The race to reduce America's reliance on Chinese rare earths is on, and it's a complex and challenging journey. Imagine a world where the US is no longer at the mercy of China's dominance in rare earths, a critical component for various industries. This is the ambitious goal that the Trump administration is striving for, and it's a story that deserves to be told.
Last week, Scott Bessent, the US Treasury Secretary, made a bold statement as he returned from South Carolina. He held up a small metal magnet, claiming it to be the first rare-earth magnet made in the US in 25 years. This symbolized a significant step towards breaking free from China's grip on the supply chain.
The South Carolina-based company, eVAC, has established a new rare-earth mineral processing center, and Bessent declared, "We're finally becoming independent again." But here's where it gets controversial...
China currently holds a massive advantage in the rare earths market, with approximately 70% of global mining and over 90% of global processing capacity. Trump's administration has implemented tariffs and other economic strategies to bring the industry back to US shores, but it's an uphill battle.
The US-China trade truce on rare earths is a step in the right direction, but China's head start is significant. According to the US Geological Survey, the US imported 80% of its rare earths in 2024, highlighting the magnitude of the challenge.
For some rare earth minerals, like dysprosium and samarium, China's dominance in refinement is as high as 99%. These minerals are crucial for chip production, military applications, and the transition to renewable energy sources like wind and solar.
"These materials are essential for electric motors in EV cars and guidance systems for defense purposes," explains Adam Webb, head of energy raw materials at Benchmark Mineral Intelligence.
Trump's efforts to reduce US dependence on Chinese rare earths production could take years. Webb points out that the term "rare earths" is somewhat misleading, as they are not as scarce as the name suggests. However, many deposits, including those in Ukraine and other countries, are still in the early stages of extraction.
"It's not a shortage issue, but rather China's ability to control exports," Webb adds. Getting export licenses from China can be a lengthy and challenging process.
Greenland, Brazil, and several US states, including California, Wyoming, and Missouri, have significant rare earth deposits. The largest operational mine in the US is located at Mountain Pass, California, not far from Las Vegas.
In July, the Pentagon became the largest shareholder in MP Materials, the operator of the California mine, with plans to establish a "mine-to-magnet" plant to produce magnets for F-35 fighter jets, drones, and submarines.
According to the geological survey, North America has an estimated 3.6 million tons of rare earths in the US and over 14 million tons in Canada, which pales in comparison to China's estimated 44 million tons.
The US government is taking direct action, mirroring its investments in the steel industry and chipmaker Intel. The interior department is prepared to make direct investments in critical mineral companies to support domestic production.
"You're competing against state capital," Doug Burgum, the US Secretary of the Interior, stated. "China strategically invests in these areas."
Burgum proposed the idea of utilizing a sovereign wealth fund to accelerate production, questioning why the wealthiest country shouldn't have the biggest fund.
Previous US efforts to support domestic production have faltered when China lowered prices, making unsupported rare earth development uneconomical.
Simon Moores, managing director of Benchmark Mineral Intelligence, testified before the US Senate committee five years ago, emphasizing the need for immediate action to dominate the industry for generations.
Today, the scramble to form trading alliances around rare earths is intensifying. Trump's ambitious goal of having an abundance of critical minerals and rare earths within a year is a bold statement.
"We'll have so much critical mineral and rare earths that you won't know what to do with them," Trump declared.
The question remains: Can the US overcome its shortfall and weaken China's hold on rare earth supply chains? Webb believes the US has already taken significant steps, but self-reliance in the short term is challenging due to the time required to develop mines and build refining capacity.
The journey to reduce US dependence on Chinese rare earths is a complex and ongoing process, and it will be interesting to see how this story unfolds.
