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Last week, the US Treasury Secretary returned from South Carolina brandishing a tiny sample of metal, declaring it was the initial rare-earth magnet made in the US in a quarter of a century.

He remarked that this was proof the US is ending “Beijing's grip on our industrial pipeline.” Thanks to a new rare-earth mineral processing center in South Carolina, he noted, “America is reclaiming its self-sufficiency.”

Countering China’s Dominance in Essential Minerals

Overthrowing Beijing's refining and production supremacy in these minerals, which are vital for some semiconductors, energy storage, and military equipment, is a key goal for the federal government. Through tariffs and other approaches, the US is counting on returning the industry back to domestic facilities.

Such measures led Beijing to limit rare-earth exports to the US and pushed US leaders to sign deals with Australia, Malaysia, Cambodia, and a key Asian economy.

Although the US and China have now brokered a trade truce on rare earths, Beijing—with approximately 70% of global mining and over 90% of international refining—holds an advantage that may prove challenging to diminish.

“Rare earths are used in electric motors but also in defense technology that have obvious applications for the defense department,” says a market analyst. “Anything that has a decent magnet in it uses rare earths.”

Challenging Path for US Independence

It won't be simple for the US to reduce its reliance on Chinese production of minerals critical to defense, chip manufacturing, and the transition from fossil fuels to renewable sources. According to official sources, the US brought in 80% of the rare earths it consumed in recent years.

In the case of rare-earth minerals such as a key element, used in semiconductors, and samarium, critical for defense systems, China's control over processing rises to almost total. Dysprosium and terbium are found in magnets essential for electric engines and generators in wind turbines, along with applications for cellphones, high-intensity lighting, and nuclear reactors.

Long-Term Efforts and Global Deposits

Initiatives to reduce the US’s dependence on Chinese production of rare-earth minerals could take years. Analysts point out that “These minerals” is somewhat of a misnomer because they’re not that uncommon in the earth’s crust, but many deposits, including those in Eastern Europe, where an agreement was signed earlier this year, are only in the early stages of extraction.

“The issue isn't scarcity per se, it’s that Beijing can limit how much is sent abroad,” a specialist explained, adding that obtaining permits from China can be a complex and time-consuming endeavor.

Greenland, another focus of American interest, and Brazil, are additional nations with substantial rare-earth resources. In the continental US, there are deposits in the West, Wyoming, and the central US, with the biggest active site located at Mountain Pass, 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 largest shareholder in a mining company, with plans to open a new “integrated” plant, named a new facility, to make magnets essential for military aircraft, unmanned systems, and naval vessels.

Across the continent, measured and indicated resources of rare earths were calculated at millions of tons in the US and additional millions in the northern neighbor—significantly lower than the 44m tons believed to be in the Asian giant.

Following government funding in other sectors and domestic technology firms, the federal agency said it was ready to make direct investments in strategic resource firms.

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

The official floated that the US could utilize a sovereign wealth fund to speed production. “How could the richest nation in the world not possess the biggest sovereign wealth fund?” he asked.

Past Challenges and Prospects

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

Five years ago, a market expert testified before a congressional panel that “nations that fund in battery capacity and supply chains today are poised to dominate this sector for the foreseeable future. It is not too late for the US but immediate steps are required.”

Five years on, a race to build international partnerships around rare earths is accelerating.

“In about a year from now, we’ll have so much critical mineral and rare earths that you won’t know what to do with them,” the President told the media. That came eight months after a demand for compensation in the form of natural resources from another country. More recently, the government of Pakistan agreed to a deal with an US firm, giving it access to minerals such as key metals.

Prospects for Success

However, is America able to close its shortfall and loosen China’s hold on rare-earth supply chains? “The US has taken really significant steps already,” a specialist comments. The nation, he adds, cannot be “independent in the short term because it requires years to bring a mine online and establish processing plants.”