{"id":299303,"date":"2025-11-18T15:04:08","date_gmt":"2025-11-18T15:04:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/299303\/"},"modified":"2025-11-18T15:04:08","modified_gmt":"2025-11-18T15:04:08","slug":"how-america-fell-behind-in-the-rare-earth-race-and-how-it-hopes-to-come-back","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/299303\/","title":{"rendered":"How America fell behind in the rare-earth race\u2014and how it hopes to come back"},"content":{"rendered":"

The United States has known for years that its economy runs on materials that it can\u2019t control. The rare-earth metals that power F-35 fighter jets, electric vehicles, and iPhones mostly comes from one place: China<\/a>.\u00a0<\/p>\n

Now, after years of warnings, that dependence has turned from an abstract vulnerability into a central fault line in global trade. An agreement<\/a> between President Donald Trump and Chinese President Xi Jinping earlier this month has pulled the U.S. back from the brink of panic, at least for now, but the supply chain\u2019s long-term vulnerability remains.<\/p>\n

Beijing\u2019s planned rules, due to take effect December 1, would have required a licence for any company anywhere in the world exporting even trace amounts of rare-earth materials that originated in China. Analysts warned that enforcement of those controls could have slowed or halted production across entire industries, particularly hitting the automotive sector.<\/p>\n

The agreement buys the U.S. a little time\u2014a year\u2019s worth\u2014to get a handle on rare-earth minerals. But experts say it doesn\u2019t fix the rot that put America in this position in the first place: decades of overcaution and underfunding.<\/p>\n

A crisis years in the making<\/p>\n

Georgetown Law scholar Peter Harrell, a former senior White House and State Department official who advised both the Trump and Biden administrations on supply-chain security, said the vulnerabilities were well understood inside Washington long before the current flare-up.\u00a0<\/p>\n

\u201cThis is not a new problem,\u201d he said in an interview with Fortune.<\/p>\n

For a lot of policymakers, Harrell added, the first time the gap began to register was in 2011, when China cut off rare-earth exports to Japan during a maritime dispute. That incident\u2014sometimes referred to as the \u201cposter child<\/a>\u201d for how trade could get weaponized in geopolitical conflict\u2014panicked Japan enough to prompt it to reduce its reliance<\/a> on China\u2019s rare-earth exports from 90% to 60%.\u00a0<\/p>\n

\u00a0That episode, he said, triggered \u201ca flurry of activity\u201d at the Pentagon and among U.S. allies. The Obama administration\u2019s initial efforts were mostly diagnostic; Trump\u2019s first term funded a handful of pilot mining and processing projects; Biden\u2019s term added a diplomatic layer through the Minerals Security Partnership, a U.S.-led alliance across a dozen nations to secure global supply chains for critical minerals.\u00a0<\/p>\n

But collectively, Harrell argued, those efforts fell short because \u201cit\u2019s hard to get the government to focus on problems that aren\u2019t urgent, take years to solve, and cost real money.\u201d For a while, the threat seemed theoretical. Until now.<\/p>\n

Former USTR and Treasury official Emily Kilcrease, who is currently a fellow at the think tank Center for a New American Security, agreed that Washington\u2019s failure stemmed not from ignorance but from misplaced faith in markets.\u00a0<\/p>\n

\u201cThe private market for rare earths is not going to get us what we need,\u201d she said. \u201cIt\u2019s dominated by China. Companies can\u2019t compete on price alone.\u201d<\/p>\n

China\u2019s state-directed system\u2014fueled by subsidies, loose environmental standards, and an aggressive industrial policy\u2014has gutted its competitors. Rare earths have long given Beijing outsized global leverage despite being a relatively small financial investment. The industry itself generates roughly $50 billion a year in revenue\u2014a figure cited by Ahmad Ghahreman, CEO of Cyclic Materials\u2014yet it underpins multi-trillion-dollar sectors including defense, electric vehicles, renewable energy, and consumer electronics.<\/p>\n

By heavily subsidizing refining and magnet-making throughout the 1990s and 2000s, Beijing secured a near-monopoly over global production, Ghareman told Fortune. Today, China accounts for about 70% of rare-earth mining and nearly 90% of processing capacity, according to the U.S. Geological Survey and OECD trade data. That dominance allows China to wield export restrictions as a geopolitical tool at little economic cost to itself but enormous potential disruption abroad\u2014a dynamic that, as Kilcrease put it, has turned rare earths into \u201ca choke point\u201d for the world\u2019s most advanced supply chains.<\/p>\n

China, however, had always \u201cexercised restraint\u201d in leveraging that choke point against the, Kilcrease said.<\/p>\n

The scramble\u00a0<\/p>\n

That changed this year. China\u2019s new export restrictions have hit at the heart of Western manufacturing just as demand for EV motors and data-center hardware soars. Inside Washington, the response has been a scramble to design an industrial policy for a supply chain that barely exists.<\/p>\n

The most ambitious step so far is the $8.5 billion U.S.\u2013Australia rare-earth framework, <\/a>backed by the U.S. Defense Department and the Export-Import Bank. The pact blends loans, subsidies, and purchase guarantees to keep allied producers alive even if Beijing floods the market to crash prices.\u00a0\u00a0<\/p>\n

Still, experts say the framework barely makes a dent against the problem. For one, the agreement covers mainly neodymium and praseodymium, which are only two of the 17 rare-earth elements.<\/p>\n

