Recently, a top US official returned from a southern state displaying a tiny sample of metal, proclaiming it was the first rare-earth magnet manufactured in the US in 25 years.
The official stated that this was proof the US is ending “China's dominance on our industrial pipeline.” Because of a recently opened rare-earth mineral refining facility in South Carolina, he added, “America is reclaiming its self-sufficiency.”
Countering Beijing's Control in Critical Materials
Overthrowing China’s refining and production supremacy in these materials, which are vital for advanced electronics, energy storage, and military equipment, is a major focus for the federal government. Through economic tools and other approaches, the US is counting on returning the industry back to domestic facilities.
Such measures led Beijing to limit rare-earth exports to the US and pushed the administration to sign deals with Australia, a partner, another nation, and a key Asian economy.
While the US and China have since brokered a trade truce on rare earths, Beijing—with approximately the majority of global mining and nearly all of international refining—has a head start that will be difficult to diminish.
“These materials are essential for electric motors but also in defense technology that have clear uses for the defense department,” notes an industry expert. “Anything that has a decent magnet in it uses rare earths.”
No Easy Fix for American Self-Sufficiency
There’s no easy fix for the US to reset its dependence on imports from China of materials critical to national security, chip manufacturing, and the shift from traditional energy to renewable sources. Data from official sources, the US imported the vast majority of the rare earths it consumed in recent years.
For some rare-earth minerals such as a key element, essential for chip production, and samarium, essential to military applications, Chinese refinement dominance rises to 99%. These elements are used in magnets crucial to electric engines and generators in renewable energy, along with applications for cellphones, high-intensity 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 may require a long time. Analysts point out 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 Eastern Europe, where an agreement was signed earlier this year, are only in the early stages 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 said, noting that obtaining export licenses from China can be a lengthy, difficult process.
The Arctic region, a key area of American interest, and South America, are two other countries with substantial rare-earth deposits. In the continental US, there are deposits in California, the Midwest, and the central US, with the largest operational mine operating at a key location, the state, not far from Las Vegas.
Government Initiatives and Investment
In July, the Pentagon became the largest shareholder in an industry operator, with intentions to open a new “integrated” plant, named a new facility, to produce magnets crucial for military aircraft, unmanned systems, and naval vessels.
In North America, estimated reserves of rare earths were estimated to include millions of tons in the US and more than 14m tons in Canada—significantly lower than the 44m tons believed to be in the Asian giant.
Following direct investment in the steel industry and US chipmakers, the interior department said it was ready to make targeted funding in critical mineral companies.
“You’re competing against state capital because China is picking these as priority areas that they aim to control,” a cabinet member stated during a speech in April.
He suggested that the US could utilize a national investment pool to accelerate production. “Why wouldn’t the richest nation in the world not possess the biggest sovereign wealth fund?” he questioned.
Past Challenges and Future Outlook
US efforts to support homegrown output have floundered in the past when Chinese producers cut costs, rendering unsubsidized rare-earth development unprofitable against China’s lower cost of production and far-sighted planning.
Five years ago, a market expert testified before a US Senate committee that “those who invest in energy storage and supply chains today are poised to lead this industry for generations to come. It is not too late for the US but action is needed now.”
Five years on, a race to assemble trading alliances around rare earths is accelerating.
“Soon, we’ll have so much critical mineral and rare earths that you won’t know what to do with them,” a top leader told reporters. This followed in the wake of a request for payment in the form of minerals from Ukraine. In September, the government of Pakistan agreed to a contract with an US firm, giving it access to minerals such as antimony and copper.
Can the US Succeed?
But, can the US make up its gap and weaken Beijing's grip on rare-earth supply chains? “America has implemented major measures already,” an analyst comments. The US, he continues, cannot be “independent in the short term because it takes time to bring a mine online and establish processing plants.”
