Highlights
- China’s export restrictions on rare earth minerals are forcing U.S. manufacturers and defense contractors to urgently seek alternative supply chains.
- MP Materials’ Mountain Pass mine becomes crucial in reducing dependence on Chinese rare earth processing, with limited current domestic processing capabilities.
- The U.S. is struggling to rapidly rebuild its rare earth mineral production infrastructure, with new mining projects still years away from full operation.
As reported (opens in a new tab) April 18 in Fortune magazine, America’s only operating rare earths mine, located in Mountain Pass, California, is suddenly finding itself at the center of an anxious rush from manufacturers and defense contractors. The reason? A rapidly escalating trade war between the U.S. and China, triggered by President Donald Trump’s recent tariffs, has pushed China to restrict exports of certain critical minerals, tightening its already firm grip on the global rare earths market. The consequences of these moves are rippling through industries that rely on these elements, from electric vehicle makers to defense contractors, and prompting new conversations about America’s mineral independence.
MP Materials, the company that owns and operates the Mountain Pass mine, has received a surge of calls from worried businesses since China’s announcement of export controls earlier this month. These restrictions, combined with steep 125% tariffs on U.S. imports imposed by Beijing, have made it impractical and politically unwise to continue sending ore to China for processing. MP Materials has announced that it will now process about half of its mined material on-site, while storing the rest until it can expand its processing capabilities domestically.
Rare earth elements, which include neodymium, praseodymium, terbium, and dysprosium, play vital roles in technologies like electric vehicles, wind turbines, fighter jets, submarines, smartphones, and television screens. While these minerals aren’t literally rare, mining them in profitable concentrations is difficult and environmentally challenging. The Mountain Pass mine primarily produces light rare earths, such as neodymium and praseodymium, which are essential for the powerful magnets used in electric vehicles and renewable energy infrastructure. However, it cannot currently process the heavier, heat-resistant elements, such as terbium and dysprosium, which China has specifically restricted—materials crucial for advanced defense applications and high-temperature industrial uses.
The price effects of these tensions are already showing. Terbium prices alone have jumped 24% since the end of March, reaching $933 per kilogram. Analysts, such as Neha Mukherjee from Benchmark Mineral Intelligence, believe that existing stockpiles will cushion immediate demand, but warn that shortages could develop later in the year if the situation persists.
China’s dominance in this space is overwhelming. Last year, it produced 270,000 metric tons of rare earth minerals—nearly six times the amount mined in the U.S. Beyond mining, China also controls the bulk of global processing capacity, giving it a powerful economic and strategic advantage. The recent restrictions now require Chinese exporters of certain heavy rare earths and magnets to obtain special licenses, a move widely seen as retaliatory and strategically calculated.
President Trump’s administration has made efforts to reduce this reliance, including pushing for the development of new U.S. mines and rare earth processing facilities. So far, results have been limited. Notably, attempts to negotiate rare earth deals with Greenland and Ukraine have failed. However, two companies—NioCorp and U.S. Critical Materials—are currently working to establish new mining operations in Nebraska and Montana. NioCorp aims to raise $1.1 billion to build a mine in southeastern Nebraska, hoping that the increased urgency from the White House will unlock the necessary funding and approvals. Meanwhile, U.S. Critical Materials plans to excavate several tons of ore in Montana this summer for testing and processing trials.
Despite these efforts, both projects remain years away from actual production. Even with supportive policy measures, environmental permitting, financing, and infrastructure challenges mean that fully operational mines won’t be ready for some time. MP Materials itself has received significant federal support, including $45 million in grants, and has invested nearly $1 billion since 2020 to modernize its operations, but it cannot process heavy rare earths domestically.
The situation has left major U.S. automakers and defense contractors cautious and tight-lipped. Companies like Boeing and Lockheed Martin, which are among those directly targeted by China’s export restrictions, have offered only vague statements about monitoring the situation and maintaining access to critical materials.
Defense applications represent a smaller, though strategically vital, portion of rare earth demand. Recognizing the threat, Trump signed an executive order calling for a national security review of America’s dependence on Chinese rare earths. Meanwhile, price increases have already hit the market for other critical minerals, such as antimony, which is used in lead-acid batteries and has more than doubled in price since China restricted its exports last year.
Battery makers and other manufacturers are bracing for further price spikes. Some, like Steve Christensen of the Responsible Battery Coalition, warn that supply shortages for key elements could begin to affect production lines within weeks if the situation continues to deteriorate. While carmakers will likely absorb higher costs initially, ongoing restrictions could eventually lead to price increases at the consumer level.
The broader picture reveals how the United States, which once met its rare earth needs entirely through domestic production until the late 1990s, relinquished its position when low-cost Chinese minerals dominated global markets. Now, as demand from cutting-edge technologies like electric vehicles, drones, and advanced weaponry surges, the nation finds itself scrambling to rebuild a supply chain it allowed to erode.
Efforts are underway—NioCorp recently signed a contract for exploratory drilling in Nebraska in hopes of securing an $800 million loan, and U.S. Critical Materials continues to develop its Sheep Creek project in Montana—but the timeline for these mines stretches far into the future. For now, America’s rare earth independence remains more an aspiration than a reality, leaving manufacturers, national security leaders, and policymakers anxiously watching the unfolding trade war’s next move.
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