Exploring Trump's Rush to Reduce US Dependence on China's Critical Minerals

Recently, a top US official came back from a southern state holding up a tiny sample of metal, declaring it was the first rare-earth magnet made in the US in decades.

The official stated that this was a sign the US is ending “China’s chokehold on our supply chain.” Due to a recently opened rare-earth mineral processing center in South Carolina, he noted, “The nation is regaining its autonomy.”

Breaking China’s Dominance in Essential Minerals

Ending China’s processing and manufacturing dominance in these materials, which are crucial for some semiconductors, batteries, and military equipment, is a top priority for the federal government. Using trade measures and other approaches, the US is counting on returning the industry home to domestic facilities.

Such tariffs led Beijing to restrict rare-earth exports to the US and motivated the administration to forge agreements with Australia, a partner, another nation, and Japan.

While the US and China have now reached a temporary agreement on rare earths, China—with approximately the majority of worldwide extraction and nearly all of global processing capacity—holds an advantage that may prove challenging to diminish.

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

No Easy Fix for US Independence

There’s no easy fix for the US to reduce its dependence on Chinese production of minerals critical to national security, chip manufacturing, and the shift from traditional energy to renewable sources. According to federal reports, the US brought in the vast majority of the rare earths it consumed in recent years.

In the case of rare-earth minerals such as a key element, essential for semiconductors, and another mineral, critical for military applications, China's control over processing reaches almost total. Dysprosium and terbium are used in magnets essential for electric engines and generators in renewable energy, along with applications for cellphones, advanced lighting, and energy plants.

Extended Timelines and International Resources

Initiatives to reduce the US’s dependence on China's output of rare-earth minerals may require a long time. Analysts point out that “Rare earths” is not entirely accurate because they’re relatively abundant in the earth’s crust, but many reserves, such as those in Eastern Europe, where a deal was made earlier this year, are only in the early stages of extraction.

“It’s not that there’s a shortage per se, it’s that China can limit how much is exported,” an analyst said, adding that obtaining permits from China can be a complex and time-consuming endeavor.

The Arctic region, a key area of US attention, and Brazil, are additional nations with significant rare-earth deposits. Domestically, there are reserves in California, Wyoming, and the central US, with the largest operational mine operating at a key location, the state, about 60 miles from a major city.

Federal Efforts and Investment

Recently, the US Department of Defense took on the role of the largest shareholder in an industry operator, with plans to open a new “mine-to-magnet” plant, called 10X, 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—significantly lower than the 44m tons estimated to be in China.

Following government funding in other sectors and domestic technology firms, the federal agency announced it was ready to make targeted funding in critical mineral companies.

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

He floated that the US could use a sovereign wealth fund to speed production. “How could the wealthiest country in the world have the biggest sovereign wealth fund?” he questioned.

Historical Obstacles and Future Outlook

US efforts to promote homegrown output have struggled in the past when Chinese producers cut costs, rendering unsupported rare-earth development unprofitable against China’s lower cost of production and far-sighted planning.

In the past, a market expert stated before a congressional panel that “those who invest in energy storage and industrial networks now are likely to lead this industry for the foreseeable future. There is still time for the US but immediate steps are required.”

Since then, a race to assemble trading alliances around rare earths is speeding up.

“In about a year from now, we’ll have so much essential resources that supply will exceed demand,” the President informed the media. This followed eight months after a request for payment in the form of minerals from Ukraine. In September, the government of Pakistan agreed to a deal with an American company, securing rights to minerals such as antimony and copper.

Can the US Succeed?

However, is America able to close its gap and weaken Beijing's grip on rare-earth supply chains? “America has implemented major measures so far,” an analyst comments. The US, he continues, is unlikely to become “independent in the near future because it requires years to start operations and build refining capacity.”