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Recently, a top US official came back from a southern state brandishing a tiny sample of metal, announcing it was the first rare-earth magnet produced in the US in 25 years.

He indicated that this was evidence the US is breaking “Beijing's grip on our supply chain.” Thanks to a recently opened rare-earth mineral manufacturing plant in South Carolina, the official continued, “The nation is regaining its autonomy.”

Breaking China’s Dominance in Critical Materials

Overthrowing China’s processing and manufacturing dominance in these minerals, which are crucial for some semiconductors, energy storage, and armaments, is a top priority for the federal government. Via tariffs and other approaches, the US is counting on bringing the industry back to US soil.

These measures led Beijing to restrict rare-earth shipments to the US and pushed the administration to sign deals with Australia, a partner, another nation, and Japan.

While the US and China have since reached a trade truce on rare earths, Beijing—with approximately 70% of worldwide extraction and over 90% of global processing capacity—has a head start that will be difficult to overcome.

“These materials are used in EV engines but also in guidance systems that have clear uses for the military,” notes a market analyst. “Anything that has a decent magnet in it requires rare earths.”

Challenging Path for US Independence

It won't be simple for the US to reduce its dependence on Chinese production of materials critical to defense, chip manufacturing, and the transition from traditional energy to renewable sources. Data from official sources, the US imported 80% of the rare earths it consumed in 2024.

In the case of rare-earth minerals such as dysprosium, used in semiconductors, and another mineral, essential to defense systems, Chinese refinement dominance rises to 99%. Dysprosium and terbium are used in magnets essential for EV motors and power systems in wind turbines, along with uses in mobile devices, advanced lighting, and energy plants.

Extended Timelines and International Resources

Initiatives to reduce the US’s dependence on Chinese production of rare-earth minerals may require a long time. Analysts point out that “These minerals” is somewhat of a misnomer because they’re not that uncommon in the earth’s crust, but many reserves, such as those in Ukraine, where an agreement was made earlier this year, are only in the early stages of mining.

“It’s not that there’s a shortage per se, it’s that Beijing can limit how much is sent abroad,” a specialist said, adding that obtaining permits from China can be a lengthy, difficult process.

The Arctic region, another focus of American interest, and Brazil, are two other countries with significant rare-earth resources. Domestically, there are deposits in California, the Midwest, and Missouri, with the largest operational mine located at a key location, the state, about 60 miles from a major city.

Federal Efforts and Investment

In July, the US Department of Defense took on the role of the major investor in an industry operator, with plans to open a new “mine-to-magnet” plant, called 10X, to make magnets essential for F-35 fighter jets, drones, and naval vessels.

In North America, estimated reserves of rare earths were estimated to include 3.6m tons in the US and more than 14m tons in the northern neighbor—far less than the 44m tons estimated to be in the Asian giant.

Following government funding in other sectors and US chipmakers, the federal agency said it was ready to make targeted funding in strategic resource firms.

“The US is up against government-backed investment because China is selecting these strategically that they aim to control,” a senior official said during a speech this spring.

He floated that the US could utilize a sovereign wealth fund to speed production. “How could the richest nation in the world have the largest state investment fund?” he asked.

Past Challenges and Future Outlook

American attempts to support domestic production have struggled in the past when Chinese producers lowered prices, making unsubsidized rare-earth development unprofitable against Asia's competitive pricing and far-sighted planning.

In the past, an industry leader testified before a US Senate committee that “those who invest in battery capacity and industrial networks today are poised to dominate this industry for generations to come. There is still time for the US but immediate steps are required.”

Since then, a scramble to assemble trading alliances around rare earths is speeding up.

“Soon, we’ll have so much critical mineral and rare earths that supply will exceed demand,” the President informed the media. That came eight months after a demand for compensation in the form of natural resources from another country. In September, the government of Pakistan signed a deal with an American company, securing rights to minerals such as key metals.

Prospects for Success

However, can the US make up its shortfall and weaken Beijing's grip on rare-earth supply chains? “America has implemented major measures so far,” a specialist says. The nation, he continues, cannot be “self-reliant in the short term because it requires years to start operations and build refining capacity.”