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How the US gave up its edge to China in processing vital rare earth minerals – and what that’s costing
How the US gave up its edge to China in processing vital rare earth minerals – and what that’s costing. Originally published by The Conversation.
By Charles Edward Gehrke, Sloan Fellow, Massachusetts Institute of Technology (MIT) · 2026-09-23T13:05:39.539Z
MP Materials mines and processes rare earth minerals in California, including neodymium praseodymium oxide used in high performance magnets. David McNew/Getty Images Look around you, and you’ll see rare earth elements at work. A phone vibrates because a magnet moves a weight https://www.cnbc.com/2018/10/18/neodymium china controls rare earth used in phones electric cars.html . Its screen was polished with cerium powder. Its connection to the rest of the world crosses oceans on cables amplified with erbium https://hackaday.com/2023/08/08/under the sea optical repeaters for submarine cables/ . If you drove today, a rare earth magnet helped you steer, and a cerium compound scrubbed the exhaust https://profession.americangeosciences.org/collections/geoscience faq/how do we use rare earth elements/ . All of these devices function because of 17 metals collectively known as rare earth elements https://pubs.usgs.gov/fs/2014/3078/pdf/fs2014 3078.pdf . The scientists who gave the group that name in 1794 created a misnomer. Cerium alone is about as common in the Earth’s crust as copper. However, separating rare earth minerals from one another and from raw ore is intensely difficult. As a result, countries that control the processing of rare earth minerals have a lot of political leverage. China processes most of the rare earth minerals used around the world, and it isn’t just consumer electronics that depend on Chinese exports. The U.S. military’s F 35 fighter jets and Virginia class submarines https://www.csis.org/analysis/consequences chinas new rare earths export restrictions need rare earths too. I spent years adjudicating war games for the U.S. Navy https://usnwc.edu/Faculty and Departments/Directory/Charles Edward Gehrke . War games force players to identify the hidden constraints that render a beautiful plan untenable. Rare earth processing is exactly such a constraint. China showcased the power of its rare earths leverage with a series of export controls https://www.pillsburylaw.com/en/news and insights/china suspends export controls certain critical minerals related items.html issued in 2025 that it agreed to suspend – at least until Nov. 10, 2026. Controlling the supply enables a government to slow a rival’s growth, or halt it. China’s ability to extend the suspension of its export controls or let them go into effect gives it leverage on the geopolitical stage. In the parlance of Theodore Roosevelt, it’s a very big stick https://www.theodorerooseveltcenter.org/quote/speak softly and carry a big stick you will go far if a man continually blusters if he lacks civility a big stick will not save him from trouble and neither will speaking softly avail i/ . How China took the lead California’s Mountain Pass mine led world production of rare earths until the late 1980s https://www.sciencenews.org/article/rare earth mining renewable energy future . Multiple instances of radioactive wastewater spilling from the mine into the Mojave Desert https://www.hcn.org/issues/47 11/why rare earth mining in the west is a bust/ made it hard to keep domestic production running. When China expanded its own mining and sold the processed materials for less, the logic of switching rare earth suppliers was easy. Mountain Pass’ separation plant closed in 1998 https://www.gao.gov/assets/a96655.html , and the mine itself stopped in 2002. MP Materials restarted mining there in 2017 https://www.cbsnews.com/news/mp materials rare earths mine us china trade 60 minutes/ as concern about access to rare earth minerals rose, but the U.S. still imported more than two thirds https://pubs.usgs.gov/periodicals/mcs2026/mcs2026 rare earths.pdf of the rare earth elements it used as recently as 2025.
The U.S. has rare earth minerals, but few mines. For years, it shipped much of what it does mine overseas for processing. MP Materials’ Mountain Pass mine and processing facility restarted in California in 2017. Tmy350/Wikimedia Commons, CC BY SA China, which mined about 60% of the world’s rare earth elements used in magnets in 2024, handled about 91% of separation and refining https://www.iea.org/commentaries/with new export controls on critical minerals supply concentration risks become reality . Buyers using processing in China got material below the cost of making it themselves, and none of the cleanup bills or the bad press. But they ceded leverage to the processor in exchange. The trade was understood. It just didn’t look as threatening at first from a China that was still rising. Why rebuilding is slow The U.S. Government Accountability Office cited estimates in 2010 that rebuilding a domestic supply chain including mining, separation and magnet manufacturing would take as long as 15 years https://www.gao.gov/assets/a96655.html . Actually rebuilding that supply chain has been slow for several reasons. China runs its plants with thousands of experienced engineers; the U.S. has far fewer experts https://www.uts.edu.au/news/2025/11/why the west cant escape chinas rare earth dominance yet . Today’s industrial scale cutting edge technologies were developed in China, and the government there has no reason to share. Beijing also banned exports of the separation technology itself https://www.csis.org/analysis/what chinas ban rare earths processing technology exports means in December 2023.
