Rare Earth Exchanges

A Strategic Plan to Reduce U.S. Dependence on Chinese Rare Earth Elements

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Highlights

  • U.S. aims to reduce dependency on China’s 75% global rare earth supply through a multi-phase strategic approach
  • Strategy involves:
    • Short, intermediate, and long-term initiatives
    • Focusing on stockpiling, technological innovation, and international partnerships
  • Goal is to establish a fully integrated domestic rare earth supply chain while promoting ethical and sustainable production practices

China’s dominance over more than 75% of the global rare earth supply is a critical vulnerability for the United States and its allies. Addressing this challenge requires a pragmatic, multi-phase strategy focusing on immediate stabilization, medium-term capacity building, and long-term independence.

By leveraging alliances, advancing technology, and exploiting inefficiencies in China’s state-led system, the U.S. can build a diversified and secure rare earth supply chain and ultimately independence from at least that one nation.

Short Term (1 to 3 Years)

In the short term, the U.S. must stabilize its rare earth access by creating strategic stockpiles to buffer against potential trade disruptions. Collaboration with key allies like Australia, Japan, and Canada is essential to secure immediate alternative sources. Domestic companies, such as MP Materials, should be incentivized to expand refining and processing capabilities. We think it is OK to subsidize this (with key terms of interest for the public). 

Simultaneously, large-scale recycling programs for electronic waste, magnets, and batteries should be launched to recover rare earth materials quickly and sustainably, assuming the appropriate technological breakthroughs work.

Intermediate Strategies—the Path Toward Independence (3 to 7 Years)

Over the intermediate term, the U.S. needs to accelerate innovation in refining technologies to reduce costs and environmental impacts. Partnering with national labs and universities can drive breakthroughs in low-waste processing methods. While we recently suggested a “Manhattan Project” analogy would not fare well in today’s world, which is deeply distrustful of the state, an urgent national program with international allies makes sense.  Expanding mining operations in allied nations, such as Vietnam and Brazil, can further diversify supply sources.

Strategic alliances with the European Union, Japan, and Australia above and beyond existing initiatives and networks should be formalized to pool resources and set global standards, creating a coalition that challenges China’s monopoly. At the same time, China’s weaknesses—such as its centralized, top-down approach—can be exploited by promoting transparency and ethical sourcing standards that align with global, albeit likely modified, ESG priorities. Not to mention other economic, financial, ecological, and societal challenges facing China’s rare earth complex documented here at Rare Earth Exchanges.

Long Run Independence (7 to 15 Years)

In the long term, the U.S. must establish a fully integrated domestic rare earth supply chain, from mining and refining to manufacturing finished products like magnets. This requires substantial investment in infrastructure and close partnerships between industry and government. Recycling technologies must evolve to efficiently recover rare earths, reducing dependence on mining entirely. Research into alternative materials to replace rare earths in critical applications, such as permanent magnets, is also vital to long-term independence.

Moving Forward

By leading international efforts to set fair trade policies and anti-monopoly regulations, the U.S. can further weaken China’s influence and foster a more competitive global market.  While the path to independence is arduous, a proactive and coordinated strategy, capitalizing on technological breakthroughs and process disruption, can secure the rare earth supply chain for the U.S. and its allies.

This effort will not only reduce reliance on China but also position the U.S. as a leader in sustainable and ethical rare earth production. With the right investments and partnerships, the nation can build a resilient foundation for critical technologies and industries.

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