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This comprehensive strategic analysis examines the critical vulnerabilities in the U.S. rare earth element (REE) supply chain as of 2025, with particular focus on China's dominant market position across mining, processing, and manufacturing. The report provides a detailed assessment of China's structural advantages, U.S. supply chain gaps, and presents a phased 10-year implementation roadmap for establishing a resilient domestic 'Mine-to-Magnet' supply chain. Special attention is given to heavy rare earth elements that represent the most acute vulnerability for U.S. national security and economic competitiveness in defense and clean energy applications.

The Takeaway

The Takeaway

  1. China controls approximately 70% of global REE mining, 85% of processing, and 90-92% of rare earth magnet manufacturing as of 2025.

  2. The U.S. has zero domestic heavy rare earth processing capability, creating critical vulnerabilities for defense applications and clean energy technologies.

  3. China has demonstrated willingness to weaponize REE supply chains, most recently with April 2025 export restrictions on seven critical elements.

  4. Defense systems are highly vulnerable, with each F-35 fighter jet containing over 900 pounds of rare earth elements and Virginia-class submarines requiring 9,200 pounds.

  5. U.S. mine permitting takes an average of 29 years, creating significant barriers to domestic resource development.

  6. A comprehensive 10-year strategy requires $20-30 billion in investment across mining, processing, and manufacturing.

  7. Heavy rare earth elements like dysprosium and terbium represent the most acute supply vulnerability with no domestic separation capability.

  8. International partnerships, particularly through the Quad Alliance (U.S., Japan, Australia, India), are essential for supply chain diversification.

  9. Recycling and circular economy approaches could provide up to 30% of rare earth supply by 2035.

  10. The strategy proposes a three-phase implementation plan (2025-2035) to achieve 75% domestic rare earth magnet production and 50% domestic processing by 2035.

Overview

The global rare earth element (REE) supply chain represents one of the most critical strategic vulnerabilities facing the United States in 2025. China's decades-long dominance in this sector has created significant national security and economic risks, particularly as REEs have become essential components in advanced defense systems, clean energy technologies, and high-tech manufacturing. This report provides a comprehensive analysis of the current REE landscape, China's structural advantages, U.S. vulnerabilities, and a strategic roadmap for establishing a resilient domestic "Mine-to-Magnet" supply chain over the next decade.

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As of April 2025, China controls approximately 70% of global REE mining production, 85% of processing capacity, and 90-92% of rare earth magnet manufacturing. [1] [2] [3] This dominance extends across the entire value chain, from extraction to finished products, creating multiple chokepoints that could be weaponized during geopolitical tensions. Indeed, China has already demonstrated its willingness to use REEs as a geopolitical tool, most recently with its April 2025 export restrictions on seven critical rare earth elements in response to U.S. tariffs. [11] [12] [14]

 

The U.S. faces particularly acute vulnerabilities in heavy rare earth elements (HREEs) like dysprosium and terbium, which are essential for high-performance magnets used in defense applications. According to the Center for Strategic and International Studies (CSIS), "There is no heavy rare earths separation happening in the United States at present," despite Department of Defense goals to develop a complete supply chain by 2027. [11] This vulnerability is magnified by the fact that defense systems like F-35 fighter jets contain over 900 pounds of rare earth elements, while Virginia-class submarines require 9,200 pounds. [2] [9]

 

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Despite significant efforts to diversify supply chains since 2020, including over $439 million in Department of Defense investments, the U.S. remains critically dependent on China for REE processing and magnet manufacturing. [9] This dependence creates substantial risks for both national security and the clean energy transition, as rare earth demand is projected to grow by 400-600% over the next few decades. [2]

 

This report outlines a comprehensive strategy for addressing these vulnerabilities through a phased approach that targets each segment of the REE value chain. The strategy encompasses regulatory reforms, financial incentives, international partnerships, workforce development, and technological innovation to create a resilient domestic supply chain by 2035.

China's Structural Advantages in the REE Market

 

KEY POINTS

China's dominance in the rare earth element market is the result of decades of strategic planning and investment. The country has built an integrated ecosystem spanning the entire value chain, supported by government policies, technological expertise, and cost advantages. This section examines how China achieved and maintains its commanding position in the global REE market.

 

 

Historical Development of China's REE Strategy

China's rise to dominance in the rare earth element sector began in the 1980s and accelerated through deliberate state policy. In 1992, during a visit to Baotou, Inner Mongolia (one of China's largest rare earth mines), Chinese leader Deng Xiaoping famously declared, "The Middle East has oil, China has rare earths." [22] This statement reflected China's early recognition of rare earth elements as strategic resources with significant geopolitical implications.

 

Unlike many resource-rich countries that primarily extract and export raw materials, China pursued a comprehensive strategy to control the entire value chain. As one analysis notes, "China built an entire ecosystem around the rare earths, from mineral production and processing to manufacturing finished products, and most importantly, rare earth magnets." [22] This vertical integration has allowed China to capture maximum value from its natural resources while creating significant dependencies for other nations.

 

China's approach included several key phases:

1980s-1990s: Resource Development and Capacity Building

  • Expansion of mining operations in resource-rich regions like Inner Mongolia

  • Development of initial processing capabilities

  • Establishment of research institutions focused on rare earth technologies

1990s-2000s: Global Market Penetration

  • Aggressive pricing strategies that undercut Western producers

  • Acquisition of foreign technologies and expertise

  • Expansion of processing capacity beyond domestic mining output

2000s-2010s: Consolidation and Export Controls

  • Implementation of production quotas and industry consolidation

  • Introduction of export restrictions and licensing requirements

  • Development of high-value downstream industries

2010s-2025: Strategic Weaponization

  • Use of rare earth exports as leverage in geopolitical disputes

  • Implementation of targeted export controls on specific elements

  • Further advancement of technological capabilities

China first demonstrated its willingness to use rare earths as a geopolitical weapon in 2010 when it banned exports to Japan during a fishing trawler dispute. [14] This precedent has been followed by increasingly sophisticated export controls, culminating in the April 2025 restrictions on seven critical rare earth elements in response to U.S. tariffs. [12]

 

Quantification of China's Market Control

China's dominance extends across all segments of the rare earth value chain, with varying degrees of control depending on the specific stage:

 

Mining Production: As of 2024, China produces approximately 70% of global rare earth mine output. [1] [13] While this represents a decline from its peak of 97.7% in 2010, [42] it still gives China significant control over the primary supply of these critical materials. The United States is a distant second, accounting for only 11.6% of global production. [13]

 

Processing and Refining: China's control is even more pronounced in the processing and refining stages, where it accounts for approximately 85% of global capacity. [2] [15] This dominance is particularly acute for heavy rare earth elements, where China controls nearly 99% of global processing capacity. [14] As CSIS noted in April 2025, "Until 2023, China accounted for 99 percent of global heavy REEs processing, with only minimal output from a refinery in Vietnam. However, that facility has been shut down for the past year due to a tax dispute, effectively giving China a monopoly over supply." [14]

 

Magnet Manufacturing: At the highest value-added stage of the supply chain, China's dominance is most complete. The country produces approximately 90-92% of global rare earth magnets, [2] [15] which are critical components for everything from electric vehicles to wind turbines to advanced weapons systems. In 2024, China exported a record 58,152 tonnes of rare earth permanent magnets, a 10% increase from the previous year. [40]

 

Integrated Supply Chain: China's advantage is further strengthened by its integrated approach to the entire value chain. As one analysis explains, "China's rare earths processing involves sophisticated solvent extraction and ion-exchange techniques, which are capital-intensive and technically complex. This vertical integration from mining to magnet production creates a near-monopoly on downstream applications that has proven difficult to replicate elsewhere." [3]

 

China's Policy Framework and Incentives

China's rare earth dominance is supported by a comprehensive policy framework that provides significant advantages to domestic producers:

 

"The Middle East has oil, China has rare earths."

