Highlights

• A 2016 German study warned that weak governance—not geology—is the core rare earth problem, a diagnosis proven correct as the U.S. now attempts to legislate and finance its way out of Chinese midstream dominance.
• Trump's 2025 actions—Section 232 on processed minerals, permitting acceleration, and defense-backed capital for facilities like Mountain Pass—mark a shift from concern to state power, but three structural gaps remain unresolved.
• The U.S. still lacks a trained workforce for rare earth processing, a subsidized separation/refining complex at scale, and coordinated downstream demand guarantees—without these, America builds supply chain pieces, not a self-sustaining industrial system.

---

In 2016, German researchers G. Barakos at the time at Helmholtz Institute Freiberg for Resource Technologies, H. Mischo, and J. Gutzmer, TU Bergakademie Freiberg delivered a blunt thesis (opens in a new tab) at the SME Annual Meeting: the rare earth problem isn’t just geology or metallurgy—it’s governance. Weak, mismatched, or missing rules around radioactivity, chemical processing, tailings, and enforcement can turn REE supply into a cycle of environmental backlash, smuggling, and market manipulation—often strengthening China’s midstream leverage. That diagnosis has aged well. What’s changed since January 20, 2025 is that the U.S. is no longer just warning about the trap—it is increasingly attempting to legislate, finance, and permit its way out of it.

The Authors’ Core Finding Still Stings: “No Rules” and “Bad Rules” Both Break Supply Chains

Barakos and colleagues emphasized REE-specific hazards that generic mining rules often underweight: thorium/uranium-bearing ores, radon and dust exposure, acid leaching, and the long shadow of tailings and wastewater that can contaminate air, soils, and groundwater for decades if mismanaged. The takeaway remains painfully current: lax rules invite ecological damage and illegal production; overly slow or unpredictable rules invite paralysis—and projects die before they start.

China’s Cautionary Tale: Pollution plus Illicit Flows equals Distorted Markets

The paper, nine years ago, points to China’s legacy issues (Baotou and beyond) not as PR damage, but as structural risk: illegal mining and smuggling can undermine official controls and poison public trust globally. Their cited estimate—that 15–30% of production may have moved illicitly abroad in some years—captures why transparency and enforcement matter as much as ore grades.

Trump’s 2025 Pivot: From “Concern” to Tools of State Power

Since taking office, and to his credit, President Trump has pursued a more muscular, integrated approach (although not nearly enough in our humble opinion)—permitting + trade leverage + capital:

• Permitting acceleration: The March 20, 2025, Executive Order on Immediate Measures to Increase American Mineral Production directs federal agencies to fast-track priority mineral projects and aligns permitting and land-use planning toward mineral production.
• FAST-41 “dashboard” pressure: The Permitting Council began adding critical mineral projects to the Federal Permitting Dashboard to increase transparency and speed review, framing it as a first wave with more to follow.  Rare Earth Exchanges™ (REEx) interviewed Emily Domenech (opens in a new tab), the head of the Permitting Council.
• Section 232 escalation on processed minerals: The White House moved beyond raw ore anxiety to the real chokepoint—processed critical minerals and derivative products—invoking Section 232 actions tied to national security and the defense industrial base.
• Direct defense-aligned investment: The U.S. Department of Defense (and its Office of Strategic Capital) has taken unusually direct steps—including investments and a $150 million loan to expand heavy rare earth separation at Mountain Pass, and public-private partnership actions aimed at accelerating domestic magnet independence.

The Throughline: The Germans Were Right—But the U.S. Is Finally Acting on the Real Bottleneck

Barakos et al. argued mining isn’t the choke point—separation and processing are. Trump’s Section 232 posture and defense-linked financing reflect that same logic: control the midstream, or remain exposed.

REEx Take: The 2016 warning reads today like a blueprint for avoiding two failures at once: environmental blowback and strategic dependence. The Trump administration’s 2025 playbook—permitting acceleration, Section 232 actions, and defense-backed capital—signals a decisive shift from “studying the problem” to attempting a national industrial response. The remaining test is execution: building credible, scalable processing under enforceable standards—fast enough to matter, strict enough to last.

