Highlights
- North America’s dependence on China for rare earth elements poses significant national security risks across defense, technology, and energy sectors.
- A comprehensive strategy involving government-industry partnerships, regional cooperation, and technological innovation is crucial for developing a robust REE supply chain.
- Building domestic mining, processing, recycling, and manufacturing capabilities can mitigate geopolitical vulnerabilities and enhance strategic autonomy.
Rare earth elements (REEs) are vital to the defense, technology, and energy sectors, making a resilient North American supply chain critical for national security. REEs play a pivotal role in advanced military technologies, including precision-guided munitions, radar systems, fighter jets, satellites, and secure communications. With over 3,000 defense systems relying on REEs, uninterrupted access is essential for defense readiness. However, North America’s dependence on China, which controls 70-90% of the global REE supply chain, exposes significant geopolitical vulnerabilities. China’s export restrictions, as seen during its 2010 embargo against Japan, highlight the potential for severe disruptions that could cripple North American defense and technology industries during a conflict.
Beyond defense, REEs are integral to renewable energy systems, electric vehicle motors, a variety of advanced electronic products and critical infrastructure, underscoring their importance to energy independence and sustainability goals. A secure supply chain also supports North America’s industrial base in aerospace, automotive, and electronics, bolstering economic stability and global competitiveness. Without domestic supply chain resilience, North America risks falling behind technologically and economically while facing vulnerabilities during geopolitical conflicts.
Developing a robust REE supply chain fosters innovation in materials science, supports clean energy transitions, and ensures readiness for conflict scenarios. Dependence on foreign-controlled supplies threatens national security, but an integrated North American REE strategy can safeguard critical industries, enhance strategic autonomy, and mitigate risks in a volatile global environment.
Optimal Pathway to Supply Chain Resiliency
As we have discussed in various articles,, the pathway to North American supply chain resiliency will take time, historic investments,, and,, importantly,, alignment between taxpayers and the government regarding the urgency of public expenditures.
Given the magnitude, scale, and financial commitment involved, especially during a period of great U.S. debt, transparency becomes a primary prerequisite for success. Rare Earth Exchanges was launched to bring this transparency, with media, analytics consulting, and technology to support supply chain transparency, including pricing.
So, what’s the pathway to success?
- Government-Industry Partnerships
Collaboration between governments and private companies will be needed to de-risk investments and accelerate project timelines. For instance, public funding can complement private capital in developing mines and refining plants. Programs like those supporting semiconductor manufacturing can be adapted for REEs. The level of commitment may be more than many politicians may initially be ready to support. However, free market solutions are not sufficient if we want to achieve resiliency in the short to intermediate run. China’s rare earth complex remains too advanced for any other approach to succeed. - Streamlining Fed Gov Agency Oversight
Streamlining federal agency oversight is essential to strengthening the American and North American REE supply chain. Currently, dozens of agencies share oversight responsibilities, creating a fragmented and piecemeal regulatory environment. This lack of coordination leads to inefficiencies, delays, and confusion, hindering the timely development of domestic mining, processing, and recycling capabilities. In an industry already challenged by technical complexity and geopolitical pressures, a fragmented oversight framework adds unnecessary barriers, discouraging private investment and slowing progress toward supply chain resiliency.
A consolidated approach would improve efficiency, accountability, and clarity, ensuring that policies align with national security and economic goals. Centralized oversight could streamline permitting processes, facilitate interagency collaboration, and eliminate redundant regulations. By reducing administrative bottlenecks, this approach would accelerate the deployment of critical REE projects, enabling the U.S. and its North American partners to reduce dependence on foreign sources and build a robust, integrated supply chain. Simplified oversight would also provide clear guidance to stakeholders, fostering innovation, investment, and strategic autonomy in this vital sector. - Establishing Regional Cooperation
North America can strengthen supply chains by leveraging partnerships between the U.S., Canada, and Mexico. Canada’s rich mineral reserves and the U.S.’s manufacturing capabilities create a complementary advantage. Joint ventures and trade agreements can optimize resource use and cost-sharing. - Investing in Recycling and other Green-enabling Technologies
Expanding R&D into cost-effective recycling methods, such as bioleaching and advanced separation techniques, ensures REE recovery from used products. Incentivizing recycling through tax breaks or credits for companies that process REE-containing waste can accelerate adoption. - Developing Refining and Processing Capabilities
The U.S. Department of Defense and other government entities can invest directly in building domestic refining facilities. Public-private partnerships like those with MP Materials or Lynas Corporation can serve as models for scaling this effort. - Incentivizing End-Use Manufacturing
Policies that support domestic manufacturing of REE-based components, such as permanent magnets and EV batteries, ensure demand-side stability and close the supply chain loop within North America. - Creating a Strategic Reserve
A national stockpile of critical REEs should be established and managed similarly to the Strategic Petroleum Reserve. This would buffer against market shocks and supply chain disruptions. - Streamlining Environmental and Regulatory Approvals
A balanced approach is needed to address environmental concerns while expediting approvals for mining and processing projects. Clear, consistent policies with fast-tracked reviews for strategic projects are critical. - Encouraging Alternative Materials and Technologies
Investing in research on REE substitutes (e.g., ferrite magnets) and technologies that reduce reliance on rare earths in applications such as wind turbines or EV motors can enhance long-term resilience.
Final Thoughts
To build a resilient REE supply chain, North America must integrate mining, refining, recycling, and manufacturing capabilities while fostering regional cooperation and technological innovation. Government support through policy, funding, and strategic partnerships will be essential to mitigate risks and achieve supply chain independence. The optimal pathway combines investment, sustainability, and innovation to secure a stable and self-reliant REE ecosystem.
Daniel
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