Securing Rare Earths: A Unified Allied Strategy to Break China’s Grip

Highlights

• China controls 80-90% of global rare earth refining and magnet production, creating a strategic vulnerability for the US and its allies.
• Allied nations are developing comprehensive upstream, midstream, and downstream strategies to reduce dependence on Chinese rare earth supplies.
• A unified, coordinated approach involving investment, policy reform, and industrial collaboration is essential to achieve rare earth independence.

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China’s near-monopoly over rare earth elements—controlling an estimated 80–90% of global refining and magnet production—has exposed a critical weakness in the industrial backbone of the United States and its democratic allies. These materials power EVs, wind turbines, defense systems, and satellites. While the U.S. has taken steps through FAST-41, Section 232 actions, and executive orders, allies like Japan, Australia, and Canada are pursuing bolder industrial strategies. This Rare Earth Exchanges (REEx) op-ed examines their upstream, midstream, and downstream models and calls for a unified U.S.-led response, industrial policy driven– to reduce Chinese leverage.

Upstream–Digging for Independence

Allied democracies are accelerating mining efforts and blocking Chinese acquisitions. Canada forced divestments from three firms, and Australia has pledged A$840 million for Arafura’s Nolans project. Canada’s C$3.8 billion Critical Minerals Strategy is advancing domestic extraction and infrastructure. Japan and South Korea, lacking domestic reserves, are co-investing abroad—acting as “buyers of first resort” to anchor supply.

Permitting is also being streamlined. FAST-41 in the U.S. and the EU’s Critical Raw Materials Act are designed to cut red tape while maintaining environmental standards. These steps prioritize sovereignty, supply diversity, and resilience.

Midstream–Breaking the Refining Bottleneck

Processing remains the strategic choke point. Lynas is expanding with U.S.-Australian support; MP Materials is scaling up refining at Mountain Pass, but the U.S. still lacks full-scale commercial heavy rare earth separation capacity. Canada’s Saskatchewan Research Council is building North America’s first such facility.

Japan’s JOGMEC funds up to 75% of global project costs. Australia and South Korea are using strategic stockpiles and offtake agreements to stabilize markets. The U.S. is now stockpiling rare earth oxides and securing multi-year magnet supply contracts via the Pentagon.

Trade tools are sharpening. Trump’s renewed Section 232 probe could impose tariffs on Chinese magnets. Pentagon procurement rules now ban Chinese content. The EU’s CRM Act limits 65% of any critical input from a single supplier, implicitly targeting China’s dominance.

Downstream–Manufacturing and Innovation

Allies are rebuilding magnet production and investing in recycling. The U.S. DoD has funded TDA Magnetics and Urban Mining, and awarded MP Materials$35 million to build a domestic magnet factory. Japan’s R&D has driven innovations to reduce dysprosium use. The EU and Korea aim to recycle 20–25% of their rare earth demand by 2030.

EV tax credits in the U.S. now require allied mineral content, and the U.S. and EU are working to recognize each other’s materials as “domestic mutually.” This prevents supply nationalism and fosters transatlantic trade in strategic inputs.

Workforce and innovation pipelines are expanding. Canada, the U.K., and the U.S. are funding training and research programs. The Pentagon is using grant tools to transfer industrial expertise to new entrants. Together, these initiatives support reindustrialization and long-term resilience.

Gaps and Opportunities

The U.S. still lags in unified leadership, financing scale, and coordination. Permitting remains slow, and there is still no large-scale U.S. commercial separation facility online. DoD and DOE funding—~$200 million—is dwarfed by Chinese subsidies and Japan’s more aggressive investments.

There is also no single, cabinet-level authority overseeing the entire U.S. critical minerals strategy. REEx recommends the appointment of a Critical Minerals Czar. The U.S. also lacks a JOGMEC-equivalent to provide long-term equity financing and absorb project risk.

Policy coherence is a problem. Tariffs may raise prices, but don’t guarantee security. Meanwhile, alliance coordination is underdeveloped. The Minerals Security Partnership (MSP) exists, but there is no binding Five Eyes Critical Minerals Alliance. A mine in Australia should be treated as “domestic” under U.S. trade rules, but current law falls short.

A United Front

China’s decades-long bet—that democracies would remain fragmented and reactive—is faltering under our vision. An industrial realignment is under way. Japan is providing patient capital. Australia is securing offtake agreements. Canada is investing in upstream supply. The EU is reworking regulatory frameworks. The U.S. must now lead—not by going it alone, but by anchoring a resilient, transparent, and fully integrated allied supply chain.  This does mean a pivot from the existing Liberation Day paradigm.

The time has come to move from reaction to coordinated strategy. The race for rare earth independence is on—and unity is our strategic edge.