Why Trump Still Hasn’t Done Enough (Even If He’s Moved the Ball)

The Trump administration has undeniably shifted U.S. policy from hand-wringing to state power: the March 20, 2025 Executive Order to accelerate mineral production, FAST-41 project “visibility pressure,” Section 232 actions on processed critical minerals and derivative products, and defense-aligned capital flowing into key domestic players such as MP Materials.

But measured against the German authors’ 2016 diagnosis—the rare earth crisis is governance + enforcement + midstream capacity—the current approach remains too narrow, too slow, and too concentrated in a handful of “hero” projects and a limited set of feedstocks.

1) Section 232 is the right tool—but it’s still a pathway, not a delivered supply chain.

The April 2025 move correctly targets the real choke point—processed minerals and derivatives—but trade tools do not themselves build separation plants, qualify products, or secure non-Chinese feedstock at scale.

REEx view: China’s leverage is industrial capacity plus market behavior; a Section 232 posture is not capacity.

2) Permitting acceleration doesn’t equal permitting solved.

The March 20 EO explicitly defines “mineral production” to include mining, processing, refining, and smelting—an important acknowledgement that concentrates are not independent. But FAST-41 dashboarding and federal coordination still collide with the real blockers: NEPA litigation risk, state permitting friction, community opposition (especially around radioactivity and tailings), and water/utility constraints.

3) The MP Materials bet is big—but the “heavies” problem doesn’t disappear.

Defense-linked financing and support for Mountain Pass is a meaningful intervention, yet the U.S. still faces the structural reality that much of the highest-leverage magnet material challenge sits in heavy rare earths—and scaling Dy/Tb supply requires dependable feedstock and midstream redundancy, not just one expanded site.

REEx view: You can finance a refinery, but you cannot finance your way around geology without sufficient allied feedstock, plus the scalable process and chemistry prerequisite to surpass Chinese rare earth dominance.

4) “Kilograms to lots of tons” remains the hard gap.

Pilot achievements matter—but the industrial base needs reliable tonnage, year after year, with consistent specifications and qualification.

5) International collaboration is improving—but Trump also created avoidable friction.

REEx has consistently emphasized that the U.S. cannot rebuild a rare earth supply chain on a domestic nationalist-leaning effort alone; it must be allied, redundant, and synchronized from ore to magnets. On that front, Trump’s recent moves are directionally helpful: the U.S.-Australia Critical Minerals Framework describes a USD $8.5B pipeline of priority projects and mutual commitments to invest—exactly the kind of allied architecture REEx has called for.

Likewise, Pax Silica (opens in a new tab) signals a broader alliance logic—securing technology supply chains (including upstream inputs)—even if it is not a rare-earth-specific pact.  Yet early in 2025, a nationalist move, Art of the Deal-driven theatrics, or not, tariff escalation strained Canada, a critical minerals and materials partner, at exactly the wrong moment for North American resilience.

And while Washington can achieve major objectives in Greenland through cooperation with Denmark and Greenland, analysts argue rhetoric early on that clearly felt coercive was in fact counterproductive—especially when the goal is long-term allied supply integration.

REEx view: A supply chain alliance cannot be built while alienating the nearest, most resource-rich partners.

6) The full-stack magnet ecosystem is still incomplete.

Even with marquee projects, the U.S. still lacks China’s dense web: oxides → metals → alloys/master alloys → powders → sintered magnets → qualified components with repeatable QA and workforce depth. Funding isolated nodes piecemeal is not the same as building an ecosystem, one that is as vast as what China represents.

7) The biggest missing piece remains credible, fast, enforceable “clean” standards that defeat NIMBY and beat China on legitimacy.

Barakos’ point wasn’t “dig more.” It was governance: without rules people trust—on radioactivity, tailings, water, chemicals—you either get Baotou-style damage or Western-style shutdowns. The U.S. still lacks a widely trusted, nationally legible framework that is both stringent and investable.