 

Industrial Policy: The Chinese government has designated rare earth elements as strategic resources and implemented policies to support their development. The country's approach includes:

  • Consolidation of the industry under state-controlled enterprises

  • Designation of rare earths as a priority sector in national five-year plans

  • Integration of rare earth strategy with broader industrial policies like Made in China 2025

     

Financial Incentives: Chinese rare earth companies benefit from various financial support mechanisms:

  • Subsidized electricity and water for processing facilities

  • Preferential loans and financing from state-owned banks

  • Tax incentives for rare earth processing and magnet manufacturing

  • Research and development grants for technological advancement

     

Export Controls and Quotas: China has implemented sophisticated export control mechanisms that serve both economic and geopolitical objectives:

  • Export licensing requirements that can be selectively enforced

  • Production and export quotas that manage global supply

  • Value-added tax (VAT) rebate policies that incentivize domestic processing

  • Strategic stockpiling programs that provide additional market leverage

As reported in April 2025, "Exporters must navigate an opaque licensing regime managed by China's Ministry of Commerce. Applications for U.S.-bound shipments face systematic delays or rejections, as seen in the complete halt of antimony exports to the U.S. since September 2024." [12]

 

Technological and Human Capital Advantages

 

China's dominance in rare earth elements extends beyond natural resources to include significant technological and human capital advantages:

 

Technological Expertise: China has developed substantial intellectual property and know-how in rare earth processing and applications:

  • From 1950 to 2018, China filed over 25,000 rare earth patents, compared to the U.S.'s 10,000 [22]

  • Chinese engineers have perfected the solvent extraction process for refining REEs [22]

  • China leads in hydrometallurgical processing methods, with 642 patent applications in recent years [17]

 

Research and Education: China has built a robust educational and research infrastructure focused on rare earth elements:

  • The country has 38 mineral processing schools and 44 mining engineering programs [26]

  • Substantial government funding supports rare earth research institutions

  • Integration of academic research with industrial applications

 

 

Workforce Development: China has cultivated a specialized workforce with expertise across the rare earth value chain:

  • Training programs specifically focused on rare earth mining and processing

  • Integration of rare earth specializations in engineering curricula

  • Knowledge transfer between research institutions and industry

 

This human capital advantage stands in stark contrast to the U.S. situation, where "the number of mining and mineral engineering programs has dropped from 25 in 1982 to just 15 in 2023," [26] and "only 14 Accreditation Board for Engineering and Technology-accredited programs remain in metallurgy and materials science." [10]

U.S. Supply Chain Vulnerabilities and Gaps

 

KEY POINTS

The United States faces critical vulnerabilities across the rare earth element supply chain, from mining to magnet manufacturing. Despite having significant domestic resources, the country lacks processing infrastructure, faces regulatory hurdles, and suffers from workforce shortages. These gaps create substantial national security and economic risks, particularly as demand for rare earth elements continues to grow for defense and clean energy applications.

 

Current U.S. Capabilities Assessment

The United States has limited capabilities across the rare earth element value chain, with significant gaps in processing and manufacturing:

 

Mining: The U.S. has substantial rare earth reserves, estimated at approximately 1.8 million metric tonnes as of 2023. [2] However, actual production remains limited:

  • The U.S. accounted for only 11.6% of global rare earth production in 2024 [13]

  • There is currently only one active rare earth mine in the United States (Mountain Pass in California) selling to the commercial market [9] [32]

  • Domestic production is primarily focused on light rare earth elements, with minimal production of heavy rare earths [14]

 

Processing and Separation: The most significant gap in the U.S. supply chain is in processing and separation capabilities:

  • "There is no heavy rare earths separation happening in the United States at present," according to CSIS [11]

  • Existing U.S. processing capabilities are so limited that in 2019, the Mountain Pass Rare Earth Mine still sent 98% of its raw materials to China for processing [10]

  • Several processing facilities are under development with Department of Defense funding, but most will not be operational until 2026 or later [4] [9]

 

Metallization and Alloy Production: The U.S. has minimal capabilities in rare earth metallization and alloy production:

  • Almost all rare earth metals and alloys are currently imported

  • Limited domestic expertise in metallurgical processes for rare earth elements

  • Few facilities capable of producing the specialized alloys required for magnet manufacturing

 

Magnet Manufacturing: The U.S. has extremely limited rare earth magnet manufacturing capacity:

  • MP Materials is building a rare earth magnet manufacturing facility in Texas, expected to be producing magnets by late 2025 [4]

  • Even with current investments, the U.S. will only produce approximately 1,000 tons of NdFeB magnets by the end of 2025, compared to China's 300,000 tons [14]

  • The technology gap in magnet manufacturing is substantial, with China controlling most of the intellectual property and know-how

 

Recycling and Circular Economy: The U.S. has minimal rare earth recycling infrastructure:

  • Currently, only 1-5% of rare earth elements are recycled globally [2]

  • Rare earth elements are "currently not recycled at a commercial scale and end up in landfills" [18]

  • Several companies are developing innovative recycling technologies, but these remain at early stages of commercialization [18]

 

Critical Chokepoints and Vulnerabilities

The U.S. rare earth supply chain contains several critical chokepoints that create significant vulnerabilities:

 

Heavy Rare Earth Processing: The most acute vulnerability is in heavy rare earth processing, particularly for elements like dysprosium and terbium that are essential for high-performance magnets:

  • China controls approximately 99% of global heavy rare earth processing [14]

  • The U.S. has zero heavy rare earth separation capabilities [11]

  • These elements are critical for defense applications and have no viable substitutes [37]

 

Magnet Manufacturing: The lack of domestic magnet manufacturing creates a critical vulnerability for both defense and clean energy applications:

  • Rare earth magnets are essential components in F-35 aircraft, Virginia-class submarines, and various weapon systems [9]

  • A single F-35 fighter jet requires 417 kg of rare earth materials [23]

  • Wind turbines, electric vehicles, and other clean energy technologies also depend heavily on rare earth magnets [2] [18]

 

Supply Chain Transparency: The complexity and opacity of global rare earth supply chains create significant risks:

  • Limited visibility into sourcing and processing of materials

  • Difficulty in verifying compliance with environmental and labor standards

  • Challenges in tracking potential supply disruptions or bottlenecks

 

Single-Source Dependencies: The concentration of supply in China creates significant risks of disruption:

  • Export restrictions or embargoes could cut off critical supplies

  • Quality control issues could affect multiple downstream applications

  • Price manipulation could impact economic viability of U.S. industries

 

Regulatory, Financial, and Technological Barriers

 

Multiple barriers impede the development of a domestic rare earth supply chain:

Regulatory Challenges: The U.S. regulatory environment creates significant obstacles for rare earth development:

  • The permitting process for new mines in the U.S. takes an average of 29 years, making it the second slowest country in the world for mine development [10] [16]

  • Obtaining permission to operate a mine requires securing up to 30 permits, many of which are duplicative [16]

  • Environmental regulations, while important, often lack streamlined processes for critical minerals [31]

 

Financial Barriers: The economics of rare earth production outside China are challenging:

  • It would require approximately $20-40 billion over the next decade to establish domestic refining and processing capabilities [10] [29]

  • Most rare earth mining projects outside China are economically marginal, with only a few being potentially profitable under specific price scenarios [37]

  • Project economics are extremely sensitive to rare earth oxide prices, which China can influence through its dominant market position [37] [24]

 

Technological Gaps: The U.S. faces significant technological challenges in rare earth production:

