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Last week, a top US official returned from a southern state displaying a small piece of metal, announcing it was the initial rare-earth magnet manufactured in the US in decades.

The official stated that this was a sign the US is overcoming “China's dominance on our supply chain.” Thanks to a recently opened rare-earth mineral manufacturing plant in South Carolina, he added, “We’re finally becoming independent again.”

Countering China’s Dominance in Critical Materials

Overthrowing China’s processing and manufacturing dominance in these minerals, which are essential for advanced electronics, energy storage, and military equipment, is a key goal for the American leadership. Using economic tools and other approaches, the US is betting on returning the industry home to domestic facilities.

Such measures prompted China to restrict rare-earth exports to the US and motivated US leaders to forge agreements with an ally, Malaysia, another nation, and a key Asian economy.

While the US and China have now reached a trade truce on rare earths, Beijing—with approximately the majority of global mining and over 90% of global processing capacity—has a head start that may prove challenging to diminish.

“Rare earths are essential for EV engines but also in defense technology that have obvious applications for the military,” notes an industry expert. “Anything that has a strong magnet in it uses rare earths.”

Challenging Path for US Independence

There’s no easy fix for the US to reduce its dependence on imports from China of minerals essential to defense, semiconductor production, and the shift from fossil fuels to wind and solar. According to federal reports, the US imported 80% of the rare earths it consumed in recent years.

In the case of rare-earth minerals such as dysprosium, essential for chip production, and samarium, critical for defense systems, Chinese refinement dominance rises to 99%. These elements are found in magnets crucial to electric engines and power systems in renewable energy, along with uses in cellphones, advanced lighting, and nuclear reactors.

Long-Term Efforts and Global Deposits

Efforts to cut the US’s reliance on Chinese production of rare-earth minerals could take years. Experts note that “Rare earths” is not entirely accurate because they’re not that uncommon in the planet's surface, but many reserves, such as those in Ukraine, where an agreement was signed recently, are only in the early stages of mining.

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

Greenland, a key area of American interest, and Brazil, are additional nations with substantial rare-earth deposits. Domestically, there are deposits 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 Las Vegas.

Federal Efforts and Funding

Recently, the US Department of Defense became the major investor in a mining company, with intentions to open a new “mine-to-magnet” plant, called a new facility, to produce magnets crucial for military aircraft, drones, and naval vessels.

In North America, measured and indicated resources of rare earths were estimated to include 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 government funding in the steel industry and domestic technology firms, the federal agency announced it was ready to make targeted funding in strategic resource firms.

“The US is up against state capital because China is selecting these as priority areas that they want to invest in,” a senior official stated during a speech this spring.

The official suggested that the US could utilize a national investment pool to speed production. “Why wouldn’t the wealthiest country in the world not possess the largest state investment fund?” he questioned.

Past Challenges and Future Outlook

American attempts to promote homegrown output have floundered in the past when China lowered prices, making unsupported rare-earth development unprofitable against China’s lower cost of production and long-term strategic outlook.

Five years ago, an industry leader testified before a US Senate committee that “those who invest in energy storage and supply chains today are poised to dominate this sector for generations to come. There is still time for the US but action is needed now.”

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

“In about a year from now, we’ll have so much critical mineral and rare earths that supply will exceed demand,” a top leader informed the media. This followed in the wake of a demand for compensation in the form of natural resources from Ukraine. In September, the government of Pakistan signed a contract with an American company, giving it access to minerals such as key metals.

Can the US Succeed?

But, is America able to close its gap and weaken China’s hold on rare-earth global networks? “The US has taken really significant steps so far,” an analyst says. The nation, he adds, is unlikely to become “independent in the short term because it takes time to bring a mine online and establish processing plants.”