8) Workforce Development: The Quiet Bottleneck No Executive Order Has Solved

One of the least discussed—but most binding—constraints on rebuilding a U.S. rare earth supply chain is human capital. Separation plants, metallization lines, alloying, powder production, and magnet manufacturing are not plug-and-play industries. They require chemists, metallurgists, radiological safety specialists, process engineers, quality-control technicians, and operators trained in tightly controlled environments.

China’s advantage is not just equipment or scale—it is decades of accumulated workforce expertise, embedded across hundreds of facilities and reinforced through state-backed universities, technical institutes, and industrial apprenticeships. By contrast, the U.S. workforce pipeline for rare earth processing and magnet manufacturing remains thin, fragmented, and under-coordinated.

To date, the Trump administration’s 2025 actions—permitting acceleration, Section 232 actions, and defense-aligned capital—do not include a coherent national workforce strategy for critical minerals. There is no dedicated rare earths training corps, no federally backed credentialing framework, and no scaled apprenticeship or re-skilling program tied directly to separation, metallurgy, and magnet production.

REEx view: You can fast-track permits and finance plants—but without trained people to design, operate, and troubleshoot them, capacity will bottleneck at commissioning. Workforce development must be treated as strategic infrastructure, not an afterthought left to individual companies.

9) Downstream Demand Support: Supply Will Not Scale Without Guaranteed Pull-Through

Another missing pillar is integrated downstream demand support—the “pull” that makes upstream and midstream investment bankable. Some of such demand was eradicated via the Big Beautiful Bill (incentives for EVs, green energy, etc.).

China did not build its rare earth ecosystem by hoping markets would materialize. It did so by orchestrating demand both internally and, importantly, abroad: state-backed magnet makers, guaranteed offtake for EVs, wind turbines, electronics, and defense systems, and long-term procurement certainty that justified capacity buildout even during price volatility.

In the U.S., by contrast, rare earth and magnet projects are still forced to rely on fragmented, short-term, or speculative demand signals. While the Department of Defense (War) has provided important anchor demand and financing—especially for magnet-related capacity (and a price floor contractually for at least one company)—this remains narrow and episodic, not economy-wide.

What is missing is a systematic demand-augmentation framework:

• Long-term federal offtake agreements beyond defense alone and across companies
• Clear incentives or mandates for domestic magnet content in EVs, wind, grid infrastructure, robotics/drones, and other sectors.
• Coordinated procurement across DoD, DOE, DOT, and DHS to create a predictable volume (that Critical Mineral Czar)
• Risk-sharing mechanisms that stabilize pricing during early-scale years

Without this, private capital remains cautious, projects scale slowly, and the U.S. risks building technically impressive facilities that operate below capacity or fail to attract follow-on investment. On this topic, when POTUS declares, “we will have more magnets than we know what to do with by next year,” this is the exact opposite of what should be stated. Confusion in boardrooms, on Wall Street, and in partner governments ensues.

REEx view: Supply chains scale when demand is orchestrated. Comprehensive and integrated financing helps; offtake certainty closes deals. Until downstream demand is integrated and amplified, rare earth independence will remain partial and fragile.

REEx Bottom Line

President Donald Trump has moved U.S. rare earth policy decisively beyond rhetoric—using permitting authority, trade law, defense capital, and allied frameworks, not to mention 232 action and more. For that, he should get credit regardless of political leanings. But at least three structural gaps remain unresolved: the likely need for subsidized separation and refining complex; a trained workforce capable of operating a complex midstream–downstream ecosystem, and a robust, coordinated demand engine that guarantees long-term pull-through, ensuring patient capital flows into the sector.

Until the U.S. pairs separation and refining, people and demand with permits and capital, it will continue to build pieces of a supply chain—rather than a self-sustaining industrial system capable of rivaling China’s.

Source: Barakos, G., Mischo, H., & Gutzmer, J. (2016). Legislation, Challenges and Policy Strategies: In Search for a Regulatory Framework for Sustainable Development in the Rare Earths Mining Industry. SME Preprint 16-048.

©!-- /wp:paragraph -->