  • Limited domestic expertise in rare earth separation and processing technologies

  • Lack of specialized equipment for rare earth processing

  • Insufficient research and development in alternative processing methods

 

Workforce Limitations: The U.S. faces a critical shortage of skilled workers across the rare earth value chain:

  • By 2029, an estimated 221,000 workers in the mining sector will retire [10] [26]

  • Only 327 degrees were awarded in mining and mineral engineering in 2020, compared to China's extensive educational programs [26]

  • The number of mining and mineral engineering programs in the U.S. has dropped from 25 in 1982 to just 15 in 2023 [26]

 

National Security and Economic Implications

 

The U.S. dependence on Chinese rare earth elements creates significant national security and economic risks:

 

Defense Applications: Rare earth elements are critical for numerous defense systems:

  • Each F-35 fighter jet contains over 900 pounds of rare earth elements [2] [9]

  • A Virginia-class submarine requires 9,200 pounds of rare earth elements [9]

  • Rare earths are crucial for precision-guided weapons, radar systems, and communications equipment [14]

As CSIS warned in April 2025, "The United States is particularly vulnerable for these supply chains," emphasizing that rare earths are crucial for a range of advanced defense technologies. [11]

 

Clean Energy Transition: Rare earth elements are essential for the clean energy transition:

  • A single 3-megawatt wind turbine can use up to 2 metric tonnes of rare earth magnets [2]

  • Electric vehicles rely on rare earth magnets for motors and other components [23]

  • The demand for rare earth elements is expected to grow by 400-600% over the next few decades, driven by electrification and renewable energy [2]

 

Economic Competitiveness: Rare earth supply chain vulnerabilities threaten U.S. economic competitiveness:

  • China's recent export restrictions could add $1,200 to average EV prices by 2026 and increase consumer electronics prices by 5-8% [23]

  • The supply chain disruption could last 3-5 years, with full market rebalancing potentially taking up to a decade [23]

  • U.S. manufacturing competitiveness in high-tech sectors is at risk due to potential supply disruptions and price volatility

Root Cause Diagnostics

 

KEY POINTS

The U.S. rare earth dependency stems from multiple factors: historical policy decisions that allowed China to flood the market with underpriced materials, regulatory barriers including thorium restrictions that hamper heavy rare earth production, significant economic disadvantages in processing costs, and a severe technical expertise gap with only 14 accredited metallurgy programs remaining in the U.S. compared to China's 38 mineral processing schools. The permitting process for new mines takes an average of 29 years in the U.S. versus 2-3 years in China, creating structural disadvantages that market forces alone cannot overcome.

 

Historical Policy Decisions

The current U.S. dependency on Chinese rare earth elements is the result of decades of policy decisions that allowed China to establish dominance in the sector. As Newsweek reported, "The lack of U.S. rare earth processing infrastructure is the result of decades of allowing China to flood the market and undercut domestic production." [1] This strategy was part of China's deliberate long-term approach to securing control over critical minerals.

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China's rare earth dominance grew systematically over time. According to the American Journal of Transportation, "The U.S. Geological Survey noted that China was dominating production of REEs and its growing control over the market was evident: 'In 1993, 38% of world production of REEs was in China, 33% was in the United States, 12% was in Australia, and five percent each was in Malaysia and India. However, in 2008, China accounted for more than 90% of world production of REEs, and by 2011, China accounted for 97% of world production.'" [31]

This dominance was not accidental but the result of strategic planning, including the 1992 "Rare Earth King Strategy" that consolidated 200 state mines and trained 12,000 specialized metallurgists. [19] By systematically building capabilities across the entire value chain while undercutting global competitors on price, China was able to drive most Western producers out of business.

 

Regulatory Barriers

Regulatory barriers in the United States have significantly hampered domestic rare earth production. According to War on the Rocks, "In China, smelters often take two to three years to obtain permits. By contrast, the process takes 7 to 10 years in the United States. According to an S&P Global Report, it takes an average of 29 years to bring a new mine online in the United States, making it the second slowest country in the world for mine development." [7]

 

Environmental regulations, while important for sustainability, add significant costs to rare earth production in the United States. According to Discovery Alert, "Environmental regulations and cleanup liabilities add $2.5 million per acre of processing facility, dramatically increasing the cost of domestic rare earth production." [19] These costs create a competitive disadvantage compared to Chinese producers, which operate under less stringent environmental standards.

 

Another significant regulatory barrier is the restriction on thorium, which is often found alongside heavy rare earth elements. The Namibia Critical Metals case demonstrates how thorium, traditionally considered a waste product in rare earth mining, can be transformed into a valuable revenue stream. [15] However, U.S. regulations make it difficult to process materials containing thorium, limiting domestic heavy rare earth production.

 

Economic Factors

Economic factors create significant competitive disadvantages for U.S. rare earth production compared to China. The cost structure of rare earth processing in the United States is substantially higher due to labor costs, environmental compliance, and lack of economies of scale.

 

MP Materials' experience highlights these economic challenges. Despite government subsidies, "U.S. magnets may cost 10-20% more than Chinese alternatives." [4] This price differential makes it difficult for U.S. producers to compete in global markets without additional support or protection.

 

The scale of investment required to establish a competitive rare earth industry in the United States is substantial. According to War on the Rocks, "Replacing China's copper smelting and refining capacity alone would require approximately $85 billion." [7] For rare earth elements specifically, the investment requirements are also significant, with MP Materials having invested $1 billion to rebuild the U.S. rare earth supply chain. [4]

 

The Department of Defense's relatively small demand for rare earth elements (less than 0.1% of global demand) limits its ability to drive market development on its own. [7] As the Government Accountability Office noted, "DOD's demand is relatively low compared to the broader global commercial market for these goods." [11] This makes it difficult to justify large-scale investments based solely on defense requirements, necessitating a broader approach that includes commercial applications.

 

Technical Expertise Gap

The United States faces a significant technical expertise gap in rare earth processing compared to China. According to the Center for Strategic and International Studies, "By 2029, an estimated 221,000 workers in the mining sector will retire, creating a significant workforce challenge." [7] [24] This demographic shift threatens to further erode U.S. capabilities in mineral processing.

 

The educational infrastructure to support rare earth production has also declined significantly. As CSIS reported, "Only 14 Accreditation Board for Engineering and Technology-accredited metallurgy and materials science programs remain in the United States." [7] [24] This contrasts sharply with China, which has 38 mineral processing schools and 44 mining engineering programs. [24]

 

Montana Technological University's recent initiative to develop a comprehensive online educational pipeline with seven stackable certificates aims to address this gap, but it will take time to rebuild the necessary expertise. [25] The $6.5 million project will address "critical workforce development needs in metallurgical, geological, mining, and environmental engineering" through innovative online programs. [25]

 

The technical complexity of rare earth processing further exacerbates this expertise gap. As the Indo-Pacific Studies Center noted, "REM production is not like other heavy metal production. It is heavily polluting, very dangerous to handle (due to the inclusion of concentrated acids), extremely energy intensive (requires an artificial environment that mimics high pressure and heat) to procure, and painstakingly long to refine (requires multiple separations for rare earth ore to be produced at bare minimum 95% purity)." [32]

Public-Private Partnership Models

 

Key Points

 

Successful implementation requires innovative public-private partnership models that align incentives across government, industry, and financial sectors. The Japanese JOGMEC model provides a proven template, having reduced Japan's rare earth dependence on China from 90% to 58% within a decade through strategic investments and offtake agreements. Effective partnerships must include risk-sharing mechanisms, streamlined regulatory processes, and coordinated R&D efforts. The Defense Production Act offers powerful tools for catalyzing private investment, while international partnerships through AUKUS can leverage complementary capabilities with allies like Australia.

