Unpacking the US Administration's Scramble to Cut US Reliance on Chinese Critical Minerals

Not long ago, the US Treasury Secretary came back from South Carolina displaying a tiny sample of metal, announcing it was the initial rare-earth magnet manufactured in the US in a quarter of a century.

He indicated that this was proof the US is breaking “Beijing's grip on our supply chain.” Due to a new rare-earth mineral refining facility in the state, he added, “We’re finally becoming independent again.”

Countering Beijing's Control in Critical Materials

Reducing China’s refining and production supremacy in these minerals, which are crucial for some semiconductors, batteries, and armaments, is a major focus for the federal government. Through trade measures and other approaches, the US is betting on bringing the industry home to American shores.

These measures led Beijing to limit rare-earth shipments to the US and motivated the administration to forge agreements with an ally, a partner, Cambodia, and Japan.

Although the US and China have now brokered a temporary agreement on rare earths, Beijing—with around 70% of global mining and nearly all of global processing capacity—has a head start that may prove challenging to erode.

“These materials are used in EV engines but also in guidance systems 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 reduce its reliance on Chinese production of minerals critical to national security, chip manufacturing, and the shift from fossil fuels to renewable sources. Data from federal reports, the US imported the vast majority of the rare earths it consumed in 2024.

In the case of rare-earth minerals such as dysprosium, essential for semiconductors, and another mineral, essential to military applications, Chinese refinement dominance rises to almost total. Dysprosium and terbium are found in magnets crucial to electric engines and generators in renewable energy, along with applications for cellphones, high-intensity 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. Analysts point out that “These minerals” is somewhat of a misnomer because they’re relatively abundant 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.

“It’s not that there’s a shortage itself, it’s that China can control how much is exported,” an analyst explained, adding that obtaining export licenses from China can be a complex and time-consuming endeavor.

Greenland, another focus of US attention, and Brazil, are additional nations with substantial rare-earth resources. Domestically, there are reserves in California, Wyoming, and the central US, with the biggest active site operating at a key location, the state, about 60 miles from a major city.

Government Initiatives and Investment

Recently, the US Department of Defense took on the role of the largest shareholder in a mining company, with intentions to open a new “integrated” plant, named 10X, to make magnets essential for F-35 fighter jets, unmanned systems, and naval vessels.

Across the continent, measured and indicated resources of rare earths were calculated at 3.6m tons in the US and additional millions in Canada—significantly lower than the vast reserves believed to be in China.

Following direct investment in other sectors and US chipmakers, the federal agency announced it was prepared to make targeted funding in strategic resource firms.

“The US is up against government-backed investment because China is selecting these as priority areas that they want to invest in,” a cabinet member said during a speech this spring.

The official suggested that the US could use a sovereign wealth fund to accelerate production. “Why wouldn’t the richest nation in the world have the biggest sovereign wealth fund?” he asked.

Historical Obstacles and Prospects

US efforts to promote domestic production have struggled in the past when China lowered prices, making unsubsidized rare-earth development uneconomic against Asia's competitive pricing and far-sighted planning.

Five years ago, a market expert stated before a US Senate committee that “nations that fund in battery capacity and industrial networks now are poised to lead this industry for generations to come. There is still time for the US but action is needed now.”

Five years on, 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 told the media. That came in the wake of a request for compensation in the form of natural resources from Ukraine. More recently, the government of Pakistan agreed to a contract with an US firm, securing rights to minerals such as key metals.

Can the US Succeed?

However, can the US make up its gap and weaken China’s hold on rare-earth global networks? “The US has taken really significant steps already,” an analyst comments. The nation, he adds, cannot be “self-reliant in the short term because it requires years to start operations and establish processing plants.”