Facing the weaponization of rare earth exports by the Chinese Communist Party, the United States and its allied countries are actively working to establish a rare earth supply chain that is no longer dependent on Beijing. Despite numerous challenges, the industry generally believes that countries are unwilling to return to a situation where rare earth supply is dominated by Beijing.
Experts in the rare earth industry believe that the market is still in its early stages but undergoing rapid transformation – with increasing investor interest, particularly as various participants in the rare earth industry are making efforts to reduce dependence on China, driven in part by the U.S. government.
According to a report by Bloomberg, Noveon Magnetics near Austin, Texas, is becoming a symbol of the revival of the U.S. rare earth industry – after a decade of development, Noveon officially began commercial sales of rare earth magnets in 2023.
After China announced export restrictions on rare earths in April this year, Noveon’s phones were nearly overwhelmed by customer inquiries.
Noveon’s annual production target is 2,000 tons, but this capacity falls far short of market demand. Co-founder of Noveon, Scott Dunn, said that based on customer demand, their “production not only needs to meet the original plan, but also needs to be increased several times.”
Currently, Noveon has signed contracts with major manufacturers such as General Motors and automation company ABB, indicating that Western companies are eagerly seeking alternative supply sources to Beijing.
China currently produces over 90% of the global rare earth magnets and controls more than half of the reserves and most of the refining capacity. Recently, China has repeatedly expanded export controls, requiring products containing specific rare earth elements to apply for permits for exports.
U.S. Treasury Secretary Scott Bessent stated that in exchange for trade agreements, China may temporarily postpone the implementation of these controls. Following the meeting between Trump and Xi on October 30th, Trump announced that the hurdle of rare earth controls had disappeared. U.S. officials added that China will not implement the previously proposed rare earth control measures.
Analysts suggest that the conflicts between the U.S. and China have been temporarily put on hold, including rare earth controls.
The U.S. government is increasing investments and policy support for the rare earth industry, seeking cooperation among allied countries.
Currently, the U.S. Department of Defense has decided to invest $400 million in rare earth production company MP Materials, marking a new milestone. This month, the U.S. Department of Defense increased the offer with a $1.5 billion loan commitment, promising to purchase all rare earth magnets produced by MP Materials and setting a 10-year price floor for neodymium and praseodymium to prevent China from undercutting prices.
MP Materials is currently building a rare earth magnet factory in Fort Worth, Texas.
This month, the U.S. and Australia agreed to jointly invest in mining and processing projects and take measures such as setting price floors to prevent cutthroat competition.
Noveon has recently signed an agreement with Australia’s Lynas Rare Earths to supply light and heavy rare earths, providing magnets for the U.S. defense and civilian industries.
This demonstrates that Western countries are shifting from the previous “laissez-faire market” model to a more proactive “key industry support” model, leading to a significant increase in the prices of global rare earth-related stocks.
Nick Myers, CEO of rare earth refining company Phoenix Tailings, pointed out that to attract investors, returns must be increased while risks are reduced, stating that “when the U.S. government is willing to invest and support, the risks of the entire industry will significantly decrease.”
Consulting firm Adamas Intelligence estimates that if several magnet factories planned by the U.S. are completed on schedule, the U.S.’ autonomous capacity may be sufficient to meet demand by 2028.
However, experts also warn that developing new mines, building refineries takes several years, magnet manufacturing technology is complex, and with China’s decades-long advantage, Beijing’s magnet supply still cannot be fully replaced in the short term.
China has long supported the rare earth industry through national strategic interventions, including direct investments, low-interest loans, administrative assistance, and subsidy policies, creating a highly integrated industry with low costs.
Ryan Castilloux, founder of Adamas, believes that the West needs to respond to China’s strategy, stating that “the old approach of relying entirely on the market has clearly not worked, and we do need a new strategy.”
In September 2025, at the Rare Earth Mines, Magnets and Motors conference held in Toronto, representatives from various rare earth industry companies gathered to show strong willingness for cooperation. The event featured new project proposals from Africa, Australia, and North America, indicating a trend towards diversification in global rare earth supply.
In addition to developing new mines, some companies are opting to recycle rare earths. Cyclic Materials, backed by investments from Amazon and Microsoft, plans to launch a recycling plant in Canada next year to extract magnet materials from electronic waste.
According to Adamas, global demand for rare earth magnets is expected to grow at a rate of 9% annually over the next decade. By 2033, U.S. demand is projected to increase fivefold from the current levels, while European demand is expected to double.
While short-term supply tensions have been caused by China’s weaponization of rare earths, it has accelerated cooperation and the relocation of production capacities globally.
Other U.S. companies like USA Rare Earth, Vulcan Elements, Germany’s Vacuumschmelze GmbH, and South Korea’s JS Link are also constructing new magnet factories.
Analysts suggest that even if the U.S. and China eventually reach a trade agreement, the U.S. and its allies will continue to strive for establishing an independent rare earth supply chain.