 

Lessons from Japan's JOGMEC Model

Japan's approach to reducing rare earth dependence on China provides valuable lessons for the United States. After China's 2010 embargo, Japan implemented a comprehensive strategy that successfully reduced its reliance on Chinese rare earths from over 90% to 58% within a decade. [35] [36]  Central to this strategy was the Japan Oil, Gas and Metals National Corporation (JOGMEC), a state-backed company that made targeted investments in rare earth projects globally.

 

As Quartz reported, "Through Jogmec, Japan could direct substantial government funds to support different mining projects, and secure rights to a certain amount of rare earths in what's known as offtake agreements." [35] This approach provided both financial support for rare earth projects and guaranteed markets for their products, reducing investment risk.

 

JOGMEC's comprehensive approach included "exploration, recycling, alternative materials development, stockpiling, and technical support across the entire mineral supply chain." [36] The agency offered "extensive financial assistance, investing up to 75% in mineral projects to reduce risk for private enterprises and carefully vetting development plans." [36]

 

The United States currently lacks an equivalent institution with JOGMEC's focused mandate and financial capabilities. As Quartz noted, "One reason why the US and Europe have not been as active in providing significant state support to the rare earths sector is that those governments are just not set up for the task... While the US Geological Survey works on rare earths issues, it's fundamentally a research organization and doesn't have a financing function." [35]

 

Proposed U.S. Partnership Structure

Based on Japan's successful model, the United States should establish a dedicated Critical Minerals Corporation (CMC) with a mandate to invest in rare earth projects across the entire value chain. This entity would combine elements of the Defense Production Act, the International Development Finance Corporation, and the Department of Energy's Loan Programs Office, with a specific focus on critical minerals.

 

The U.S. current approach to critical minerals is fragmented and underfunded, with the International Development Finance Corporation financing only 1.2% of its projects in mineral investments.

 

The CMC would have the authority to:

  1. Make equity investments in rare earth mining, processing, and manufacturing projects

  2. Provide loan guarantees to reduce financing costs for critical projects

  3. Enter into offtake agreements to guarantee markets for rare earth products

  4. Coordinate research and development efforts across government, industry, and academia

  5. Facilitate international partnerships with allied nations

  6.  

This structure would address the current fragmentation of U.S. efforts across multiple agencies and provide a single point of contact for industry and international partners. As New Security Beat noted, "The U.S. current approach to critical minerals is fragmented and underfunded, with the International Development Finance Corporation financing only 1.2% of its projects in mineral investments." [36]

 

Risk-Sharing Mechanisms

Effective public-private partnerships require appropriate risk-sharing mechanisms that align incentives across stakeholders. The federal government should:

1. Provide Loan Guarantees: Offer loan guarantees for critical rare earth projects to reduce financing costs and attract private capital. The Department of Energy's Loan Programs Office provides a model that could be expanded specifically for rare earth projects.

 

2. Establish Purchase Commitments: Implement long-term purchase commitments for rare earth materials and components to provide market certainty for producers. The Department of Defense could lead this effort, leveraging its procurement authority.

 

3. Share Development Costs: Co-fund research and development efforts for innovative rare earth processing technologies. The Department of Energy's Advanced Research Projects Agency-Energy (ARPA-E) could establish a dedicated program for rare earth technologies.

 

4. Offer Tax Incentives: Provide tax incentives for investments in rare earth production, processing, and manufacturing facilities. These could include accelerated depreciation, investment tax credits, and production tax credits.

 

5. Create Insurance Programs: Establish insurance programs to protect against market volatility and supply disruptions. The Export-Import Bank's insurance programs provide a potential model.

 

Regulatory Coordination

Streamlining regulatory processes is essential for timely implementation of rare earth projects. The current permitting timeline for new mines (averaging 29 years in the United States) [7] is incompatible with the urgent need to develop domestic capabilities. The March 2025 executive order provides a starting point for regulatory reform, but additional measures are needed:

 

1. Establish a One-Stop Permitting Process: Create a single coordinated permitting process for critical mineral projects that maintains environmental standards while reducing redundancy and delay.

 

2. Reform Thorium Regulations: Modernize regulations related to thorium handling to enable domestic processing of heavy rare earth elements. The Namibia Critical Metals case demonstrates how thorium can be managed safely and potentially monetized. [15]

 

3. Develop Standardized Environmental Frameworks: Establish standardized environmental assessment frameworks specifically for rare earth projects to reduce uncertainty and accelerate permitting.

 

4. Implement Time Limits for Regulatory Decisions: Set maximum timeframes for regulatory decisions on critical mineral projects, with default approvals if deadlines are not met.

 

5. Create Regulatory Assistance Programs: Provide technical assistance to project developers to navigate regulatory requirements efficiently, particularly for smaller companies with limited resources.

 

International Partnership Models

International partnerships, particularly with allied nations, are essential for building a resilient rare earth supply chain. The AUKUS framework provides a promising vehicle for cooperation with Australia, which possesses significant rare earth resources. As the National Defense Industrial Association noted, "Australia has some of the largest recoverable critical mineral deposits on Earth, including high-quality cobalt, lithium, manganese, rare earth elements, tungsten and vanadium." [9]

 

Effective international partnerships should include:

1. Joint Investment in Processing Facilities: Co-invest in rare earth processing facilities in allied nations to diversify supply sources and share development costs.

 

2. Technology Transfer Agreements: Establish technology transfer agreements to share processing expertise and accelerate capability development.

 

3. Coordinated Stockpiling: Develop coordinated stockpiling strategies with allied nations to maximize resilience against supply disruptions.

 

4. Harmonized Standards and Regulations: Work toward harmonized standards and regulations for rare earth production to facilitate international trade and investment.

 

5. Joint Research and Development: Establish joint research and development programs to advance rare earth processing technologies and reduce environmental impacts.A

Technological Innovation Pathways

 

Key Points

Technological innovation is essential for breaking China's rare earth monopoly. Promising approaches include ReElement's Ligand Assisted Displacement chromatography, which eliminates toxic solvents used in traditional processing; biochemistry-based extraction methods that offer superior selectivity; and advanced recycling technologies that can recover up to 98% of rare earths from electronic waste. Emerging separation technologies like dual-ligand systems and machine learning-optimized extractants show potential for more efficient processing. These innovations can reduce environmental impact, lower production costs, and enable processing of unconventional sources like coal ash and phosphate waste.

 

Separation and Processing Innovations

Innovative separation and processing technologies offer the potential to overcome China's technical advantages in rare earth processing. ReElement Technologies has developed a novel Ligand Assisted Displacement (LAD) chromatographic separation technology that "offers a more environmentally friendly and cost-effective method for rare earth element extraction." [18] This technology "eliminates the need for toxic organic solvents, reducing environmental impact and potentially lowering capital expenditures compared to traditional rare earth processing methods." [18]

Rainbow Rare Earths is pioneering a new rare earth oxide separation process using continuous ion exchange (CIX) and continuous ion chromatography (CIC), which "replaces traditional solvent extraction methods." [28] This approach "eliminates the need for over 100 separate stages and avoids using toxic and flammable solvents traditionally used in rare earth processing." [28]

 

Biochemistry-based extraction methods represent another promising approach. Alta Resource Technologies "employs custom-engineered proteins to selectively bind and separate critical minerals from low-grade ores and recycled materials." [27] These "custom-designed proteins precisely target and bind rare earth elements at the molecular level, excelling even in low concentrations or complex mixtures. This level of selectivity surpasses traditional chemical processes, offering a cleaner, more efficient alternative." [27]

 

