The U.S. Obsession with Rare Earths: The Long Journey from Supply Constraints to Self-Sufficiency

Folks, the U.S.’s strategy regarding rare earths—from being at the mercy of others to achieving self-sufficiency—has been a rollercoaster ride. So, last year, Trump played the rare earth card, sending both U.S. allies and the U.S. itself into a panic—a major source of anxiety for the entire year. And now Sullivan is actually praising it? Honestly, I’m really curious just how effective “Trump-style” biding one’s time and building strength has actually been. Last April, the U.S. tariff war and chip embargo forced us to play our rare earth card. The first round involved export controls on seven medium- and heavy-rare earth elements; exports required a license from the Ministry of Commerce, or they wouldn’t be approved. The second round expanded the scope of rare earth elements and, combined with “long-arm jurisdiction,” required foreign products containing Chinese rare earth components or technology to also obtain a license from China. Through negotiations, we agreed to suspend the implementation of these measures for one year, until November 10 of this year. However, the core restrictions from last April remain in effect, so export approvals have become stricter and the clearance process has slowed down. According to CSIS, China’s exports are one thing—last year’s total exports even hit a 10-year high—but first, there is significant volatility, and second, the flow of goods is being controlled: rare earth imports to Europe and Japan have rebounded, while U.S. imports have returned to pre-restriction levels. The reason is that China is allowing exports of light rare earths for civilian use while restricting heavy rare earths for military applications. There is a severe shortage of the heavy rare earths required for heat-shield coatings in U.S. aircraft engines. This has caused significant distress for the United States, as heavy rare earths are crucial to its defense industry—including satellites, aircraft, guided weapons, and air defense systems. The U.S. has just consumed a massive amount of ammunition in the war with Iran this year and is facing significant difficulties in replenishing its stockpiles. At the same time, the U.S.’s economic weapons—tariffs, sanctions, bans, and blacklists—are also problematic, as it dares not use them against China lightly. Furthermore, rare earths are tied to a broader strategic landscape: by controlling the supply chain, China holds the initiative in resolving the Taiwan issue. Whether the U.S. can break this rare earth monopoly will determine whether it can retain the option of military intervention. This past year, the U.S. has pursued a two-pronged approach: Domestically, it has launched the most aggressive industrial policy in decades to rebuild its rare earth mining, processing, and magnet manufacturing capabilities; externally, it has deepened international partnerships through official diplomacy, signing critical minerals agreements centered on rare earths to ensure global supply. In addition to interagency cooperation across defense, commerce, and energy, federal agencies such as the Export-Import Bank, the International Finance Corporation, and the Trade Development Agency have also allocated resources toward rare earth projects. The Export-Import Bank issued letters of intent to rare earth projects in multiple countries, committing a total of 3.9 billion in investment; the International Finance Corporation provided a 565 million loan to Brazil; and the Trade Development Agency awarded a 1.88 million grant to Mozambique—a modest amount intended for feasibility studies and early-stage development; The Department of Defense has been particularly active, providing a total of 1.33 billion through loans, equity investments, and grants. One of the more significant deals involved MP Materials, which received a 400 million equity investment and a 150 million loan from the Department of Defense, making the Department its largest shareholder and helping the company expand its separation and processing capabilities in California as well as its magnet manufacturing capacity in Texas. The United States has also been very active overseas, exploring rare earth cooperation with Australia, Japan, Saudi Arabia, Malaysia, Brazil, Kazakhstan, Thailand, Greenland, Ukraine, and even Pakistan. The Center for Strategic and International Studies (CSIS) has made a key assessment: China’s export controls have backfired, forcing countries to seek rare earth supply chains that bypass China. While some of these—such as Greenland and Ukraine—have little immediate utility, four in particular—Australia, Saudi Arabia, Japan, and Malaysia—have already played a critical role. Australia is the United States’ most steadfast partner. It possesses vast rare earth reserves and numerous projects under construction, and is currently expanding its midstream production capacity. As mentioned earlier, its company Lynas transports rare earth ore from Western Australia to Malaysia for processing; it is the only rare earth separation and production facility outside of China that has reached commercial scale. In Saudi Arabia, the U.S. Department of Defense has partnered with MP Materials to establish a joint venture with a Saudi mining company to build a refinery, with the U.S. holding a 49% stake. In addition to Saudi Arabia’s own mines, the country is now attracting the most rare earth exploration activity in Africa. As for Japan, the U.S. looks to it as a mentor, as Japan has long learned from past hardships and has been investing in rare earth projects worldwide since 2011. Japan is ahead of the U.S. in research areas such as rare earth element recovery, magnet technology, and deep-sea mining. So how is the supply chain actually shaping up? Last year, U.S. domestic production of rare earth intermediate products hit a decades-high of 8,900 metric tons, but this accounted for only one-third of its consumption. The U.S. imported 18,100 metric tons, with 70% coming from China, 13% from Malaysia, 5% from Japan, and 5% from Estonia. One could say the U.S. has made aggressive moves, but looking at the results—let’s not say 0.5, but even 1.5—it’s clear that building a complete supply chain from mines to magnets isn’t that easy, especially when ensuring resilience and avoiding single points of failure. The U.S. has now assessed critical minerals, and four of the five highest-risk points involve rare earths—so the alarm has not been lifted. That said, magnet factories in the U.S. began production this summer and are gradually ramping up capacity, which has bolstered investor confidence in the rare earth supply chain outside of China. The U.S. model is already in place; now, the biggest enemy is time. Building an industrial chain takes years, not months, and the road to self-sufficiency remains long and arduous. Conversely, for us, since the U.S. is targeting only the top players, and is gradually eroding the deterrent power of our hand through a slow strategic rollout, we must not only create difficulties for the U.S. in terms of resources, pricing, technology, and environmental standards, but more importantly, while it is catching up on what it has missed over the past few decades, we must quickly elevate the level of the game and transform our advantage in rare earth resources into a comprehensive ecosystem advantage in high-tech industries.