\u00a0\u201cThere are a dozen other rare earths and twenty other critical minerals that need the same attention,\u201d Harrell warned. \u201cYou\u2019ve got to sustain focus across the whole set, not just a couple of them.\u201d<\/p>\n

Also, Australia holds the world\u2019s fourth-largest deposits of rare earths, but at 5.7 million metric tons of rare-earth oxide equivalents, its industry is dwarfed by China\u2019s 44 million.<\/p>\n

For Kilcrease, the deal is part of a larger shift away from Washington\u2019s long-standing faith in markets and toward a recognition that the state has to play a more direct role. She said the move fits into a broader pattern of \u201ca more kind of muscular industrial policy,\u201d pointing to recent U.S. equity stakes in companies like Intel<\/a> and U.S. Steel.<\/p>\n

\u00a0\u201cThese are all part of the same trend,\u201d Kilcrease said. \u201cThe government is getting more involved to make sure we have a reliable supply of the materials that keep our economy running.\u201d<\/p>\n

Inside Washington, the policymaking process itself has also changed.\u00a0<\/p>\n

\u201cThe interagency process under the second Trump administration is fundamentally different than we\u2019ve ever seen before,\u201d Kilcrease said. <\/p>\n

\u00a0She described a White House that no longer waits for staff-level policy proposals: \u201cIt\u2019s the president sitting down with the Treasury secretary or the Commerce secretary and figuring out how to come up with the commercial and government deal that resolves the problem.\u201d<\/p>\n

Reuse, recycle<\/p>\n

While Washington works through that new approach, industry is trying to fill the gap on its own. Ghareman said.<\/p>\n

\u201cWe started Cyclic Materials because we really knew this was coming,\u201d he said. \u201cI had been working on a study for the government of Canada on rare-earth deposits, and I concluded that we needed a business whose revenue wasn\u2019t entirely dependent on mining rare earths.\u201d<\/p>\n

Ghareman\u2019s company extracts magnets and metals from used products like e-bikes, power tools, and electric motors.\u00a0<\/p>\n

\u201cIn our first facility in Arizona, we\u2019ll process about 25,000 tons per year of end-of-life products,\u201d he said. \u201cThat produces about 750 tons of magnet material per year that goes into our second technology, where we produce rare-earth oxides and nickel-cobalt hydroxide.\u201d<\/p>\n

\u00a0The Arizona plant and a companion facility in Kingston, Ontario are expected to begin full commercial operation in the first half of next year.<\/p>\n

Recycling, he said, can\u2019t eliminate the need for mining but can relieve pressure on the system.<\/p>\n

\u00a0\u201cBoth of them need to coexist if we ever have a vision of decarbonizing our planet,\u201d Ghareman said. \u201cRecycling uses five percent of the water that mining consumes and about a third of the carbon footprint.\u201d\u00a0<\/p>\n

Heavy rare-earth elements, he added, remain the most critical: \u201cNinety-nine percent of heavy rare earths today are mined and supplied by China. The only realistic sources outside China are new mines and recycling.\u201d<\/p>\n

The most common heavy rare-earth elements\u2014dysporosium, terbium, and yttrium\u2014are used in the heavy-duty magnets which power EV motors and military tech.\u00a0<\/p>\n

In Ghareman\u2019s view, \u201cgovernment support for the next five to ten years is going to be critical\u201d if the U.S. and its allies want to compete.<\/p>\n

For now, that support is coming slowly. Harrell said the U.S.\u2013Australia deal and smaller Pentagon contracts<\/a> with mining companies like MP Minerals are a start, but warned that \u201cthe question is going to be, are we able to sustain this level of attention and this level of resources to actually solve the problem? Or, you know, six months or a year from now, do we move on to something else?\u201d<\/p>\n

Ghareman sounded a similar note of urgency. He said China\u2019s pattern of tightening export controls\u2014from equipment restrictions in 2023 to the expansion of those controls this year\u2014shows how fast the landscape is shifting.\u00a0<\/p>\n

\u201cYou can connect the dots and project it to the future,\u201d he said. \u201cSpeed to execution and bringing the full supply chain to the U.S. and allied countries is going to be important.\u201d<\/p>\n

If the U.S. wants to end its dependence on China, he said, it will have to move faster than it ever has before.\u00a0<\/p>\n

\u201cWe\u2019re just getting started,\u201d Ghareman said. \u201cBut we don\u2019t have time to waste.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The United States has known for years that its economy runs on materials that it can\u2019t control. The…\n","protected":false},"author":2,"featured_media":299304,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[23,1246,144,12,3319,3,1343,121918,759,5948,20443,21,19,22,20,25,24,6132],"class_list":["post-299303","post","type-post","status-publish","format-standard","has-post-thumbnail","category-united-states","tag-america","tag-australia","tag-china","tag-donald-trump","tag-joe-biden","tag-news","tag-policy","tag-rare-earth-metal","tag-tariffs","tag-tariffs-and-trade","tag-u-s-department-of-the-treasury","tag-united-states","tag-united-states-of-america","tag-unitedstates","tag-unitedstatesofamerica","tag-us","tag-usa","tag-xi-jinping"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/299303","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=299303"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/299303\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/299304"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=299303"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=299303"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=299303"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}