Academic research is advancing additional separation technologies. As Wiley-VCH reported, "Neutral organic extractants are emerging as promising alternatives to traditional acidic extractants, offering more selective and environmentally friendly separation methods." [29] Additionally, "Machine learning and computational methods are now being leveraged to rapidly predict and design new ligands for REE separation," [29] and "the development of dual-ligand separation systems shows significant promise for more precise REE element separation." [29]

 

Recycling and Urban Mining

Recycling and urban mining offer complementary pathways to reduce dependence on primary rare earth sources. REEcycle's technology "can recover over 98% of critical rare earth elements from electronic waste, representing a significant breakthrough in recycling efficiency." [20] The company's process specifically targets "neodymium, praseodymium, dysprosium, and terbium, the rare earths that impart essential properties in the NdFeB magnets used in critical national defense systems." [20]

 

The economic potential of urban mining is substantial. According to CSIS, "The value of raw materials in U.S. e-waste was almost $7.5 billion in 2019, representing a significant untapped economic opportunity." [22] Additionally, "Urban mining is becoming cost-competitive with traditional mining, especially for metals like copper and gold." [22]

 

The Pacific Northwest National Laboratory has developed a novel separation technique that "can recover rare earth elements in 4 hours, compared to traditional 30-hour methods." [23] This research "uses a simple mixed-salt water-based solution to separate minerals, making the process potentially more economical and environmentally friendly." [23] Importantly, "The separation technique is not limited to e-waste and could be applied to recovering minerals from seawater, mining waste, and salt lake brines." [23]

 

Alternative Sources and Processing Routes

Developing alternative sources and processing routes for rare earth elements can help diversify the supply chain and reduce dependence on traditional mining. Energy Fuels has identified monazite as a strategic mineral for REE production, with "high total rare earth oxide content (55%) and advantageous distribution of light, mid, and heavy rare earth elements." [17] The company has "secured future monazite supply through acquisition of three large-scale heavy mineral sands mines in the Southern Hemisphere" [17] and has "current commercial capacity to process 10,000 tonnes of monazite concentrate annually, with plans to expand to 60,000 tonnes in the coming years." [17]

 

Unconventional sources like coal ash, phosphate waste, and seawater are being explored as potential rare earth sources. As Wiley-VCH noted, "Emerging separation technologies are exploring unconventional sources like coal ash, electronic waste, and industrial byproducts for REE recovery." [29] These sources could provide significant rare earth supplies without the environmental impacts associated with traditional mining.

 

Thorium recovery and utilization represents another opportunity. Namibia Critical Metals has signed a memorandum of understanding to sell thorium produced from its Lofdal Heavy Rare Earth Project, demonstrating that "thorium, traditionally considered a waste product in rare earth mining, can be transformed into a valuable revenue stream." [15] This approach could help address regulatory barriers related to thorium in the United States while creating additional value from rare earth processing.

 

Cost Reduction Strategies

Reducing the cost of rare earth production is essential for competing with Chinese producers. Several technological approaches offer potential cost advantages:

1. Process Intensification: Technologies like ReElement's LAD chromatography and Rainbow's CIX/CIC process can reduce the number of processing steps and equipment requirements, potentially lowering capital and operating costs.

 

2. Energy Efficiency: Developing more energy-efficient separation processes can significantly reduce operating costs, as rare earth separation is traditionally energy-intensive.

 

3. Automation and Digitalization: Implementing advanced automation and digital technologies can reduce labor requirements and improve process efficiency, helping to offset higher U.S. labor costs.

 

4. Co-Product Recovery: Maximizing the recovery of co-products like thorium, uranium, and other valuable elements can improve the economics of rare earth production by creating additional revenue streams.

 

5. Modular Processing: Developing modular processing facilities that can be scaled up incrementally can reduce initial capital requirements and financial risk, making projects more attractive to investors.

Heavy Rare Earth Element Strategy

Key Points

Heavy rare earth elements represent the most critical vulnerability in the U.S. supply chain, with China maintaining near-complete monopoly control. A targeted strategy focusing on alternative sources, processing technologies, material efficiency, and substitution is essential for addressing this specific challenge. Success requires both short-term measures to secure immediate supplies and long-term investments in sustainable production capabilities.

​

Current Challenges and Vulnerabilities

Heavy rare earth elements (HREEs), particularly terbium and dysprosium, represent the most acute vulnerability in the U.S. rare earth supply chain. China's dominance in this segment is near-absolute, creating significant risks for critical applications that depend on these materials:

"Until 2023, China accounted for 99 percent of global heavy REEs processing, with only minimal output from a refinery in Vietnam. However, that facility has been shut down for the past year due to a tax dispute, effectively giving China a monopoly over supply." [1] This monopoly control gives China significant leverage over industries that depend on these materials.

​

The strategic importance of heavy rare earths stems from their essential role in high-performance applications. "Terbium, which makes up less than 1% of total rare earth content in most deposits, 'adds temperature resiliency to neodymium iron boron magnets' used in key defense systems like aircraft, submarines and missiles." [18] Similarly, dysprosium is critical for maintaining magnet performance at high temperatures, making it essential for applications like electric vehicle motors and wind turbines.

​

The supply challenge is compounded by geological factors. Heavy rare earths are primarily found in ionic adsorption clay deposits, which are rare outside of China. "Dysprosium and terbium are very rare and are recovered today only from uniquely accessible 'deposits' known as ionic adsorption clays, IACs (in the jargon). These types of deposits were first discovered in China and were only known and processed there until 10 years ago." [24] Developing alternative sources is technically challenging and requires specialized expertise.

​

Processing these materials presents additional challenges. "No one has ever commercially produced heavy rare earths from IACs located outside of China. No one, outside of China, therefore has any experience with the commercial extraction of heavy rare earths from the vast number of different materials know as 'clays,' each variation of which requires a careful study, before it can be defined as a 'mine-able' deposit." [24] This knowledge gap represents a significant barrier to developing alternative sources.

​

The situation is further complicated by projected demand growth. "Terbium demand is projected to increase 4-5 fold by 2060, driven primarily by electric vehicles, wind turbines, and home appliances." [3] China's own reserves may be insufficient to meet this growing demand, as "China's current terbium reserves (20,000 tons) are insufficient to meet projected demand of 20,500-44,300 tons between 2019-2060." [3] This creates both a challenge and an opportunity for developing alternative sources.

​

Alternative Sourcing Strategies

​

Developing alternative sources for heavy rare earth elements requires a multi-faceted approach:

 

1. Identify and Develop Domestic Resources: The Round Top deposit in Texas represents one of the most promising domestic sources of heavy rare earths. "The Round Top deposit in Texas represents a geological anomaly with tremendous strategic significance. While most rare earth deposits globally contain primarily light rare earth elements, Round Top contains significant concentrations of heavy rare earth elements—the most valuable and technologically crucial variety." [20] Accelerating the development of this resource should be a top priority.

 

2. Explore Urban Mining: Recycling heavy rare earths from end-of-life products offers a promising alternative to primary production. "REEcycle's proprietary processes recover more than 98% of the elements neodymium, praseodymium, dysprosium, and terbium, the rare earths that impart essential properties in the NdFeB magnets used in critical national defense systems." [17] Scaling up such recycling operations could provide a significant domestic source of heavy rare earths.

​

3. Invest in International Projects: Strategic investments in heavy rare earth projects in allied nations can help diversify supply sources. Lynas Rare Earths, the largest non-Chinese rare earth producer, is "expanding its heavy rare earth (HRE) product offerings to include dysprosium and terbium" at its Malaysian facility, with production targeted for 2025. [32] Similar partnerships with other international producers could help secure alternative supplies.

