Highlights

• Governments across the U.S., Canada, Australia, Japan, and Europe invested over $3 billion in rare earth supply chains from January 2025 through January 2026, with the U.S. leading at $1.4 billion—marking an unprecedented shift toward reshoring and diversifying away from Chinese dominance.
• Despite record public funding, allied nations still lack a unified industrial strategy, with critical gaps in:
  
  
  
  • Permitting reform
  
  
  • Demand signaling
  
  
  • Workforce development
  
  
  • Integrated Five Eyes cooperation
  
  
  
  

  needed to compete with China's control of 85% of global refining capacity.

  
  
• China is aggressively consolidating its rare earth dominance through tightened export controls and industrial policy.
• Experts estimate the West needs $10-20 billion and systemic reform to build a resilient supply chain within five years, making the current window to act critically narrow.

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Over the past year, governments around the world have dramatically increased their investments in rare earth supply chains in a bid to reduce reliance on China and secure critical materials essential for electric vehicles, wind turbines, and defense technologies.

From January 2025 through January 2026, the United States, Canada, Australia, Japan, and the European Union announced and allocated hundreds of millions of dollars toward mining, refining, and magnet production projects. This surge in public funding marks a pivotal shift toward reshoring and diversifying the rare earth ecosystem—once dominated by a single supplier—and signals a new era of industrial policy focused on strategic minerals.

hese figures reflect only government allocations and do not include substantial private capital being deployed, particularly in the United States, Europe, and Japan. Notably, Europe’s public investment lags far behind the scale and urgency demonstrated by the U.S., underscoring disparities in policy commitment across the allied industrial economies.

United States

Summary: The U.S. significantly expanded its rare earth element (REE) investment strategy through the Department of Defense and Department of Energy. Investments spanned upstream mining to downstream magnet production, with the Pentagon leading large-scale equity and loan programs.

Total Outlay: >$1.3 billion USD in direct awards, plus >$1 billion in pledged project financing

Canada

Summary: Canada emphasized long-term strategic capital through a newly established sovereign fund while directly committing to select R&D and international partnerships. Direct project spending included investments in REE processing and recycling, with several major financing commitments under review.

Total Outlay: ≈US$51.6 million (C$36.3M + US$25M), plus billions in declared critical minerals funding capacity

Australia

Summary: Australia aggressively expanded public financing of REE projects, especially around Arafura's Nolans project. Government support included equity stakes, loans, and grants. Australia has positioned itself as a major non-Chinese source of rare earths.

Total Outlay: ≈A$400 million in direct rare earth funding (≈US$260 million), with A$1B+ in new capacity announced in Jan 2026

Japan

Summary: Japan reinforced its whole-of-supply-chain strategy by increasing JOGMEC's funding and co-investing internationally. Major highlights include a joint heavy REE plant in France and a ¥39 billion reserve fund to support upstream projects overseas.

Total Outlay: ¥39 billion + €110 million (≈US$380–400 million combined)

Europe (EU & Key Member States)

Summary: Europe ramped up support for REE through the Critical Raw Materials Act and major national projects. While full funding disbursement is unfolding, key early investments focus on recycling and downstream capacity (e.g., magnets). Public funding remains fragmented and lower in volume relative to U.S. and Australian efforts.

Total Outlay: ~€3 billion earmarked; ~€150–200 million in confirmed REE project disbursements in 2025

Investment Table Sampling for last year.

Note, we include a sampling and may not capture all allocations.

USA

Country	Date	Amount (Local)	Amount (USD)	Type	Recipient / Project	Description / Stage
USA	July 2025	$400m	$400m	Equity	MP Materials	Midstream (Separation), Downstream (Magnets)
USA	Aug 2025	$150m	$150m	Loan	MP Materials	Heavy REE separation (midstream)
USA	Sept 2025	$5m	$5m	Loan (convertible) U.S. DFC	Aclara Resources	Heavy REE Upstream
USA	Oct 2025	Up to $160m	Up to $160m	US EXIM loan*	Pensana	Upstream
USA	Nov 2025	$620m	$620m	Loan	Vulcan Elements	Downstream (Magnet production)
USA	Nov 2025	$80m	$80m	Loan	ReElement Technologies	Midstream / Downstream (Magnets/Recycling)
USA	Nov 2025	$50m	$50m	Equity	DOC Stake	Strategic equity in U.S. magnet supply chain
USA	Dec 2025	$1.6m	$1.6m	Grant	Pheonix Tailings	Midstream refining/recycling
USA			$1.466b

*not disbursed yet

** note pre-2025 Vacuumschmelze (VAC) has received significant U.S. public funding and financial support to establish a rare earth magnet manufacturing facility in Sumter County, South Carolina, through its U.S. subsidiary, e-VAC Magnetics.

