At this year’s G7 summit, European Commission President Ursula von der Leyen raised a rare earth magnet to symbolize the Western determination to break free from dependence on China and achieve independence in the rare earth supply chain. The magnet, manufactured by a Canadian company in Estonia with materials sourced from Australia, received support from the EU’s Just Transition Fund, as Von der Leyen explained during the summit on June 15 to world leaders including US President Donald Trump.
The EU’s Just Transition Fund aims to provide financial support to achieve the EU’s goal of net zero greenhouse gas emissions. According to data from the International Energy Agency, China accounts for 90% of the world’s rare earth element extraction. Therefore, the production of rare earth magnets through alternative supply chains outside of China is highly noteworthy.
One crucial application of these rare earth minerals is in producing heat-resistant magnets, essential for modern manufacturing. Without rare earth elements, consumers could face shortages in vehicles and electronic products, as screens, batteries, and motors rely on rare earth elements.
The same goes for advanced weapon systems. The US Department of Defense states that an F-35 fighter jet requires over 900 pounds of rare earth elements, while a nuclear-powered attack submarine needs over 9000 pounds of rare earth metals.
The term “rare” in “rare earth” does not indicate scarcity in the Earth’s crust but rather the low concentration and high extraction cost of these elements from other metals.
China not only dominates the extraction of these elements but also the entire rare earth value chain, including separating and refining rare earths and manufacturing magnets.
Relying on its near-monopoly position in the global rare earth sector, China weaponized rare earths during the US-China trade war.
Despite agreements reached in May in Geneva and June in London, where China promised to continue supplying rare earth metal elements to the US, the output still falls short of pre-April levels when China implemented export controls.
Meanwhile, the Trump administration is working to relax regulations and increase investments to establish a domestic rare earth supply chain in the US. In the Obama era of the 2010s, the US recognized China’s dominance in critical minerals. In the Biden era, the US introduced manufacturing tax incentives and federal loan assistance measures under the Inflation Reduction Act.
Experts believe that Western countries’ determination to establish alternative rare earth supply chains has reached a turning point. Even if China lifts rare earth export controls and floods the market with its cheap products again, Western nations will not slacken in building rare earth supply chains as in the past.
Ken Mushinski, CEO of Rare Element Resources, a rare earth mining and processing company in Wyoming, stated that the US’s efforts to achieve rare earth supply chain independence are progressing “one hundred percent certain.”
Mushinski told the Epoch Times that he recently met with Energy Secretary Chris Wright and officials from the Department of Defense, who expressed keen interest and full understanding of the necessity of establishing a rare earth supply chain domestically.
“Everyone I’ve met in Washington, DC, and Wyoming believes this is a critical step that needs to be fully implemented as soon as possible,” he stated.
Under a cost-sharing agreement with the US Department of Energy, Rare Element Resources is operating a demonstration plant. The company expects to begin full commercial production within two to three years.
James Lewis, a renowned researcher and tech expert at the Center for European Policy Analysis, believes the US could start making concrete progress within two years in establishing a domestic rare earth supply chain.
He told the Epoch Times that if people see profitability in the rare earth industry and think regulatory barriers have been removed, they will enter the industry.
Since the start of his second term in January, President Donald Trump has issued 11 executive orders providing lenient policies and financial support for companies involved in mining and refining critical minerals.
At the end of June, the US Department of Energy announced new guidelines on the National Environmental Policy Act to simplify mining enterprise permit processes. Two months earlier, the Interior Department included critical mineral infrastructure projects for the fast-track plan initiated during the Obama era in the Permitting Council’s coordination.
Mushinski explained that mining and refining companies can now sit down with all federal reviewers involved in environmental assessments before starting projects to discuss schedules. This process streamlines complex procedures, coordination with various agencies, and saves companies a significant amount of time. The Permitting Council, established by Congress in 2015, reports to Congress and is responsible for ensuring review plans are implemented.
With this approach, approval times could be reduced by several years. For example, his company’s project in northeastern Wyoming took 10 years to obtain a permit before. Under the new process, a similar project could receive complete approval within 2 to 4 years.
According to Alex Herrgott, chairman of The Permitting Institute, waiting 7 to 10 years for permits is common for major mining companies.
Financial supply also speeds up project progress. For instance, Critical Metals Corp., based in New York, announced a $120 million loan for its Tanbreez rare earth mine on Greenland, currently under review by the US Export-Import Bank.
Melissa Sanderson, board member of American Rare Earths and co-chair of the Critical Minerals Institute, previously told the Epoch Times that under new executive orders aimed at increasing US mineral output, mining projects no longer need to secure “off-take agreements” guaranteeing purchases of all or part of their output to qualify for grants and loans, making approval processes faster.
