Post by : Meena Ariff

Photo: Reuters

The United States is working hard to reduce its heavy dependence on China for rare earth minerals. These minerals are special because they are used in making many high-tech products like smartphones, electric cars, wind turbines, fighter jets, missiles, satellites, and military equipment. Without these minerals, modern technology and defence systems cannot function smoothly.

Pentagon’s Big Step to Secure Rare Earth Supply

On Thursday, the Pentagon announced that it would spend US$400 million to buy shares in MP Materials, the largest rare earth mining company in America. With this investment, the US Department of Defence has now become the biggest shareholder in MP Materials. Officials hope this will help America become less dependent on China for rare earth supplies in the coming years.

Expert Warns of Many Challenges Ahead

However, experts say this move is just the beginning. David Argyle, CEO of REalloys, an Ohio-based company that supplies special magnet materials to the US defence sector, said there are many challenges ahead. He explained that mining rare earths is only the first step. The US also needs to develop midstream technology to refine and purify these minerals before using them in making magnets and other final products.

Environmental and Permit Issues

Mining and processing rare earths is not easy. It can be highly polluting and sometimes produces radioactive waste, which is dangerous for health and the environment. This makes it hard for companies to get government permission for mining and refining. Argyle explained, “It depends on the plan and who is doing it. If everything goes well, the US can meet 40% to 50% of its rare earth needs by 2027 or 2028. That will solve a big part of America’s rare earth problem.”

Realloys and Their Role in US Defence
Realloys makes high-end magnet materials used by the US National Defence Stockpile, Defence Industrial Base, Nuclear Industrial Base, robotics, electric aviation, and other important industries. These magnets are used in fighter jets, missiles, drones, satellites, and electric planes which are crucial for protecting the country.

China Tightens Control Over Rare Earth Supplies

Recently, China has tightened its control over exporting middle and heavy rare earth minerals. This move has become a powerful tool in the trade war between China and the US. Due to China’s strict action, American officials had to ease some of their technology restrictions against China during talks in London in early June. This shows how powerful rare earths are in global politics and trade negotiations.

Past Efforts to Secure Rare Earth Supplies

Earlier, under President Donald Trump, the US government thought about buying rare earth minerals from Ukraine, even though the country is still facing war. On Thursday, US Secretary of State Marco Rubio also spoke to the Prime Minister of Malaysia about working together on critical minerals. These steps show that America is trying to find multiple sources for rare earth supplies to reduce its dependence on China.

China’s Strong Position as a Supplier

Argyle asked, “What pain will China feel if it stops selling rare earths to the US? That is China’s leverage, and it is using this power strongly.” Today, China processes 90% of the world’s rare earth minerals and produces 69% of the global mining output. China’s success is due to its high tolerance for pollution from mining and its strong midstream refining technology developed over the decades.

MP Materials’ Future Plans

MP Materials said that with the Pentagon’s investment, it will build a new facility that will start operating in 2028. This facility will have the ability to produce around 10,000 metric tonnes of rare earth magnets every year. James Litinsky, the company’s founder and CEO, said this investment shows that the US wants to build its own supply chains quickly and become independent in rare earth production.

Chinese Company Involved in MP Materials

However, there is another problem. Shenghe Resources, a Chinese company listed on the Shanghai Stock Exchange, is also one of the largest shareholders of MP Materials. In the past, Shenghe Resources was the only buyer of the rare earths mined by MP Materials in California. This means that even though the minerals were mined in the US, they were being sent to China for refining before they could be used. This shows how deeply the US is linked with China in rare earth processing.

Japan’s Strong Preparedness

Argyle said Japan has prepared well for such supply risks. It has built a large stock of magnets over the past few years. “Japan now has some comfort and insurance. But in the US, this has not happened yet,” he added.

Need for a Non-Chinese Physical Market

Argyle explained that there needs to be a real market with non-Chinese rare earth materials so that China’s decisions do not affect prices globally. He said, “I think, in the end, either the US or someone else will create this physical market. As we produce more, we will keep extra materials in storage. Then, if people need it, they can buy it and pay fair prices as decided between buyers and sellers.”

Australia’s Lynas Rare Earth Struggles with Environmental Issues

Meanwhile, Australia’s Lynas Rare Earth, the only company outside China that produces separated heavy rare earths commercially, faced problems in Malaysia last year. Its factory was accused of creating radioactive waste that could harm people’s health. Lynas promised to use new technology to remove radioactive parts from the waste. Because of this promise, Malaysia allowed Lynas to continue its operations until March 2026.

Conclusion: America’s Tough Road Ahead

This entire situation shows that while America is taking big steps to reduce its dependence on China for rare earths, it still faces many challenges. Building new mines, setting up refining technology, keeping the environment safe, and creating a fair market will take years of hard work, strong policies, and careful planning.