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Recently, a top US official came back from a southern state displaying a small piece of metal, announcing it was the initial rare-earth magnet produced in the US in a quarter of a century.

He indicated that this was a sign the US is overcoming “China's dominance on our supply chain.” Because of a recently opened rare-earth mineral manufacturing plant in the state, he noted, “The nation is regaining its autonomy.”

Challenging Beijing's Control in Critical Materials

Overthrowing China’s refining and production supremacy in these materials, which are essential for some semiconductors, energy storage, and military equipment, is a top priority for the federal government. Via trade measures and other approaches, the US is counting on bringing the industry home to domestic facilities.

Such tariffs prompted China to restrict rare-earth exports to the US and motivated the administration to sign deals with an ally, a partner, Cambodia, and Japan.

While the US and China have since brokered a trade truce on rare earths, China—with approximately the majority of worldwide extraction and nearly all of global processing capacity—has a head start that will be difficult to diminish.

“Rare earths are essential for electric motors but also in guidance systems that have clear uses for the defense department,” says a market analyst. “Any device that has a strong magnet in it requires rare earths.”

Challenging Path for American Self-Sufficiency

It won't be simple for the US to reduce its dependence on imports from China of materials critical to defense, chip manufacturing, and the transition from traditional energy to renewable sources. 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, essential for semiconductors, and another mineral, essential to military applications, Chinese refinement dominance reaches 99%. Dysprosium and terbium are used in magnets crucial to EV motors and generators in wind turbines, along with applications for mobile devices, advanced lighting, and nuclear reactors.

Long-Term Efforts and International Resources

Initiatives to cut the US’s dependence on Chinese production of rare-earth minerals could take years. Analysts point out that “Rare earths” is somewhat of a misnomer because they’re relatively abundant in the earth’s crust, but many deposits, such as those in Ukraine, where a deal was made earlier this year, are only in the initial phases of mining.

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

The Arctic region, a key area of American interest, and South America, are additional nations with significant rare-earth deposits. In the continental US, there are reserves in the West, the Midwest, and the central US, with the biggest active site located at a key location, the state, about 60 miles from a major city.

Federal Efforts and Funding

Recently, the Pentagon took on the role of the major investor in an industry operator, with intentions to open a new “integrated” plant, named 10X, to produce magnets essential for military aircraft, drones, and submarines.

In North America, measured and indicated resources of rare earths were calculated at millions of tons in the US and more than 14m tons in Canada—far less than the vast reserves estimated to be in the Asian giant.

Mirroring government funding in other sectors and domestic technology firms, the interior department announced it was ready to make targeted funding in strategic resource firms.

“You’re competing against government-backed investment because China is picking these strategically that they want to invest in,” a senior official stated during a speech in April.

The official floated that the US could utilize a national investment pool to accelerate production. “Why wouldn’t the wealthiest country in the world have the biggest state investment fund?” he asked.

Past Challenges and Future Outlook

US efforts to support homegrown output have struggled in the past when China cut costs, rendering unsubsidized rare-earth development unprofitable against Asia's competitive pricing and long-term strategic outlook.

Five years ago, an industry leader stated before a congressional panel that “nations that fund in energy storage and industrial networks today are poised to dominate this industry for the foreseeable future. There is still time for the US but action is needed now.”

Since then, a scramble to assemble international partnerships around rare earths is accelerating.

“Soon, we’ll have an abundance of critical mineral and rare earths that supply will exceed demand,” the President told reporters. That came in the wake of a request for compensation in the form of natural resources from Ukraine. More recently, the authorities in Asia signed a deal with an US firm, giving it access to minerals such as key metals.

Prospects for Success

But, can the US make up its shortfall and loosen Beijing's grip on rare-earth supply chains? “The US has taken major measures so far,” an analyst comments. The US, he adds, cannot be “self-reliant in the near future because it takes time to bring a mine online and establish processing plants.”