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Recently, the US Treasury Secretary came back from South Carolina holding up a tiny sample of metal, proclaiming it was the initial rare-earth magnet made in the US in decades.

The official stated that this was proof the US is breaking “China’s chokehold on our industrial pipeline.” Due to a new rare-earth mineral refining facility in South Carolina, he noted, “We’re finally becoming independent again.”

Challenging China’s Dominance in Critical Materials

Overthrowing China’s processing and manufacturing dominance in these minerals, which are vital for some semiconductors, batteries, and military equipment, is a top priority for the American leadership. Via tariffs and other approaches, the US is betting on returning the industry back to American shores.

Such measures led China to limit rare-earth exports to the US and pushed US leaders to sign deals with an ally, Malaysia, Cambodia, and Japan.

Although the US and China have since reached a trade truce on rare earths, China—with around the majority of worldwide extraction and over 90% of global processing capacity—has a head start that will be difficult to overcome.

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

Challenging Path for American Self-Sufficiency

There’s no easy fix for the US to reset its reliance on imports from China of materials critical to defense, chip manufacturing, and the shift from traditional energy to wind and solar. According to federal reports, the US brought in the vast majority of the rare earths it used in recent years.

For some rare-earth minerals such as dysprosium, essential for chip production, and another mineral, essential to defense systems, Chinese refinement dominance reaches 99%. Dysprosium and terbium are found in magnets essential for EV motors and power systems in wind turbines, along with applications for mobile devices, advanced lighting, and energy plants.

Extended Timelines and Global Deposits

Initiatives to reduce the US’s reliance on China's output 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 Ukraine, where an agreement was signed recently, are only in the early stages of mining.

“It’s not that there’s a shortage per se, it’s that Beijing can control how much is sent abroad,” a specialist said, noting that securing export licenses from China can be a lengthy, difficult process.

The Arctic region, a key area of American interest, and South America, are additional nations with substantial rare-earth deposits. Domestically, there are reserves in the West, Wyoming, and Missouri, with the largest operational mine operating at Mountain Pass, the state, not far from Las Vegas.

Government Initiatives and Funding

Recently, the US Department of Defense became the largest shareholder in a mining company, with plans to open a new “mine-to-magnet” plant, named a new facility, to produce magnets essential for F-35 fighter jets, drones, and submarines.

Across the continent, estimated reserves of rare earths were calculated at millions of tons in the US and more than 14m tons in the northern neighbor—far less than the 44m tons believed to be in China.

Mirroring government funding in other sectors and US chipmakers, the interior department announced it was prepared to make targeted funding in critical mineral companies.

“You’re competing against government-backed investment because China is picking these as priority areas that they want to invest in,” a senior official said during a speech in April.

He floated that the US could utilize a national investment pool to speed production. “How could the richest nation in the world have the biggest sovereign wealth fund?” he questioned.

Historical Obstacles and Future Outlook

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

Five years ago, an industry leader stated before a congressional panel that “nations that fund in battery capacity and industrial networks today are poised to lead this industry for generations to come. It is not too late for the US but immediate steps are required.”

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

“Soon, we’ll have so much essential resources that supply will exceed demand,” the President told reporters. That came eight months after a request for compensation in the form of minerals from Ukraine. More recently, the government of Pakistan signed a contract with an American company, giving it access to minerals such as key metals.

Can the US Succeed?

However, can the US make up its shortfall and loosen China’s hold on rare-earth global networks? “America has implemented major measures already,” an analyst says. The nation, he adds, is unlikely to become “independent in the short term because it requires years to bring a mine online and establish processing plants.”