***Niron Magnetics has received gov funding since at least 2022 and in 2025 a $52.2 million tax credit for non-REE magnets.

****Noveon Magnetics has received significant U.S. government funding, including over $11 million in federal contracts and nearly $30 million in federal grants as of early 2026, with specific major awards including a $28.8 million DoD agreement (around 2022) and a separate $35 million DoD award for developing domestic rare earth magnet sources, boosting their total federal support towards potentially over $70 million alongside private funding

Canada

Country	Date	Amount (Local)	Amount (USD)	Type	Recipient / Project	Description / Stage
Canada	Oct 2025	C$36.3m	~$26.6m	Grant	Ucore Rare Metals	Midstream (REE separation)
Canada	Jan 2026	C$34M	~$25M	Equity	Cyclic Materials	Downstream (Recycling)
Canada			$51.6m

*  Saskatchewan Research Council (SRC) receives significant public funds, primarily from the Government of Saskatchewan, as it is a Treasury Board Crown Corporation. It also receives funding from the Government of Canada.

Australia

Country	Date	Amount (Local)	Amount (USD)	Type	Recipient / Project	Description / Stage
Australia	Jan 2025	A$200M	~$130M	Equity	Arafura (Nolans)	Upstream & midstream
Australia	Oct 2025	US$100m	$100m	Equity	Arafura (Nolans)	Midstream / bilateral agreement
Australia			$230m

Japan

Country	Date	Amount (Local)	Amount (USD)	Type	Recipient / Project	Description / Stage
Japan	March 2025	€110M*	~$120M	Equity + Loan	Caremag (France)	Heavy REE separation (midstream)
Japan	Jan 2026	¥39B	~$260M	Reserve Fund	JOGMEC	Global Upstream
Japan			$380–400M

* Carester's subsidiary, Caremag, secured up to €110 million in financing (equity & loans) from Japanese entities, the Japan Organization for Metals and Energy Security (JOGMEC) and Iwatani Corporation, as part of a larger €216 million funding package for their rare earth recycling plant in France. This Japanese investment, along with significant French government support, funds the construction of Europe's major rare earth refining facility. 

Europe

Country	Date	Amount (Local)	Amount (USD)	Type	Recipient / Project	Description / Stage
Europe (Estonia)	Sept 2025	€18.7M	~$20M	Grant	Neo	Downstream/Magnet plant
Europe	2025–2026	~€130M	~$140M	Mixed	Various (CRMA)	Upstream/midstream/downstream
Europe			$150–160M+

All USD values are approximate and based on the average 2025 FX rates.

Big Troubles Remain

While the past year has seen an unprecedented uptick in rare earth investment across the United States, Europe, Japan, and their partners, with America leading the way thanks to the Trump administration, the overall picture remains troubling.

These funding commitments, while politically meaningful, still fall short of a coherent industrial policy commensurate with the scale and complexity of the global rare earth challenge. In the United States, cumulative federal investments across mining, processing, and magnet manufacturing now exceed $1.4 billion, but remain fragmented among discrete grants, loans, and conditional programs. Coordination among the Department of Defense, Department of Energy, and Department of Commerce has improved—and recent senior hires in the administration signal progress in the right direction—but a unified national strategy has yet to emerge.

Missing are the essential pillars: accelerated permitting reform, durable demand signaling, broad-based pricing floors, guaranteed offtake, and sustained workforce development, which the administration really does not address as of yet (note this involves major recruitment drives for metallurgists, for example, from Turkey to Iran to central Europe). As REEx has consistently argued, competing with China also requires deep integration across the Five Eyes (opens in a new tab), Europe, Japan, and South Korea—an effort that must be far more deliberate, synchronized, and multilateral than current approaches allow.