 

4. Develop Stockpiles: Given the critical importance of heavy rare earths and the challenges in developing new sources, strategic stockpiling is essential. The Defense Logistics Agency should prioritize acquiring reserves of terbium and dysprosium to mitigate short-term supply risks while longer-term solutions are developed.

 

5. Explore Secondary Recovery: Some existing mining operations may contain heavy rare earths that are not currently being recovered. Research into methods for extracting these elements from mining waste or byproducts could provide additional sources without requiring new mines.

​

Processing Technology Development

Developing domestic capabilities to process heavy rare earth elements is essential for supply chain independence:

 

1. Invest in Novel Separation Technologies: Traditional solvent extraction methods for separating rare earth elements are complex, environmentally challenging, and energy-intensive. ReElement Technologies' Ligand Assisted Displacement (LAD) chromatography offers a promising alternative that is "more environmentally friendly and cost-effective."  Similar innovative approaches should be prioritized for development and scale-up.

 

2. Explore Biomining Approaches: DARPA's EMBER program is exploring the use of microbes to separate rare earth elements. "The Environmental Microbes as a BioEngineering Resource, or EMBER, program is a DARPA initiative to use microbial and biomolecular engineering techniques to separate and purify rare earth mixtures." [9] This approach could potentially offer environmental and cost advantages over traditional methods.

 

3. Develop Modular Processing Systems: ReElement Technologies has demonstrated the potential of modular, scalable processing systems, having "successfully scaled up production capacity of SEG+ heavy rare earth concentrate by 50 times, from lab-scale to demonstration-scale, in just one day."  Such modular approaches could enable more rapid deployment of processing capabilities and more flexible adaptation to different feedstocks.

 

4. Create Processing Test Beds: Establishing facilities where different processing technologies can be tested and refined would accelerate innovation and reduce commercialization risks. These test beds could be operated as public-private partnerships, providing access to both industry and academic researchers.

 

5. Address Environmental Challenges: Developing environmentally sound processing methods is essential for sustainable domestic production. Research into closed-loop systems that minimize waste and water usage should be prioritized to ensure that domestic processing operations can meet stringent environmental standards.

​

Material Efficiency and Substitution

​

Reducing dependence on heavy rare earths through improved material efficiency and substitution represents an important complementary strategy:

 

1. Develop More Efficient Magnet Designs: Research into magnet designs that require less dysprosium and terbium while maintaining performance could significantly reduce demand for these critical elements. "The future demand for rare earths, in particular for dysprosium, could be reduced by improving material efficiency." [10]

 

2. Explore Alternative Magnet Materials: Research into alternative magnet materials that require fewer or no heavy rare earths could provide long-term solutions. "Niron Magnetics develops iron-nitride permanent magnets with zero rare earth content," [25] though such alternatives currently lack the full performance characteristics of rare earth magnets.

 

3. Investigate Grain Boundary Diffusion: This technique allows for more efficient use of heavy rare earths in magnets by concentrating them at grain boundaries rather than distributing them throughout the material. Further development and commercialization of this approach could significantly reduce heavy rare earth requirements.

 

4. Develop Application-Specific Solutions: Not all applications require the highest-performance magnets. Identifying applications where lower-performance magnets are acceptable could reduce demand for heavy rare earths in those sectors, reserving limited supplies for critical applications.

 

5. Support Fundamental Research: Long-term solutions may come from fundamental materials research that identifies entirely new approaches to achieving the properties currently provided by heavy rare earth elements. Sustained funding for such research is essential for developing transformative technologies.

​

Strategic Partnerships for HREEs

Given the significant challenges in developing heavy rare earth capabilities, strategic partnerships are particularly important in this segment:

​

1. Learn from Japan's Experience: Japan has successfully reduced its dependence on Chinese rare earths through strategic investments and partnerships. "JARE was co-founded in 2011 by Sojitz Corporation and Japan Organization for Metals and Energy Security (JOGMEC); Lynas and JARE are parties to a long-term senior loan facility." [31] This partnership has secured "up to 65% of the HRE (dysprosium and terbium, DyTb) produced by Lynas from Mt. Weld feedstock to the Japanese market." [31] Similar arrangements could benefit the U.S.

​

2. Engage with Emerging Producers: Several countries are developing heavy rare earth resources that could provide alternatives to Chinese supplies. Engaging with these emerging producers through investment, technical assistance, and purchase agreements could help accelerate their development and secure access to their production.

​

3. Coordinate Research Efforts: International coordination of research into heavy rare earth processing and substitution could accelerate progress and share costs. Establishing international research consortia focused specifically on heavy rare earth challenges would benefit all participating nations.

​

4. Develop Joint Ventures: Joint ventures between U.S. companies and international partners with relevant expertise could accelerate the development of domestic heavy rare earth capabilities. These arrangements could facilitate technology transfer and share investment risks.

​

5. Create Offtake Agreements: Long-term purchase agreements with emerging heavy rare earth producers could provide the demand certainty needed to secure financing for their projects. Such agreements could be structured to include options for equity participation or technology sharing to further strengthen relationships.

Implementation Roadmap

Key Points

Achieving rare earth element independence requires a phased approach with clear milestones and metrics. The roadmap spans immediate actions to address critical vulnerabilities, mid-term development of domestic capabilities, and long-term establishment of a sustainable industry. Success depends on coordinated action across government agencies, private sector partners, and international allies, with continuous assessment and adaptation as technologies and market conditions evolve.

Phase 1: Immediate Actions (2025-2027)

The first phase focuses on addressing critical vulnerabilities and laying the groundwork for longer-term solutions:

1. Establish a National Rare Earth Coordination Office: Create a dedicated office within the Department of Commerce or Department of Defense to coordinate rare earth initiatives across government agencies, similar to Japan's JOGMEC. This office would serve as a central point for strategy development, funding coordination, and stakeholder engagement.

2. Develop Strategic Stockpiles: Immediately expand the National Defense Stockpile to include adequate reserves of critical rare earth elements, particularly heavy rare earths like terbium and dysprosium. These stockpiles would provide a buffer against short-term supply disruptions while longer-term solutions are developed.

3. Accelerate Permitting for Advanced Projects: Implement expedited permitting processes for rare earth projects that are already in advanced stages of development, such as the Round Top deposit in Texas. This could include dedicated staff for review, concurrent rather than sequential reviews, and prioritization of projects with significant heavy rare earth content.

4. Scale Up Recycling Operations: Provide financial and technical support to scale up promising rare earth recycling operations like REEcycle, which can recover critical elements from electronic waste. These operations could provide a near-term domestic source of rare earths while primary production capabilities are being developed.

5. Secure International Supply Agreements: Negotiate long-term supply agreements with allied nations that produce rare earth elements, particularly Australia (Lynas) and Canada. These agreements could include provisions for preferential access during supply disruptions and joint investments in processing capabilities.

6. Launch a Rare Earth Workforce Initiative: Develop specialized training programs for rare earth mining, processing, and manufacturing to address immediate workforce needs. These programs could be implemented through community colleges, technical schools, and industry partnerships.

7. Implement Defense Procurement Requirements: Establish requirements for defense contractors to progressively increase the use of domestically sourced rare earth materials in military systems. These requirements would create demand certainty for domestic producers and incentivize investment in the sector.

Phase 2: Capability Development (2028-2031)

Recycling electronic waste can recover valuable rare earth elements.

The second phase focuses on building domestic capabilities across the rare earth supply chain:

1. Establish Heavy Rare Earth Processing Facilities: Support the development and scale-up of domestic heavy rare earth processing facilities using innovative technologies like ReElement's LAD chromatography. These facilities would address the most critical gap in the current supply chain.

