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Last week, the US Treasury Secretary returned from South Carolina displaying a tiny sample of metal, proclaiming it was the first rare-earth magnet produced in the US in 25 years.

The official stated that this was a sign the US is breaking “Beijing's grip on our supply chain.” Thanks to a recently opened rare-earth mineral manufacturing plant in the state, the official continued, “We’re finally becoming independent again.”

Breaking China’s Dominance in Critical Materials

Ending China’s refining and production supremacy in these materials, which are essential for some semiconductors, batteries, and military equipment, is a key goal for the federal government. Via trade measures and other strategies, the US is counting on bringing the industry back to American shores.

Such tariffs prompted Beijing to restrict rare-earth exports to the US and motivated US leaders to sign deals with Australia, Malaysia, another nation, and a key Asian economy.

Although the US and China have now reached a trade truce on rare earths, Beijing—with approximately the majority of worldwide extraction and nearly all of global processing capacity—has a head start that will be difficult to diminish.

“These materials are essential for EV engines but also in defense technology that have obvious applications for the defense department,” says an industry expert. “Anything that has a strong magnet in it requires rare earths.”

Challenging Path for US Independence

There’s no easy fix for the US to reset its dependence on imports from China of materials essential to defense, semiconductor production, and the shift from traditional energy to wind and solar. According to official sources, the US brought in the vast majority of the rare earths it used in recent years.

For some rare-earth minerals such as a key element, essential for semiconductors, and samarium, critical for military applications, China's control over processing rises to almost total. These elements are used in magnets essential for EV motors and power systems in renewable energy, along with uses in mobile devices, high-intensity lighting, and energy plants.

Long-Term Efforts and Global Deposits

Efforts to cut the US’s reliance on China's output of rare-earth minerals could take years. Experts note that “These minerals” is somewhat of a misnomer because they’re not that uncommon in the planet's surface, but many deposits, such as those in Eastern Europe, where a deal was made earlier this year, are only in the initial phases of mining.

“The issue isn't scarcity itself, it’s that China can limit how much is exported,” an analyst explained, noting that securing export licenses from China can be a lengthy, difficult process.

The Arctic region, a key area of US attention, and Brazil, are two other countries with substantial rare-earth deposits. In the continental US, there are deposits in California, Wyoming, and the central US, with the largest operational mine located at Mountain Pass, California, not far from Las Vegas.

Federal Efforts and Investment

Recently, the US Department of Defense became the largest shareholder in a mining company, with intentions to open a new “mine-to-magnet” plant, called 10X, to produce magnets crucial for military aircraft, drones, and naval vessels.

In North America, measured and indicated resources of rare earths were calculated at millions of tons in the US and more than 14m tons in the northern neighbor—significantly lower than the vast reserves estimated to be in China.

Following direct investment in the steel industry and US chipmakers, the federal agency said it was ready to make direct investments in strategic resource firms.

“You’re competing against government-backed investment because Beijing is selecting these strategically that they aim to control,” a senior official stated during a address in April.

The official floated that the US could utilize a national investment pool to accelerate production. “Why wouldn’t the richest nation in the world not possess the largest state investment fund?” he asked.

Past Challenges and Future Outlook

American attempts to promote domestic production have struggled in the past when Chinese producers lowered prices, making unsupported rare-earth development uneconomic against China’s lower cost of production and long-term strategic outlook.

In the past, a market expert stated before a US Senate committee that “those who invest in battery capacity and industrial networks now are poised to lead this sector for the foreseeable future. It is not too late for the US but action is needed now.”

Since then, a race to build trading alliances around rare earths is accelerating.

“In about a year from now, we’ll have an abundance of essential resources that supply will exceed demand,” a top leader informed reporters. That came eight months after a request for compensation in the form of natural resources from another country. In September, the government of Pakistan agreed to a contract with an US firm, giving it access to minerals such as key metals.

Can the US Succeed?

However, can the US make up its shortfall and weaken Beijing's grip on rare-earth supply chains? “The US has taken major measures already,” an analyst says. The nation, he continues, cannot be “self-reliant in the short term because it requires years to start operations and establish processing plants.”