rare earths” 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 per se, it’s that China can limit how much is sent abroad,” an analyst explained, noting that obtaining permits from China can be a lengthy, difficult process.

Greenland, another focus of US attention, and South America, are additional nations with substantial rare-earth resources. Domestically, there are reserves in California, Wyoming, and Missouri, with the biggest active site located at Mountain Pass, the state, about 60 miles from Las Vegas.

Government Initiatives and Funding

In July, the US Department of Defense took on the role of the largest shareholder in an industry operator, with intentions to open a new “mine-to-magnet” plant, called 10X, to produce magnets crucial for F-35 fighter jets, drones, and submarines.

Across the continent, measured and indicated resources of rare earths were estimated to include 3.6m tons in the US and more than 14m tons in Canada—significantly lower than the 44m tons believed to be in China.

Mirroring direct investment in other sectors and US chipmakers, the interior department said it was ready to make direct investments in critical mineral companies.

“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 said during a speech this spring.

He suggested that the US could use a sovereign wealth fund to speed production. “How could the wealthiest country in the world have the largest state investment fund?” he asked.

Historical Obstacles and Prospects

US efforts to support domestic production have floundered in the past when China cut costs, rendering unsubsidized rare-earth development unprofitable against Asia's competitive pricing and far-sighted planning.

In the past, a market expert stated before a US Senate committee that “those who invest in energy storage and supply chains now are likely to lead this sector for the foreseeable future. There is still time for the US but action is needed now.”

Since then, a race to assemble international partnerships around rare earths is speeding up.

“Soon, we’ll have so much critical mineral and rare earths that you won’t know what to do with them,” a top leader informed reporters. This followed eight months after a demand for compensation in the form of natural resources from Ukraine. In September, the government of Pakistan agreed to a deal with an American company, giving it access to minerals such as antimony and copper.

Can the US Succeed?

However, is America able to close its shortfall and loosen China’s hold on rare-earth supply chains? “The US has taken major measures so far,” an analyst comments. The nation, he continues, cannot be “independent in the short term because it requires years to bring a mine online and build refining capacity.”