🔗 Share this article

Last week, the US Treasury Secretary came back from a southern state holding up a tiny sample of metal, announcing it was the first rare-earth magnet manufactured in the US in decades.

The official stated that this was evidence the US is breaking “China’s chokehold on our industrial pipeline.” Due to a new rare-earth mineral refining facility in South Carolina, he added, “The nation is regaining its autonomy.”

Challenging China’s Dominance in Critical Materials

Reducing China’s processing and manufacturing dominance in these minerals, which are vital for advanced electronics, batteries, and armaments, is a key goal for the current US administration. Via economic tools and other approaches, the US is counting on returning the industry home to domestic facilities.

These measures prompted Beijing to limit rare-earth exports to the US and motivated US leaders to sign deals with an ally, a partner, Cambodia, and Japan.

Although the US and China have since brokered a temporary agreement on rare earths, Beijing—with around 70% of worldwide extraction and nearly all of global processing capacity—holds an advantage that will be difficult to diminish.

“These materials are used in EV engines but also in guidance systems that have clear uses for the military,” says a market analyst. “Any device that has a decent magnet in it requires rare earths.”

Challenging Path for American Self-Sufficiency

There’s no easy fix for the US to reduce its reliance on Chinese production of materials essential to defense, chip manufacturing, and the transition from traditional energy to wind and solar. Data from official sources, the US imported 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, essential to defense systems, China's control over processing rises to almost total. Dysprosium and terbium are used in magnets essential for EV motors and power systems in renewable energy, along with applications for mobile devices, advanced lighting, and nuclear reactors.

Long-Term Efforts and Global Deposits

Initiatives to reduce the US’s reliance on Chinese production of rare-earth minerals may require a long time. Experts note that “Rare earths” is somewhat of a misnomer because they’re relatively abundant in the planet's surface, but many reserves, including those in Eastern Europe, where a deal was signed recently, are only in the early stages of extraction.

“The issue isn't scarcity per se, it’s that China can control how much is exported,” a specialist said, noting that obtaining export licenses from China can be a complex and time-consuming endeavor.

Greenland, another focus of US attention, and Brazil, are additional nations with substantial rare-earth resources. In the continental US, there are reserves in the West, Wyoming, and Missouri, with the largest operational mine operating at a key location, the state, not far from Las Vegas.

Government Initiatives and Investment

Recently, the US Department of Defense took on the role of the major investor in an industry operator, with plans to open a new “integrated” plant, named 10X, to produce magnets crucial for military aircraft, drones, and naval vessels.

In North America, estimated reserves of rare earths were calculated at millions of tons in the US and additional millions in the northern neighbor—significantly lower than the vast reserves estimated to be in the Asian giant.

Following direct investment in the steel industry and domestic technology firms, the federal agency said it was prepared to make direct investments in critical mineral companies.

“You’re competing against government-backed investment because Beijing is selecting these as priority areas that they want to invest in,” a cabinet member stated during a speech in April.

He floated that the US could utilize a sovereign wealth fund to accelerate production. “How could the wealthiest country in the world not possess the biggest state investment fund?” he questioned.

Past Challenges and Prospects

American attempts to support homegrown output have floundered in the past when China cut costs, making unsupported rare-earth development uneconomic against Asia's competitive pricing and long-term strategic outlook.

In the past, a market expert stated before a US Senate committee that “nations that fund in energy storage and supply chains today are poised to dominate this industry for the foreseeable future. There is still time for the US but immediate steps are required.”

Since then, a scramble to assemble trading alliances around rare earths is accelerating.

“Soon, we’ll have an abundance of essential resources that you won’t know what to do with them,” the President informed reporters. This followed eight months after a demand for payment in the form of minerals from another country. In September, the government of Pakistan signed a deal with an American company, securing rights to minerals such as antimony and copper.

Can the US Succeed?

But, can the US make up its gap and weaken China’s hold on rare-earth global networks? “The US has taken major measures so far,” an analyst says. The nation, he continues, cannot be “self-reliant in the short term because it takes time to start operations and establish processing plants.”