Highlights
- U.S. produces rare earth oxides but exports nearly all, losing $274 billion in potential economic activity.
- Magnet sector dominates rare earth market value, yet U.S. primarily consumes low-value catalysts.
- Electrification trends create significant dysprosium shortfalls, threatening clean energy technologies.
A new peer-reviewed study published in the Journal of Rare Earths (opens in a new tab) delivers a searing assessment of the global and U.S. rare earth markets, revealing a stark disconnect between sector usage and economic value, and a growing strategic vulnerability for the United States.
The recent study was authored by Mpila Makiesse Nkiawete and Randy Lee Vander Wal with the
EMS Energy Institute and the John and Willie Leone Family Department of Energy and Mineral Engineering (opens in a new tab), The Pennsylvania State University.
The authors mapped global versus U.S. sector-level consumption of rare earth oxides (REOs) from 2008 to 2022, uncovering that while the magnet sector now dominates REO value (accounting for over two-thirds), the U.S. captures almost none of that value domestically due to its near-total dependence on imports and lack of integrated supply chains.
Key Findings:
What follows are key findings derived from this study:
| Key Finding | Summary |
|---|---|
| Magnets vs. Catalysts | Magnets make up just 29% of global REO consumption by weight but command over 90% of market value—while the U.S. overwhelmingly consumes rare earths for catalysts (74%), which yield minimal strategicvalue. |
| Dysprosium Crisis Incoming | The authors forecast that electrification—particularly EVs and wind turbines—will create severe shortfalls in dysprosium (Dy), essential for high-temperature NdFeB magnets. Even current levels of EV adoption could consume up to 15% of global Dy supply. Substitutes like Gd and Tb exist but are themselves scarce. |
| Supply Chain Hollowing | Despite producing 42,000 tons of REOs in 2021, the U.S. exported nearly all of it due to a lack of refining and magnet manufacturing. The study quantifies the loss: $274 billion in U.S. economic activity is tied to REE end-use industries, yet none of that value originates from domestic refining or downstream manufacturing. |
| Coal as a Strategic Resource | The study identifies over 10 million tons of potentially recoverable REEs from U.S. coal and coal byproducts, concentrated in heavy REEs. Yet regulatory and technical hurdles—and a political aversion to coal—keep these resources untapped. |
Limitations
The study relies on historical trends and modeling assumptions that may underestimate future technological substitution (e.g., Dy-free magnets). Additionally, some supply estimates—particularly for Chinese production—are clouded by opaque reporting and illegal mining.
Conclusion
The U.S. is hemorrhaging value across the rare earth supply chain, capturing none of the strategic or economic upside of its own mineral production. With the global acceleration of EV adoption and wind energy mandates, the U.S. is left dangerously exposed due to a lack of domestic magnet manufacturing, processing capacity, and heavy reliance on REE security. Without rapid industrial policy intervention and investment in domestic midstream and downstream infrastructure, including from alternative sources like coal, the U.S. will remain dependent on China while forfeiting a trillion-dollar clean-tech future.
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