2. Expand Magnet Manufacturing Capacity: Provide financial and technical support to expand domestic magnet manufacturing capacity, building on MP Materials' Fort Worth facility and USA Rare Earth's planned Oklahoma facility. The goal should be to achieve at least 20% of domestic magnet demand from U.S. production by 2031.

3. Develop New Mining Operations: Bring additional domestic rare earth mines into production, focusing on deposits with significant heavy rare earth content. This would require continued permitting reforms and financial support for project development.

4. Create Regional Processing Hubs: Establish regional rare earth processing hubs that can serve multiple mining operations, achieving economies of scale and concentrating technical expertise. These hubs could be developed through public-private partnerships.

5. Implement Recycling Infrastructure: Develop a comprehensive infrastructure for collecting and processing end-of-life products containing rare earth elements. This would include collection systems, dismantling facilities, and processing technologies.

6. Expand Research and Development: Increase funding for research into advanced rare earth processing technologies, recycling methods, and alternative materials. This research should be coordinated across national laboratories, universities, and industry partners.

7. Develop International Production Partnerships: Establish joint ventures or strategic investments in rare earth projects in allied nations, following Japan's model of securing access to international production. These partnerships would help diversify supply sources and share development costs.

Phase 3: Industry Maturation (2032-2035)

U.S. Rare Earth Supply Chain Independence Targets (%)

The final phase focuses on creating a sustainable and competitive domestic rare earth industry:

1. Achieve Processing Independence: Complete the development of domestic processing capabilities for all critical rare earth elements, eliminating dependence on foreign processing. This would include both light and heavy rare earths, with particular emphasis on elements like terbium and dysprosium.

2. Establish a Competitive Magnet Industry: Develop a domestic magnet manufacturing industry capable of meeting at least 50% of U.S. demand for rare earth magnets. This industry should be commercially viable without ongoing government subsidies.

3. Implement Sustainable Mining Practices: Ensure that domestic rare earth mining operations implement best practices for environmental protection and community engagement. This would include water management, waste reduction, and site rehabilitation.

4. Commercialize Advanced Technologies: Bring to market advanced technologies developed in earlier phases, including more efficient separation methods, improved recycling techniques, and alternative materials with reduced rare earth content.

5. Develop a Circular Economy: Implement comprehensive systems for recovering and reusing rare earth elements from end-of-life products, creating a circular economy that reduces dependence on primary production.

6. Establish Global Leadership: Position the U.S. as a global leader in sustainable rare earth production and advanced magnet technologies, influencing international standards and practices.

7. Ensure Long-Term Competitiveness: Develop mechanisms to ensure the long-term competitiveness of the domestic rare earth industry, including continued innovation, workforce development, and appropriate trade policies.

Metrics and Milestones

Clear metrics and milestones are essential for tracking progress and ensuring accountability:

1. Supply Chain Coverage: Measure the percentage of U.S. rare earth demand that can be met through domestic sources or secure international partnerships. Target: 30% by 2027, 60% by 2031, 90% by 2035.

2. Processing Capacity: Track the development of domestic processing capacity for both light and heavy rare earths. Target: Processing capability for all critical rare earth elements by 2031.

3. Magnet Production: Measure domestic production of rare earth magnets as a percentage of U.S. demand. Target: 20% by 2031, 50% by 2035.

4. Recycling Rate: Track the percentage of rare earth elements recovered from end-of-life products. Target: 15% by 2027, 30% by 2031, 50% by 2035.

5. Investment Levels: Monitor public and private investment in the domestic rare earth industry. Target: $10 billion by 2027, $25 billion by 2031, $50 billion by 2035.

6. Workforce Development: Track the number of workers trained in rare earth mining, processing, and manufacturing. Target: 5,000 by 2027, 15,000 by 2031, 30,000 by 2035.

7. Research and Innovation: Measure patents, publications, and commercialized technologies related to rare earth elements. Target: Double current levels by 2027, quadruple by 2031, octuple by 2035.

Governance and Coordination

Effective implementation requires clear governance structures and coordination mechanisms:

1. National Rare Earth Coordination Office: This office would oversee implementation of the roadmap, coordinate across government agencies, engage with industry and international partners, and report regularly on progress.

2. Interagency Working Group: A working group including representatives from relevant agencies (Defense, Energy, Commerce, State, Interior) would coordinate government actions and ensure alignment with the roadmap.

3. Industry Advisory Council: A council of industry representatives would provide input on implementation, identify challenges and opportunities, and help align government and private sector efforts.

4. International Coordination Mechanism: A formal mechanism for coordinating with allied nations on rare earth initiatives would ensure complementary rather than competitive efforts and facilitate information sharing.

5. Annual Progress Report: A comprehensive annual report on progress toward rare earth independence would provide transparency and accountability, identifying successes, challenges, and needed adjustments to the roadmap.

Strategic Roadmap for REE Supply Chain Resilience

 

KEY POINTS

Building a resilient U.S. rare earth element supply chain requires a comprehensive, phased approach that addresses vulnerabilities across the entire value chain. This strategic roadmap outlines concrete steps for developing domestic capabilities, forming international partnerships, and implementing policy reforms over the next decade. The strategy balances short-term risk mitigation with long-term structural changes to create a sustainable and secure supply chain.

 

Phased Implementation Plan (2025-2035)

The strategic roadmap is structured around three distinct phases, each with specific objectives and milestones:

 

Phase 1: Risk Mitigation and Foundation Building (2025-2027)

Key Objectives:

  • Establish strategic stockpiles of critical rare earth materials

  • Develop initial processing capabilities for light rare earth elements

  • Implement regulatory reforms to accelerate project development

  • Form international partnerships with allied nations

  • Launch workforce development initiatives

Key Milestones:

  • Complete environmental permitting reforms for critical minerals by Q4 2025

  • Establish a National Rare Earth Strategic Reserve by Q2 2026

  • Commission first domestic light rare earth separation facility by Q4 2026

  • Implement "Critical Minerals Production Tax Incentive" by Q1 2026

  • Launch Rare Earth Workforce Development Initiative by Q3 2025

 

Phase 2: Capability Development and Scaling (2028-2031)

Key Objectives:

  • Develop domestic heavy rare earth processing capabilities

  • Scale up magnet manufacturing capacity

  • Establish recycling infrastructure for rare earth elements

  • Expand mining operations for both light and heavy rare earths

  • Deepen international supply chain integration with allies

The most critical milestone in this phase is commissioning the first domestic heavy rare earth separation facility by Q2 2028, addressing one of the most acute vulnerabilities in the U.S. supply chain.

Key Milestones:

  • Commission first domestic heavy rare earth separation facility by Q2 2028

  • Achieve 25% domestic production of U.S. rare earth magnet demand by 2030

  • Establish commercial-scale rare earth recycling facilities by Q4 2029

  • Develop at least two new domestic rare earth mining operations by 2030

  • Create integrated supply chains with at least three allied nations by 2029

 

Phase 3: Supply Chain Resilience and Leadership (2032-2035)

Key Objectives:

  • Achieve self-sufficiency in critical rare earth processing

  • Establish global leadership in specific rare earth technologies

  • Create a fully circular rare earth economy

  • Develop next-generation rare earth alternatives

  • Establish global standards and governance frameworks

Key Milestones:

  • Meet 75% of domestic rare earth magnet demand through U.S. production by 2035

  • Process 50% of domestic rare earth consumption within the United States by 2034

  • Achieve 30% recycling rate for rare earth elements by 2035

  • Commercialize at least three alternative technologies that reduce rare earth dependence by 2033

  • Establish international rare earth governance framework with at least 10 partner nations by 2035

 

Securing Heavy Rare Earth Element Supply

 

Addressing the acute vulnerability in heavy rare earth elements requires a targeted strategy:

