Not long ago, the US Treasury Secretary came back from South Carolina holding up a small piece of metal, declaring it was the initial rare-earth magnet made in the US in decades.
He remarked that this was a sign the US is ending “Beijing's grip on our supply chain.” Thanks to a new rare-earth mineral manufacturing plant in South Carolina, he noted, “We’re finally becoming independent again.”
Challenging Beijing's Control in Critical Materials
Ending China’s refining and production supremacy in these minerals, which are vital for advanced electronics, batteries, and military equipment, is a top priority for the federal government. Through trade measures and other approaches, the US is relying on returning the industry home to American shores.
These measures prompted China to restrict rare-earth shipments to the US and pushed the administration to sign deals with an ally, Malaysia, Cambodia, and Japan.
Although the US and China have since reached a trade truce on rare earths, Beijing—with approximately the majority of global mining and over 90% of global processing capacity—holds an advantage that will be difficult to diminish.
“These materials are used in EV engines but also in defense technology that have obvious applications for the defense department,” says a market analyst. “Anything that has a decent magnet in it requires rare earths.”
No Easy Fix for US Independence
It won't be simple for the US to reduce its dependence on imports from China of minerals essential to defense, semiconductor production, and the shift from fossil fuels to renewable sources. According to official sources, the US imported the vast majority of the rare earths it consumed in 2024.
For some rare-earth minerals such as dysprosium, essential for chip production, and samarium, critical for defense systems, China's control over processing rises to 99%. These elements are used in magnets crucial to EV motors and power systems in renewable energy, along with uses in cellphones, advanced lighting, and nuclear reactors.
Long-Term Efforts and International Resources
Efforts to cut the US’s reliance on China's output of rare-earth minerals could take years. Experts note that “These minerals” is not entirely accurate because they’re not that uncommon in the earth’s crust, but many deposits, such as those in Ukraine, where an agreement was signed recently, are only in the initial phases of mining.
“It’s not that there’s a shortage per se, it’s that China can control how much is sent abroad,” a specialist said, noting that securing export licenses from China can be a complex and time-consuming endeavor.
Greenland, another focus of US attention, and South America, are two other countries with substantial rare-earth resources. Domestically, there are reserves in the West, Wyoming, and Missouri, with the biggest active site located at Mountain Pass, California, not far from Las Vegas.
Federal Efforts and Investment
In July, the US Department of Defense became the major investor in an industry operator, with intentions to open a new “integrated” plant, called a new facility, to produce magnets crucial for F-35 fighter jets, 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 44m tons believed to be in the Asian giant.
Mirroring direct investment in the steel industry and domestic technology firms, the interior department announced it was ready to make targeted funding in critical mineral companies.
“The US is up against state capital because China is selecting these strategically that they aim to control,” a cabinet member said during a speech this spring.
The official floated that the US could utilize a sovereign wealth fund to speed production. “How could the richest nation in the world not possess the largest state investment fund?” he questioned.
Past Challenges and Prospects
American attempts to support homegrown output have struggled in the past when Chinese producers cut costs, rendering unsubsidized rare-earth development uneconomic against Asia's competitive pricing and long-term strategic outlook.
Five years ago, a market expert testified before a congressional panel that “those who invest in battery capacity and supply chains today are poised to dominate this sector for the foreseeable future. It is not too late for the US but immediate steps are required.”
Five years on, a scramble to build trading alliances around rare earths is accelerating.
“In about a year from now, we’ll have so much essential resources that you won’t know what to do with them,” a top leader informed the media. That came 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, securing rights to minerals such as key metals.
Prospects for Success
However, can the US make up its gap and loosen China’s hold on rare-earth supply chains? “America has implemented major measures already,” an analyst says. The US, he continues, is unlikely to become “self-reliant in the short term because it requires years to start operations and build refining capacity.”
