Highlights
- China currently dominates rare earth elements (REEs) mining and processing, creating a strategic vulnerability for the United States.
- U.S. companies like MP Materials and USA Rare Earth are developing domestic mining, processing, and magnet manufacturing capabilities to reduce foreign dependence.
- A multi-pronged approach involving private sector innovation, strategic foreign partnerships, recycling technologies, and targeted government support is essential for building a resilient REE ecosystem.
In an insightful April 23 article (opens in a new tab), Forbes contributor Jim Vinoski posed a timely and pressing question: Will America finally set a sane path forward for rare earth elements (REEs)? As geopolitical tensions rise and China tightens its grip on these vital resources, the race to build a reliable, resilient, and independent rare earth supply chain in the U.S. is no longer optional—it’s a national imperative.
The Problem: China’s Stranglehold
Rare earth elements are the silent drivers behind much of modern technology—from smartphones and electric vehicles to military systems and wind turbines. At the heart of many of these applications are high-performance magnets made from REEs, particularly neodymium, praseodymium, dysprosium, and terbium. For years, China has controlled not only the mining but also the entire supply chain—including refining and manufacturing of finished products.
In recent months, China imposed new export duties and controls on REEs, a move that surprised few who remember a similar tactic against Japan in 2010. For those paying attention, this was a shot across the bow—a reminder that the West’s dependence on China is a major strategic vulnerability.
Ashley Zumwalt-Forbes, principal at Smoketree Resources and former U.S. Department of Energy official, captured the situation well: “In the U.S. and broadly in the West, we’re having to stand up the entire supply chain… You really have to step back and think, ‘How can we scale something quickly as an interim solution?’”
Building a Domestic Supply Chain: Early but Promising Steps
For now, MP Materials remains the centerpiece of America’s domestic REE efforts. Rare Earth Exchanges has referred to the group as an “American treasure trove.”
With a market cap exceeding $3.5 billion, the company operates the only integrated REE mining and processing facility in the U.S., located in Mountain Pass, California. In 2024, MP Materials produced more than 45,000 tons of rare earth materials and is targeting 60,000 tons annually under its “Upstream 60k” expansion initiative.
But mining alone isn’t enough.
In Fort Worth, Texas, MP Materials has established the first fully integrated rare earth magnet manufacturing facility in U.S. history. By the end of 2025, the company expects to produce commercial-scale finished magnets for General Motors—entirely from materials mined and processed on American soil.
Yet even this milestone covers only a fraction of U.S. needs. According to MP’s Matt Sloustcher, the Fort Worth facility will consume only a single-digit percentage of Mountain Pass’ output, meaning more investment and scale are critical.
Rising Contenders: USA Rare Earth and the Oklahoma Magnet Hub
Founded in 2018, USA Rare Earth is another major player with big ambitions. The company recently went public and is developing the Round Top REE deposit in west Texas—rich in heavy REEs like dysprosium and terbium, as well as other critical minerals like gallium and lithium.
In Stillwater, Oklahoma, USA Rare Earth is constructing a 310,000-square-foot magnet manufacturing facility. According to CEO Joshua Ballard, when fully operational, the plant will produce 5,000 tons of sintered neodymium magnets annually, translating to $700–$800 million in revenue.
The construction is phased:
- Phase 1: An R&D innovation lab and pilot magnet line, nearing completion.
- Phase 2: Full-scale magnet line to be commissioned by Q1 2026.
- Phase 3: Scale-up to full 5,000-ton annual capacity.
Strategic Foreign Partnerships: Collaboration Is Key
Domestic efforts, however robust, will not be sufficient in the short term. That’s why partnerships with friendly foreign producers are emerging as an essential part of the strategy.
USA Rare Earth, for instance, has secured offtake agreements with KSM, a South Korean metals company backed by Australia Strategic Minerals. KSM sources REEs from Southeast Asia and is positioned to scale alongside U.S. needs.
“There are options,” Zumwalt-Forbes noted, “but we’ve got to ensure that we’re being very coordinated from a central point within the U.S. government.”
The Rise of REE Recycling
Recycling is another crucial piece of the puzzle. Pini Althaus, founder of USA Rare Earth and now CEO of Reemag LLC, has helped develop a carbon-free magnet recycling process in partnership with the Weizmann Institute of Science in Israel. The technology allows for the sustainable recovery of rare earths from end-of-life products—everything from hard drives to smartphones.
The process has already scaled nearly 100-fold in preparation for commercialization, potentially offering a game-changing source of supply independent of mining.
Importantly, while showing promise, recycling still represents only 1% to 3% of all sourced material. There is a long way to go.
The Role of Government: Support, Not Supremacy
Despite growing momentum, all stakeholders agree: a purely government-led approach won’t cut it.
“If the government tries to go out and solve this problem alone, it will fail 10 times out of 10,” said Zumwalt-Forbes. Instead, the private sector must lead with viable solutions, which the government can then support through funding, policy incentives, or coordination across agencies such as Defense, Energy, and Commerce.
Sloustcher added that a “level playing field” is needed to compete with China’s state-backed producers. That means Washington must step in to ensure fair competition and remove unnecessary barriers for domestic players.
A big question is whether industrial policy is necessary for the USA to catch up to China in the short to intermediate term.
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