Highlights

• Despite federal investments exceeding $1 billion, including a landmark $550M Pentagon deal with MP Materials, the U.S. still lacks a coherent industrial policy to break China's 90%+ control over rare earth refining and magnet manufacturing within five years.
• Six critical gaps block independence:
  • Allied supply coordination
  • Centralized leadership
  • Market price stabilization
  • Downstream demand creation
  • Workforce development
  • Serious equity capital
• All these gaps require NATO-style mineral partnerships and unified command.
• The timeline is brutal:
  • Mines take a decade
  • Processing plants take five years
• Meanwhile, China tightens export controls.
• Without immediate, disciplined action, U.S. defense systems and clean energy infrastructure remain dangerously dependent on Chinese supply chains.

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America talks about rare earth independence the way it once talked about energy independence: loudly, optimistically, and without fully grappling with the plumbing. The stakes, however, are far higher. Rare earths sit inside fighter jets, precision-guided munitions, EV motors, wind turbines, satellites, and data centers. Lose access, and entire industrial and defense verticals seize up.

The uncomfortable truth: the U.S. has spent billions, yet still lacks an industrial policy capable of breaking China’s grip within five years.

What Washington Has Done—And Why It’s Not Enough

Over the past few years, the federal government has woken up. The most serious move came in 2025 under President Trump 2.0, when the Department of Defense cut a landmark deal with MP Materials, the owner of America’s only operating rare earth mine. The Pentagon took a $400 million equity stake, added a $150 million loan, set a decade-long price floor for neodymium-praseodymium (NdPr), and guaranteed purchases from MP’s future U.S. magnet plant. This was not symbolic. It was industrial policy.

Other actions followed. The Office of Strategic Capital (opens in a new tab) (OSC) inside the Department of Defense (War)committed roughly $700 million in loans to magnet manufacturers like Vulcan Elements and ReElement Technologies. The Department of Energy funded pilot processing projects. In the past, the Inflation Reduction Act added tax credits for U.S.-made magnets. Allied projects sprang up across Australia, Japan, Southeast Asia, and parts of Europe.

These steps matter. But they do not add up to independence.

They are fragmented, agency-driven, and reactive. There is no single authority setting output targets. No national plan for refining capacity. No system-wide price stabilization beyond one company. No coordinated workforce strategy. And critically, every U.S. rare earth processing effort still depends on Chinese reagents, intermediates, or know-how.

Why China Still Controls the Board

China doesn’t just mine rare earths—it controls the chokepoints. Roughly 90%+ of global refining and nearly all magnet manufacturing sit inside China or Chinese-linked supply chains. Beijing built this position deliberately over decades through state coordination, price manipulation, technology accumulation, and industrial clustering.

When China floods markets, prices collapse, and competitors die. When it tightens exports, entire industries panic,and that leverage remains intact today.

The Six Gaps That Matter Most

Rare Earth Exchanges™ has argued consistently that the U.S. lacks an industrial soul in its critical mineral strategy. Closing the gap requires six moves—none optional.

1. Allied Supply Lock-In

The U.S. cannot do this alone. It needs binding supply and offtake alliances with trusted partners—Japan, Australia, the EU, Canada—not loose MOUs. Think NATO-style coordination for minerals, not trade press releases. Yes some collaborative announcements are important. But trying to annex the 51st state to the north or taking over Greenland from a longstanding partner (Denmark) does not establish the collaborative externalized mission necessary.

2. Central Command

There is no quarterback. A Critical Minerals Czar with authority across Defense, Energy, Interior, and Commerce is essential. Without unified leadership, money leaks and timelines slip.

3. Market Stabilization

China wins by crashing prices. The U.S. (in conjunction with allies) needs a Strategic Rare Earth Reserve, industry-wide price floors, and guaranteed offtake contracts—not just for MP Materials, but for every viable domestic processor and magnet maker.

4. Downstream Demand Creation

You don’t build supply chains without customers. Defense procurement, clean energy mandates, and federal buying power must explicitly favor U.S.-made magnets and components, even at higher early-stage costs. Changes are unfolding (think drone move by Trump administration) and more planning must congeal around robust, enduring demand.

5. Workforce and Know-How

China dominates not just factories but expertise. The U.S. has too few engineers trained in separation chemistry, metallurgy, and magnet science. Without massive investment in education, training, and applied R&D, plants will sit idle.

6. Serious Capital

Loans alone won’t cut it. The U.S. needs a national critical minerals investment vehicle—equity, guarantees, insurance—designed to de-risk mine-to-magnet projects the private market won’t finance on its own.

Five Years: Freedom or Fiction

Here’s the clock problem: heavy rare earth mines take up to a decade to develop. Separation plants take five years. Magnet factories take years more. Meanwhile, China is tightening export controls, not loosening them.

Absent a coherent industrial policy, the likely outcome is grim but predictable: America remains dependent on Chinese processing and magnets, even as geopolitical risk rises. Defense systems, clean energy, and advanced manufacturing stay exposed.

The U.S. has made a start. But starts don’t win industrial races. Structure does.

Rare earth independence won’t come from speeches or scattered deals. It will come from discipline, coordination, and the political will to act like supply chains—not slogans—win wars.

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