China’s grip on rare earth magnets leaves US scrambling for alternatives

China’s grip on rare earth magnets leaves US scrambling for alternatives

China's recent hold on exports of rare earth magnets—during heightened tensions with President Trump's tariffs—has revealed how little the United States has done to secure its supply chain since a preceding crisis in 2010. With years of warnings, the US is still virtually entirely reliant on China to make and process the rare earth magnets, a fundamental component used in electric cars, wind turbines, fighter planes, and missiles, the New York Times reported.

A wake-up call ignored

China's 2010 rare earth embargo against Japan, prompted by a border standoff, lasted merely seven weeks but reconfigured the world supply chain. While the Japanese retaliated by stockpiling commodities and investing in replacement sources such as Australia's Lynas Corporation, the US did little. Now the gap has further increased, rendering American manufacturers highly exposed.

China tightens grip on the international magnet market

Beijing now makes 90% of the globe's rare earth magnets and has concentrated the entire supply chain in state hands. President Xi Jinping has explicitly stated his goal of employing China's industrial hegemony as geopolitical leverage, urging in 2020 greater global reliance on Chinese supply chains.

US efforts fall behind

The sole operational rare earth mine in the United States, MP Materials' Mountain Pass operation, only just started processing its own product after decades of exporting ore to China. The company wants to start making magnets in Texas later this year, but its capacity will equate to a single day's worth of China's yearly production. Past endeavours, including a Hitachi Metals plant in North Carolina, closed in 2020 because they were too expensive and there was not enough customer demand.

Red tape and market forces hold up American progress

Establishing a rare earth mine in the US requires almost three decades, held back by tight environmental and zoning regulations. Meanwhile, Chinese mines and factories, subsidized heavily and with fewer controls, keep growing quickly and inexpensively.

Japan's model shows what the US did not do

Japan, on the other hand, countered the 2010 shock with policy and long-term investment support. It invested in Lynas, now its principal rare earth supplier, and diversified magnet manufacturing in China, Vietnam, and domestically. A new Lynas plant in Malaysia will process heavy rare earths beginning this year, adding a further layer of protection for Japanese industry.

Strategic minerals, strategic failure

Experts say America's inaction has left it vulnerable at a time of escalating geopolitical uncertainty. "US policymakers for 15 years have done very little to mitigate the risk of dependence on China," said Milo McBride of the Carnegie Endowment. "Rare earths are the most strategic minerals of all."

An urgent reckoning

As China reweaponises its rare earth advantage, the US is again under pressure to restore domestic capacity. But with no sustained government investment and increased policy support, few private sector companies are eager to compete against the low-cost, state-subsidized production of China.