The U.S. has rare earth deposits, but little mining. The pink areas in this U.S. Geological Survey map are believed to have potential for rare earth deposits. USGS The U.S. government has committed more than US$7 billion https://www.csis.org/analysis/rare earth export restrictions one year later since April 2025 to try to rebuild U.S. rare earth production capacity. The Pentagon bought $400 million of preferred stock in rare earth producer MP Materials https://mpmaterials.com/news/mp materials announces transformational public private partnership with the department of defense to accelerate u s rare earth magnet independence/ in 2025, giving it 15% ownership of the company. MP Materials expects its next magnet plant to begin testing the equipment in 2028. The Commerce Department also signed a letter of intent https://www.nist.gov/news events/news/2026/01/department commerces chips program announces letter intent usa rare earth in 2026 to give a magnet maker, USA Rare Earth, $277 million in direct funding and a $1.3 billion loan, both aimed at developing facilities in Texas and Oklahoma. But export roadblocks put up by China are making rebuilding that supply chain more difficult. What happens on Nov. 10 On Oct. 9, 2025, China’s Ministry of Commerce announced six wide ranging export control measures https://www.pillsburylaw.com/en/news and insights/china suspends export controls certain critical minerals related items.html . One, Announcement No. 61, affects what even factories abroad can export. A factory in Germany or Japan would need a Chinese license to export a product if Chinese origin rare earths made up 0.1% or more of its value https://www.china briefing.com/news/chinas rare earth export controls impacts on businesses/ , or if it used Chinese rare earth technology. After President Donald Trump met Chinese leader Xi Jinping that month https://www.whitehouse.gov/fact sheets/2025/11/fact sheet president donald j trump strikes deal on economic and trade relations with china/ , Beijing suspended six export controls until Nov. 10, 2026 https://www.cirs group.com/en/chemicals/china temporarily suspends export controls on key raw materials including rare earths lithium batteries and diamond , in exchange for Washington pausing its “ affiliates rule https://www.federalregister.gov/documents/2025/11/12/2025 19846/one year suspension of expansion of end user controls for affiliates of certain listed entities ,” which imposes restrictions on companies that are majority owned by certain blacklisted firms, for one year. Both controls snap back into place automatically unless both governments extend their pauses. What stays in place Some of the export rules were never suspended, including licensing imposed by China in April 2025 on exports of seven of the heavier rare earths https://www.csis.org/analysis/consequences chinas new rare earths export restrictions . Automaker Ford saw how the export controls can affect a company when it had to idle its Chicago assembly plant for a week in May 2025 for want of magnets – critical to speakers and electrical motors – because of the export rules. Ford CEO Jim Farley described his supply as “ day to day https://fortune.com/2025/06/13/ford ceo says rare earth supply is day to day after plant halt ” because he had no alternate source. Ford was able to resume production only with Beijing’s approval https://www.cnbc.com/2025/06/06/china issues rare earth licenses to suppliers of top 3 us automakers sources say reuters.html .
A visitor stops by a rare earth iron ore exhibit during the 5th China Mongolia Expo on Aug. 26, 2025, in Hohhot, China. Ding Genhou/VCG via Getty Images On June 22, 2026, China’s Ministry of Commerce put 10 U.S. companies on its export control list https://www.cirs group.com/en/chemicals/dual use exports to the us further restricted 10 us entities added to chinas export control list . Neither Chinese nor foreign firms can sell those companies any goods that have both civilian and military uses. Most of them build drones, radar, aerospace systems and military vehicles. Two of them – MP Materials and USA Rare Earth – are the federally backed https://www.nist.gov/news events/news/2026/01/department commerces chips program announces letter intent usa rare earth American companies furthest along in building a mine to magnet chain. Beijing said its move was a response https://www.globalsecurity.org/wmd/library/news/china/2026/06/china 260622 globaltimes02.htm to a similar move by the Pentagon https://www.wilmerhale.com/en/insights/client alerts/20260611 pentagon adds 65 new entities to the 1260h list of chinese military companies . My interpretation is that China picked MP Materials and USA Rare Earth because they are best placed to reduce America’s need for Chinese processing. An extension of the pause on Nov. 10 would honor the truce, but the heavy rare earth licenses and the June 22 ban on the targeted firms would still apply. The truce means both parties get to play nice. It doesn’t mean they are being nice. Three paths For the U.S., leaving processing in China is the fastest and cheapest solution, but that leaves it exposed to Beijing’s restrictions https://source.benchmarkminerals.com/article/ex china rare earths premium to grow especially for heavies . Rebuilding a U.S. rare earths supply chain would remove most U.S. dependence on China for rare earths and the political leverage it implies. But it would take longer, startup costs run to the billions of dollars and separation produces acidic, and sometimes radioactive, residues https://www.osti.gov/servlets/purl/1363891 . Building a supply chain with allies such as Australia or Japan, both of which have started to build capacity, would lower the risk of the U.S. being cut off unilaterally. Japan has run this play with some success https://www.weforum.org/stories/2023/10/japan rare earth minerals/ , but the suspended Chinese rules affect any use of their technology abroad. President Xi’s Sept. 24, 2026, meeting https://asia.nikkei.com/politics/international relations/us china tensions/trump says xi will visit us on sept. 24 with Trump may help determine the status of the Nov. 10 restrictions, but the larger conflict over leverage will continue.
Charles Edward Gehrke does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.