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Not long ago, the US Treasury Secretary came back from South Carolina brandishing a small piece of metal, declaring it was the initial rare-earth magnet produced in the US in a quarter of a century.

He indicated that this was proof the US is overcoming “China's dominance on our industrial pipeline.” Thanks to a new rare-earth mineral manufacturing plant in South Carolina, the official continued, “America is reclaiming its self-sufficiency.”

Challenging China’s Dominance in Essential Minerals

Overthrowing Beijing's refining and production supremacy in these materials, which are crucial for some semiconductors, energy storage, and armaments, is a major focus for the current US administration. Via economic tools and other strategies, the US is relying on bringing the industry back to American shores.

These tariffs prompted Beijing to restrict rare-earth shipments to the US and pushed US leaders to sign deals with an ally, Malaysia, Cambodia, and a key Asian economy.

While the US and China have since reached a temporary agreement on rare earths, China—with approximately 70% of worldwide extraction and over 90% of global processing capacity—holds an advantage that may prove challenging to erode.

“These materials are used in EV engines but also in defense technology that have obvious applications for the defense department,” says 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 dependence on imports from China of materials essential to defense, semiconductor production, and the transition from traditional energy to wind and solar. Data from official sources, the US brought in 80% of the rare earths it used in recent years.

In the case of rare-earth minerals such as a key element, used in chip production, and another mineral, critical for military applications, China's control over processing reaches 99%. Dysprosium and terbium are used in magnets crucial to electric engines and generators in wind turbines, along with uses in cellphones, high-intensity lighting, and energy plants.

Long-Term Efforts and International Resources

Initiatives to reduce the US’s dependence on China's output of rare-earth minerals could take years. Experts note that “These minerals” is somewhat of a misnomer because they’re relatively abundant in the earth’s crust, but many deposits, including those in Ukraine, where an agreement 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 control how much is exported,” a specialist said, noting that obtaining permits from China can be a complex and time-consuming endeavor.

Greenland, a key area of US attention, and Brazil, are additional nations with substantial rare-earth resources. In the continental US, there are reserves in California, Wyoming, and the central US, with the largest operational mine operating at a key location, California, not far from a major city.

Government Initiatives and Funding

In July, the US Department of Defense took on the role of the largest shareholder in a mining company, with plans to open a new “mine-to-magnet” plant, named 10X, to make magnets essential for military aircraft, unmanned systems, 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 Canada—significantly lower than the 44m tons estimated to be in China.

Mirroring direct investment in other sectors and US chipmakers, the interior department said it was ready to make direct investments in strategic resource firms.

“The US is up against government-backed investment because Beijing is selecting these strategically that they want to invest in,” a senior official said during a speech this spring.

He suggested that the US could utilize a sovereign wealth fund to accelerate production. “Why wouldn’t the wealthiest country in the world have the biggest sovereign wealth fund?” he asked.

Historical Obstacles and Future Outlook

US efforts to promote domestic production have struggled in the past when Chinese producers cut costs, rendering unsupported rare-earth development unprofitable 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 battery capacity and supply chains now are likely to lead this sector for the foreseeable future. It is not too late for the US but action is needed now.”

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

“In about a year from now, we’ll have an abundance of essential resources that you won’t know what to do with them,” the President told reporters. That came in the wake of a demand for compensation in the form of minerals from another country. In September, the government of Pakistan agreed to a contract with an American company, securing rights to minerals such as antimony and copper.

Prospects for Success

However, is America able to close its gap and weaken Beijing's grip on rare-earth supply chains? “The US has taken really significant steps already,” an analyst says. The nation, he continues, cannot be “independent in the near future because it takes time to bring a mine online and build refining capacity.”