Mushinski estimates that achieving full rare earth self-sufficiency will take 10 to 20 years; the timeline would be 20 years for a unilateral US approach and around 10 years if the US cooperates with allied nations.
He provided an example of the magnet production lineup he envisions: his company would extract rare earth elements commercially from ore, a prominent metal refining plant in the UK and a magnet manufacturer in Japan would establish factories in the US Midwest for relevant production.
The SAFE Center for Critical Minerals Strategy proposed during a congressional hearing in May utilizing resources from allied countries for collaborating with manufacturers from Australia, Japan, India, Estonia, and others to develop rare earth resources.
As part of the G7 Action Plan, the US will host the 15th Intergovernmental Conference on Critical Minerals in Chicago in September.
Dennis Gibson, chairman of the Critical Minerals Association USA, stated that the magnet displayed by EU President Von der Leyen is a “great and tangible way” to show how global industrial powers can “transcend borders and cooperate comprehensively.”
Gibson, hopeful for the upcoming meeting in Chicago, believes it will truly bring everyone together and engage more people in the effort.
Western countries are confronting China’s near-monopoly in the rare earth sector after nearly 30 years of strategic scheming by the Chinese regime.
The Mountain Pass mine is the only rare earth mine still in operation in the US. Located in California less than 60 miles southwest of Las Vegas, the facility held the top position in global rare earth production from the 1960s to the 1980s.
Currently, it accounts for approximately 15% of global rare earth oxide production. However, as reported in the company’s 2024 annual report, it does not refine rare earths but sells the majority of extracted rare earths to China for processing, accounting for 80% of its total revenue.
Despite American Rare Earths’ temporary halt in selling rare earth concentrates to China due to retaliatory tariffs and export controls, the company’s agreement with Shenghe Resources, a few shareholders headquartered in Chengdu, China remains in effect.
The technology to manufacture permanent magnets (a type of magnetic material that does not rely on power) using rare earths was discovered in the 1960s at a US Department of Defense laboratory. The rare earth magnet technology in use today was invented in the 1980s by Sumitomo Special Metals of Japan and General Motors.
Deng Xiaoping, then Chinese leader, emphasized the strategic importance of rare earths in 1992, stating that “rare earths have extremely important strategic significance and must be handled properly.” Referring to China’s rare earth reserves, he said, “The Middle East has oil; China has rare earths.”
Foreign mining companies are only allowed to establish joint ventures with Chinese companies under the support of industrial policies. They must provide technical knowledge to Chinese counterparts to conduct rare earth operations in China, as per data from the US Geological Survey. By 2010, China’s rare earth output accounted for 95% of global production under the support of CCP’s industrial policies: a significant increase from 27% in 1990.
In the same year, the CCP reduced rare earth export quotas by nearly 40%, including a ban on exports to Japan, leading to a 50-fold surge in global rare earth prices, according to a report by CSIS. This move caused Molycorp, which owns the Mountain Pass rare earth mine, to reach a historical high stock price of nearly $80 per share in May 2011, as per the US Securities and Exchange Commission.
However, in 2015, China discontinued the rare earth export quota system, causing rare earth prices to plummet significantly below pre-2010 levels. Molycorp declared bankruptcy in June 2015. It wasn’t until years later that MP Materials, headquartered in Las Vegas, acquired the Mountain Pass rare earth mine and resumed operations in 2018.
Mushinski stated that Rare Element Resources was also affected by China’s non-market actions of hoarding and dumping off output in the last cycle. During a congressional hearing in June, the CEO testified that the Bear Lodge project obtained in Wyoming at a cost of $30 million almost went bankrupt in 2015.
When market prices collapsed, domestic companies in the US could no longer provide investors with viable business cases.
While Japan sought alternative sources for rare earths, most other countries returned to purchasing rare earths from China. The CCP’s monopoly position has essentially remained unchanged. Currently, China’s refined rare earths still constitute 90% of global total production.
Will the CCP be able to hinder current Western efforts to establish rare earth alternative supply chains by canceling export controls again, as they did in the 2010s?
Lewis doesn’t think so.
“The CCP can only play this trick a few times before people won’t stand for it anymore. They will say, ‘We won’t rely on you anymore.’ This shift has already begun,” he remarked. “Thus, I believe China’s market share will decrease but not to zero.”
Mushinski shared a similar view.
“I think everyone is aware that what is agreed upon today might be ineffective tomorrow. Hence, everyone is very, very cautious about it,” he added.
Regarding the issue of building a domestic rare earth supply chain in the US, Mushinski noted, “The Department of Defense and the US government entirely understand the necessity of bringing back the rare earth supply chain to the US.”
John Haughey contributed to this report.