Exploring the US Administration's Scramble to Cut US Reliance on Chinese Rare-Earth Metals

Not long ago, the US Treasury Secretary returned from South Carolina brandishing a tiny sample of metal, declaring it was the first rare-earth magnet made in the US in a quarter of a century.

He indicated that this was a sign the US is ending “China’s chokehold on our supply chain.” Thanks to a new rare-earth mineral processing center in South Carolina, the official continued, “The nation is regaining its autonomy.”

Challenging China’s Dominance in Critical Materials

Ending Beijing's refining and production supremacy in these minerals, which are crucial for advanced electronics, batteries, and armaments, is a top priority for the current US administration. Via tariffs and other strategies, the US is relying on returning the industry back to American shores.

These tariffs led Beijing to limit rare-earth shipments to the US and pushed US leaders to sign deals with an ally, Malaysia, another nation, and Japan.

Although the US and China have since reached a trade truce on rare earths, China—with approximately the majority of worldwide extraction and nearly all of international refining—has a head start that may prove challenging to erode.

“These materials are used in electric motors but also in guidance systems that have clear uses for the military,” notes an industry expert. “Any device that has a strong magnet in it requires rare earths.”

No Easy Fix for US Independence

There’s no easy fix for the US to reset its dependence on Chinese production of materials critical to national security, chip manufacturing, and the transition from traditional energy to wind and solar. Data from federal reports, the US imported 80% of the rare earths it consumed in recent years.

For some rare-earth minerals such as dysprosium, used in chip production, and samarium, critical for military applications, Chinese refinement dominance reaches 99%. Dysprosium and terbium are found 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 International Resources

Initiatives to reduce the US’s dependence on China's output of rare-earth minerals may require a long time. Analysts point out that “Rare earths” is somewhat of a misnomer because they’re relatively abundant in the planet's surface, but many deposits, including those in Ukraine, where an agreement was made recently, are only in the early stages of mining.

“The issue isn't scarcity per se, it’s that China can control how much is sent abroad,” an analyst said, adding that obtaining permits from China can be a lengthy, difficult process.

The Arctic region, another focus of American interest, and South America, are two other countries with significant rare-earth deposits. In the continental US, there are deposits in the West, the Midwest, and the central US, with the biggest active site located at Mountain Pass, the state, about 60 miles from Las Vegas.

Federal Efforts and Funding

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

In North America, measured and indicated resources of rare earths were estimated to include millions of tons in the US and more than 14m tons in the northern neighbor—significantly lower than the vast reserves estimated to be in China.

Mirroring 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.

“The US is up against government-backed investment because Beijing is selecting these as priority areas that they aim to control,” a cabinet member stated during a speech this spring.

The official floated that the US could utilize a sovereign wealth fund to accelerate production. “Why wouldn’t the richest nation in the world have the largest sovereign wealth fund?” he asked.

Historical Obstacles and Future Outlook

American attempts to promote domestic production have floundered in the past when Chinese producers cut costs, making unsubsidized rare-earth development unprofitable against China’s lower cost of production and far-sighted planning.

In the past, an industry leader stated before a congressional panel that “nations that fund in energy storage and supply chains today are likely to dominate this sector for the foreseeable future. It is not too late for the US but action is needed now.”

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

“Soon, we’ll have an abundance of essential resources that you won’t know what to do with them,” the President informed the media. That came in the wake of a demand for compensation in the form of minerals from Ukraine. In September, the government of Pakistan agreed to a contract with an American company, securing rights to minerals such as antimony and copper.

Prospects for Success

However, is America able to close its gap and loosen Beijing's grip on rare-earth supply chains? “America has implemented really significant steps already,” a specialist says. The US, he continues, is unlikely to become “independent in the short term because it requires years to bring a mine online and establish processing plants.”