 

Diversified Sourcing Strategy:

 

1. Domestic Resource Development:

  • Prioritize exploration and development of domestic heavy rare earth deposits

  • Focus on ionic clay deposits in the southeastern United States

  • Accelerate permitting for projects with significant heavy rare earth content

 

2. International Partnerships:

  • Develop strategic partnerships with Australia, which has significant heavy rare earth deposits [5] [7]

  • Explore opportunities in Vietnam, Brazil, and other countries with untapped heavy rare earth potential [14]

  • Create joint ventures with allied nations to develop heavy rare earth resources

 

3. Secondary Recovery:

  • Invest in technologies to recover heavy rare earths from mine tailings and waste streams [20]

  • Develop urban mining capabilities to extract heavy rare earths from electronic waste [17] [18]

  • Research coal ash and other industrial byproducts as potential heavy rare earth sources [28]

 

Processing Technology Development:

Developing domestic heavy rare earth processing capabilities is the most critical technical challenge for supply chain resilience. The strategy includes:

 

1. Separation Facilities:

  • Fast-track development of heavy rare earth separation facilities

  • Provide targeted financial incentives for heavy rare earth processing

  • Support technology transfer and adaptation of proven separation methods

 

2. Alternative Technologies:

  • Invest in research on more environmentally friendly separation technologies

  • Develop bioleaching and other innovative extraction methods [19] [20]

  • Support pilot projects for direct extraction technologies

 

3. Process Optimization:

  • Improve efficiency and reduce costs of heavy rare earth processing

  • Develop automated and digitalized process control systems

  • Reduce environmental impacts through closed-loop processing systems

 

Strategic Applications Focus:

 

1. Defense Prioritization:

  • Ensure defense applications have priority access to limited heavy rare earth supplies

  • Develop stockpiling strategies specifically for defense-critical elements like dysprosium and terbium

  • Support research on more efficient use of heavy rare earths in defense applications

 

2. Commercial Allocation:

  • Develop frameworks for allocating heavy rare earths to critical civilian applications

  • Support research on reducing or eliminating heavy rare earth content in commercial products

  • Implement recycling requirements for products containing significant heavy rare earths

 

Policy Recommendations and Incentives

A comprehensive policy framework is essential for developing a resilient rare earth supply chain:

 

Regulatory Reforms:

 

1. Permitting Streamlining:

  • Implement a "lead agency" approach to coordinate environmental reviews [30]

  • Establish strict timelines for permit processing (1-2 years maximum) [30]

  • Create a fast-track process specifically for critical mineral projects

 

2. Environmental Balance:

  • Develop clear environmental standards specific to rare earth mining and processing

  • Support research on more environmentally friendly extraction and processing methods

  • Create incentives for projects that exceed environmental performance standards

 

3. Land Access:

  • Review federal land policies to facilitate responsible rare earth exploration

  • Develop frameworks for rare earth development on public lands with appropriate environmental safeguards

  • Create a database of potential rare earth resources on federal lands

 

Financial Incentives:

Substantial financial incentives are necessary to overcome the economic challenges of developing rare earth projects outside of China.

 

1. Tax Incentives:

  • Implement a "Critical Minerals Production Tax Incentive" similar to Australia's approach [5]

  • Provide investment tax credits for rare earth processing facilities

  • Create accelerated depreciation allowances for rare earth mining and processing equipment

 

2. Direct Funding:

  • Allocate $20-40 billion over the next decade through a "Critical Minerals Industrial Act" [10] [29]

  • Expand Department of Defense funding for rare earth projects beyond the current $439 million [9]

  • Create matching grants for private sector investments in rare earth processing

 

3. Loan Guarantees:

  • Establish a dedicated loan guarantee program for rare earth projects

  • Provide working capital support for rare earth startups

  • Create export financing for rare earth processing equipment

 

Research and Development Support:

 

1. Technology Innovation:

  • Fund research on alternative separation technologies

  • Support development of more efficient magnet manufacturing processes

  • Invest in recycling and urban mining technologies

 

2. Material Substitution:

  • Research alternatives to rare earth elements for critical applications

  • Develop technologies that reduce the amount of rare earths required

  • Support commercialization of promising substitute materials

 

3. Process Improvement:

  • Fund pilot projects for innovative rare earth processing methods

  • Support scale-up of laboratory technologies to commercial applications

  • Create technology demonstration facilities for rare earth processing

 

International Partnership Strategy

 

Building international partnerships is critical for diversifying supply chains and sharing technological expertise:

"The United States cannot solve its rare earth vulnerabilities alone. International partnerships are essential for building resilient supply chains."

 

Quad Alliance Framework:

 

1. Formalized Cooperation:

  • Establish a dedicated Quad Rare Earth Partnership building on existing initiatives [33] [36]

  • Create joint investment mechanisms for rare earth projects

  • Develop shared technology platforms and standards

 

2. Complementary Strengths:

  • Leverage Australia's resource reserves and mining expertise [5] [8]

  • Utilize Japan's processing technology and capital [33]

  • Incorporate India's growing manufacturing capabilities and domestic market [33] [35]

  • Apply U.S. technological innovation and market scale

 

3. Joint Projects:

  • Develop multinational rare earth processing facilities

  • Create shared research and development initiatives

  • Establish joint stockpiling programs

 

European Partnerships:

 

1. Technology Collaboration:

  • Partner with European initiatives like the European Raw Materials Alliance

  • Support joint research on recycling and circular economy approaches

  • Develop common standards and certification systems

 

2. Market Integration:

  • Create preferential trade arrangements for rare earth products

  • Develop joint investment vehicles for rare earth projects

  • Establish reciprocal access to strategic reserves

 

Emerging Producer Relationships:

Developing relationships with emerging rare earth producers is essential for creating a diverse and resilient global supply chain.

 

1. Development Support:

  • Provide technical assistance to emerging rare earth producers

  • Create capacity-building programs for countries with rare earth potential

  • Offer financing for environmentally responsible development

 

2. Supply Agreements:

  • Establish long-term offtake agreements with new producers

  • Create strategic partnerships with countries like Vietnam, Brazil, and Canada

  • Develop processing hubs in strategic locations

 

Economic Analysis and Investment Requirements

 

Developing a resilient rare earth supply chain requires substantial investment across multiple segments:

 

Capital Requirements:

 

1. Mining Development:

  • New mine development: $300-500 million per project [37] [39]

  • Expansion of existing operations: $100-300 million per project

  • Exploration and resource definition: $50-100 million

 

2. Processing Infrastructure:

  • Light rare earth separation facility: $200-400 million per facility [38]

  • Heavy rare earth separation facility: $300-600 million per facility

  • Metallization plants: $150-300 million per facility

 

3. Magnet Manufacturing:

  • NdFeB magnet production facility: $100-200 million per facility [4]

  • Specialized alloy production: $50-100 million per facility

  • Testing and certification infrastructure: $20-50 million

 

4. Recycling and Circular Economy:

  • Commercial-scale recycling facilities: $50-150 million per facility

  • Collection and sorting infrastructure: $20-50 million

  • Urban mining technology development: $30-80 million

 

Total Investment Requirements:

  • Phase 1 (2025-2027): $5-8 billion

  • Phase 2 (2028-2031): $10-15 billion

  • Phase 3 (2032-2035): $5-7 billion

  • Total 10-year investment: $20-30 billion

While this investment is substantial, it represents less than the cost of a single aircraft carrier and would provide critical national security and economic benefits for decades.

 

Return on Investment Analysis:

 

1. Economic Benefits:

  • Job creation: 25,000-35,000 direct jobs across the value chain

  • Economic output: $15-25 billion annually by 2035

  • