Last week, the US Treasury Secretary returned from South Carolina holding up a small piece of metal, declaring it was the first rare-earth magnet produced in the US in decades.
He indicated that this was proof the US is overcoming “China's dominance on our industrial pipeline.” Due to a new rare-earth mineral manufacturing plant in South Carolina, he added, “The nation is regaining its autonomy.”
Breaking China’s Dominance in Essential Minerals
Reducing China’s refining and production supremacy in these minerals, which are crucial for advanced electronics, energy storage, and armaments, is a major focus for the federal government. Using tariffs and other approaches, the US is betting on returning the industry back to US soil.
Such tariffs led China to restrict rare-earth shipments to the US and motivated the administration to sign deals with an ally, a partner, Cambodia, and a key Asian economy.
Although the US and China have now brokered a temporary agreement on rare earths, China—with around the majority of global mining and nearly all of international refining—has a head start that will be difficult to diminish.
“Rare earths 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 strong magnet in it requires rare earths.”
Challenging Path for American Self-Sufficiency
There’s no easy fix for the US to reset its reliance on imports from China of minerals critical to defense, semiconductor production, and the shift from fossil fuels to renewable sources. Data from official sources, the US brought in 80% of the rare earths it used in recent years.
For some rare-earth minerals such as dysprosium, used in semiconductors, and another mineral, essential to military applications, China's control over processing reaches 99%. Dysprosium and terbium are used in magnets crucial to electric engines and power systems in wind turbines, along with applications for mobile devices, high-intensity lighting, and energy plants.
Long-Term Efforts and Global Deposits
Efforts to cut the US’s reliance on Chinese production of rare-earth minerals could take years. Analysts point out that “Rare earths” is not entirely accurate because they’re relatively abundant in the planet's surface, but many deposits, including 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 itself, it’s that Beijing can control how much is exported,” a specialist said, adding that securing permits from China can be a lengthy, difficult process.
Greenland, a key area of US attention, and South America, are additional nations with substantial rare-earth deposits. In the continental US, there are deposits in the West, Wyoming, and the central US, with the largest operational mine operating at Mountain Pass, the state, not far from a major city.
Government Initiatives and Investment
Recently, the Pentagon became the largest shareholder in a mining company, with intentions to open a new “integrated” plant, called a new facility, to produce magnets essential for military aircraft, drones, and submarines.
Across the continent, estimated reserves of rare earths were calculated at 3.6m tons in the US and additional millions in Canada—significantly lower than the vast reserves believed to be in the Asian giant.
Mirroring direct investment in the steel industry and US chipmakers, the interior department announced it was prepared to make direct investments in strategic resource firms.
“You’re competing against government-backed investment because Beijing is picking these strategically that they want to invest in,” a senior official stated during a speech this spring.
He floated that the US could use a sovereign wealth fund to accelerate production. “Why wouldn’t the richest nation in the world not possess the biggest state investment fund?” he questioned.
Historical Obstacles and Prospects
US efforts to support homegrown output have floundered in the past when China cut costs, making unsupported rare-earth development uneconomic against China’s lower cost of production and far-sighted planning.
In the past, a market expert testified before a congressional panel that “nations that fund in energy storage and industrial networks now are likely to lead this sector for generations to come. It is not too late for the US but immediate steps are required.”
Since then, a scramble to build international partnerships around rare earths is speeding up.
“In about a year from now, we’ll have so much essential resources that supply will exceed demand,” a top leader informed reporters. This followed in the wake of a demand for payment in the form of minerals from another country. In September, the authorities in Asia signed a contract with an American company, securing rights to minerals such as key metals.
Prospects for Success
But, is America able to close its shortfall and loosen China’s hold on rare-earth supply chains? “The US has taken major measures so far,” a specialist comments. The nation, he adds, cannot be “independent in the short term because it requires years to bring a mine online and establish processing plants.”
