🔗 Share this article

Not long ago, the US Treasury Secretary came back from South Carolina displaying 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 proof the US is ending “China's dominance on our supply chain.” Because of a new rare-earth mineral processing center in the state, he noted, “The nation is regaining its autonomy.”

Challenging China’s Dominance in Critical Materials

Reducing Beijing's refining and production supremacy in these minerals, which are crucial for some semiconductors, energy storage, and armaments, is a key goal for the American leadership. Via tariffs and other approaches, the US is counting on returning the industry home to American shores.

These measures led China to restrict rare-earth exports to the US and motivated the administration to sign deals with Australia, Malaysia, Cambodia, and Japan.

Although the US and China have since brokered a temporary agreement on rare earths, China—with approximately the majority of global mining and nearly all of global processing capacity—has a head start that may prove challenging to diminish.

“These materials are essential for EV engines but also in defense technology that have obvious applications for the military,” notes an industry expert. “Any device that has a decent magnet in it requires rare earths.”

Challenging Path for American Self-Sufficiency

It won't be simple for the US to reduce its reliance on imports from China of materials essential to defense, semiconductor production, and the transition from fossil fuels to renewable sources. According to federal reports, the US brought in 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 another mineral, essential to defense systems, China's control over processing reaches 99%. Dysprosium and terbium are used in magnets essential for EV motors and power systems in wind turbines, along with uses in mobile devices, high-intensity lighting, and nuclear reactors.

Extended Timelines and International Resources

Efforts to reduce the US’s dependence on Chinese production of rare-earth minerals could take years. Analysts point out that “These minerals” is somewhat of a misnomer because they’re not that uncommon in the planet's surface, but many deposits, such as those in Eastern Europe, where a deal was made recently, are only in the initial phases of extraction.

“It’s not that there’s a shortage per se, it’s that Beijing can control how much is sent abroad,” an analyst explained, noting that securing permits from China can be a lengthy, difficult process.

Greenland, another focus of American interest, and South America, are two other countries with substantial rare-earth resources. Domestically, there are reserves in the West, Wyoming, and Missouri, with the largest operational mine located at a key location, the state, about 60 miles from Las Vegas.

Federal Efforts and Investment

In July, the US Department of Defense became the largest shareholder in a mining company, with plans to open a new “integrated” plant, named a new facility, to produce magnets crucial for F-35 fighter jets, drones, and submarines.

Across the continent, measured and indicated resources of rare earths were calculated at 3.6m tons in the US and more than 14m tons in Canada—far less than the vast reserves believed to be in China.

Mirroring government funding in other sectors and US chipmakers, the interior department announced it was prepared to make targeted funding in critical mineral companies.

“The US is up against state capital because Beijing is picking these strategically that they aim to control,” a senior official said during a speech in April.

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

Historical Obstacles and Future Outlook

US efforts to support domestic production have floundered in the past when Chinese producers cut costs, rendering unsupported rare-earth development unprofitable against China’s lower cost of production and far-sighted planning.

In the past, an industry leader testified before a US Senate committee that “those who invest in energy storage and supply chains today are likely to lead this sector for generations to come. There is still time for the US but immediate steps are required.”

Five years on, a race to build trading alliances around rare earths is accelerating.

“Soon, we’ll have an abundance of critical mineral and rare earths that you won’t know what to do with them,” the President informed reporters. This followed in the wake of a demand for compensation in the form of natural resources from another country. In September, the government of Pakistan signed a contract with an American company, giving it access to minerals such as antimony and copper.

Prospects for Success

But, is America able to close its shortfall and loosen China’s hold on rare-earth global networks? “The US has taken really significant steps already,” an analyst comments. The nation, he continues, cannot be “independent in the near future because it requires years to start operations and build refining capacity.”