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Last week, the US Treasury Secretary came back from South Carolina holding up a small piece of metal, declaring it was the initial rare-earth magnet manufactured in the US in decades.

The official stated that this was proof the US is breaking “China's dominance on our supply chain.” Because of a new rare-earth mineral refining facility in South Carolina, he noted, “We’re finally becoming independent again.”

Countering China’s Dominance in Critical Materials

Reducing Beijing's processing and manufacturing dominance in these minerals, which are vital for some semiconductors, energy storage, and armaments, is a major focus for the American leadership. Via economic tools and other strategies, the US is relying on bringing the industry back to domestic facilities.

Such measures led Beijing to restrict rare-earth shipments to the US and motivated US leaders to sign deals with an ally, a partner, another nation, and a key Asian economy.

While the US and China have now brokered a temporary agreement on rare earths, Beijing—with approximately the majority of global mining and over 90% of global processing capacity—holds an advantage that will be difficult to overcome.

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

No Easy Fix for US Independence

It won't be simple for the US to reset its dependence on imports from China of minerals critical to national security, chip manufacturing, and the transition from traditional energy to wind and solar. According to federal reports, the US imported 80% of the rare earths it used in 2024.

For some rare-earth minerals such as a key element, used in chip production, and another mineral, essential to military applications, China's control over processing rises to almost total. These elements are found in magnets essential for electric engines and generators in wind turbines, along with uses in cellphones, high-intensity lighting, and nuclear reactors.

Extended Timelines and International Resources

Efforts to reduce the US’s reliance on Chinese production of rare-earth minerals may require a long time. Experts note that “Rare earths” is not entirely accurate because they’re not that uncommon in the planet's surface, but many deposits, including those in Eastern Europe, where a deal was made earlier this year, are only in the initial phases of extraction.

“It’s not that there’s a shortage itself, it’s that Beijing can limit how much is sent abroad,” an analyst explained, adding that securing export licenses from China can be a lengthy, difficult process.

Greenland, another focus of US attention, and South America, are additional nations with significant rare-earth deposits. Domestically, there are reserves in California, Wyoming, and Missouri, with the biggest active site operating at Mountain Pass, California, not far from a major city.

Government Initiatives and Funding

In July, the Pentagon became the largest shareholder in an industry operator, with plans to open a new “integrated” plant, called a new facility, to make magnets essential for military aircraft, drones, and submarines.

In North America, measured and indicated resources of rare earths were estimated to include 3.6m tons in the US and additional millions in the northern neighbor—far less than the vast reserves estimated to be in the Asian giant.

Mirroring government funding in other sectors and domestic technology firms, the interior department announced it was ready to make targeted funding in strategic resource firms.

“The US is up against government-backed investment because China is picking these strategically that they aim to control,” a senior official said during a address in April.

The official floated that the US could utilize a national investment pool to speed production. “How could the wealthiest country in the world have the biggest sovereign wealth fund?” he asked.

Historical Obstacles and Prospects

US efforts to promote domestic production have floundered in the past when Chinese producers cut costs, making unsubsidized rare-earth development uneconomic against Asia's competitive pricing and long-term strategic outlook.

Five years ago, a market expert testified before a US Senate committee that “those who invest in energy storage and supply chains today are poised to dominate this industry for the foreseeable future. It is not too late for the US but immediate steps are required.”

Five years on, a race to assemble trading alliances around rare earths is accelerating.

“Soon, we’ll have so much essential resources that supply will exceed demand,” the President told reporters. This followed in the wake of a demand for compensation in the form of minerals from another country. More recently, the government of Pakistan agreed to 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 shortfall and loosen Beijing's grip on rare-earth global networks? “America has implemented major measures so far,” 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.”