🔗 Share this article

Not long ago, the US Treasury Secretary returned from South Carolina holding up a small piece of metal, announcing it was the first rare-earth magnet manufactured in the US in 25 years.

The official stated that this was proof the US is breaking “Beijing's grip on our industrial pipeline.” Thanks to a new rare-earth mineral manufacturing plant in the state, he noted, “The nation is regaining its autonomy.”

Countering Beijing's Control in Essential Minerals

Reducing China’s processing and manufacturing dominance in these minerals, which are vital for some semiconductors, batteries, and military equipment, is a key goal for the American leadership. Through economic tools and other strategies, the US is relying on bringing the industry back to domestic facilities.

Such tariffs led Beijing to restrict rare-earth exports to the US and motivated US leaders to forge agreements with an ally, Malaysia, Cambodia, and Japan.

While the US and China have now reached a temporary agreement on rare earths, Beijing—with around the majority of global mining and nearly all of international refining—holds an advantage that will be difficult to erode.

“Rare earths are used in electric motors but also in guidance systems that have obvious applications for the defense department,” notes an industry expert. “Anything that has a strong magnet in it requires rare earths.”

Challenging Path for American Self-Sufficiency

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 traditional energy to renewable sources. Data from federal reports, the US imported the vast majority of the rare earths it used in recent years.

In the case of rare-earth minerals such as a key element, used in semiconductors, and another mineral, essential to military applications, Chinese refinement dominance rises to 99%. These elements are used in magnets essential for EV motors and generators in renewable energy, along with applications for cellphones, advanced lighting, and nuclear reactors.

Extended Timelines and Global Deposits

Efforts to cut the US’s dependence on China's output of rare-earth minerals may require a long time. Experts note 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 Eastern Europe, where a deal was signed recently, are only in the initial phases of extraction.

“It’s not that there’s a shortage per se, it’s that China can limit how much is sent abroad,” an analyst explained, adding that securing permits from China can be a complex and time-consuming endeavor.

Greenland, a key area of US attention, and South America, are two other countries with substantial rare-earth deposits. In the continental US, there are reserves in California, the Midwest, and Missouri, with the largest operational mine operating at Mountain Pass, California, about 60 miles from a major city.

Government Initiatives and Investment

In July, the US Department of Defense took on the role of the largest shareholder in an industry operator, with plans to open a new “mine-to-magnet” plant, called a new facility, to produce magnets essential for F-35 fighter jets, unmanned systems, and submarines.

In North America, estimated reserves of rare earths were estimated to include millions of tons in the US and additional millions in Canada—significantly lower than the vast reserves 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 direct investments in strategic resource firms.

“The US is up against state capital because Beijing is picking these as priority areas that they want to invest in,” a senior official said during a speech this spring.

He floated that the US could utilize a sovereign wealth fund to speed production. “Why wouldn’t the wealthiest country in the world not possess the biggest sovereign wealth fund?” he asked.

Historical Obstacles and Future Outlook

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

In the past, an industry leader stated before a US Senate committee that “nations that fund in battery capacity and industrial networks now are poised to lead this sector for the foreseeable future. It is not too late for the US but immediate steps are required.”

Five years on, a race to build trading alliances 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,” the President informed reporters. That came eight months after a demand for compensation in the form of natural resources from another country. More recently, the government of Pakistan signed a contract with an American company, securing rights to minerals such as key metals.

Can the US Succeed?

However, can the US make up its shortfall and loosen China’s hold on rare-earth global networks? “The US has taken major measures so far,” a specialist says. The nation, he continues, cannot be “independent in the near future because it requires years to start operations and establish processing plants.”