In Europe, the gap is even wider. While the EU has announced multibillion-euro critical minerals initiatives, the actual disbursed funding to rare earth projects has been minimal in 2025, estimated at under $200 million. Europe’s industrial policy framework remains fragmented across member states, with few integrated projects targeting the full mine-to-magnet chain. As a result, EU industry continues to rely on imports of both separated oxides and finished magnets, often from China or Chinese-linked suppliers, thereby undermining its sovereignty ambitions. Europe is frankly being left out at this pace, except for midstream brilliance.  The continent has heavy rare-earth deposits in Sweden, for example, but not the political wherewithal to drive development.  But from an industrial standpoint, Europe has truly lost its way.

Japan, although strategically experienced and active in global partnerships, still faces severe exposure to Chinese export policy—especially for heavy rare earths like dysprosium and terbium. JOGMEC’s recent ¥39 billion reserve fund is promising, and the France-based Caremag refinery backed by Japanese capital is a key milestone. But these projects will take years to mature, and Japan has yet to secure diversified heavy REE sources at a meaningful scale.

The underlying issue is one of time and dependency. Despite over $3 billion in announced public funding across allied economies in 2025, actual supply chain security—particularly for heavy rare earths—remains years away. China continues to control over 85% of global refining capacity and dominates heavy REE markets through both production and export controls.

With no fully integrated, scaled alternative outside China yet online, the U.S., EU, and Japan remain highly exposed. Barring urgent, integrated policy interventions—such as demand aggregation, processing subsidies, and strategic stockpiles, Five Eyes, Japanese and European pact, and aggressive workforce moves—REEx analysts widely expect the next 3–7 years to carry acute vulnerability for defense and clean energy sectors dependent on rare earth components.

China is Not Sitting Still

No otherplatform tracks China’s rare earth activity with the depth, granularity, and consistency of REEx. While the West races to rebuild basic REE and critical mineral supply chains, China is not standing still. Behind the scenes, Beijing is rapidly recalibrating its next five-year planning cycles to tighten its grip on rare earth and critical mineral dominance. This includes intensified industrial policy across provincial and national levels—integrating rare earths into broader tech, commercial vertical, and defense strategies, accelerating consolidation among state-backed firms, and ramping up export control enforcement. China's clear objective: fully exploit its existing market power while shaping global pricing, standards, and downstream value chains to its long-term advantage.  The battle from the Chinese view moves to the downstream and into the innovation of tomorrow. Is the West ready for this?

Food for Thought

For America and its allies, the question is no longer whether to act—but whether they can act fast enough. Without a unified industrial strategy, committed funding at scale, and enduring political will, the West risks falling irreversibly behind in the most strategically vital resource contest of the 21st century.

About $1.4 billion in direct U.S. government investment is a start, but it falls far short of what’s needed to build a resilient, fully integrated rare earth supply chain within five years. Multiple industry estimates and internal government assessments suggest $10 to $20 billion (or even considerably more) in public and private capital would be required to:

• Establish commercial-scale mining, refining, and separation facilities (especially for heavy REEs)
• Build at least 3–5 domestic magnet plants with secure offtake firing on all cylinders
• Fund redundant processing capacity across allied nations (it will need to be publicly subsidized)
• Create a strategic reserve of refined REEs and magnets
• Deploy sustained demand guarantees, permitting reforms, and price-floor mechanisms
• Develop and sustain talent development and capture across the value chain
• Reassess current economic and geopolitical strategies—including tariff policies—and prioritize deeper integration among Five Eyes nations, the European Union, Japan, South Korea and Australia to build a unified, resilient critical minerals and rare earth element supply chain alliance

The U.S. and its partners have identified the vulnerability—but resilience will require sustained, multi-agency and multi-national coordination, private-sector alignment, and a long-term industrial policy with scale far beyond today’s fragmented investments and our own limited paradigm constraints. Without that, even well-intentioned projects will struggle to reach critical mass against China’s deeply entrenched dominance. The window to course-correct is narrow, and without bold, systemic action, the West risks ceding permanent control of one of the most strategically decisive sectors of the 21st century.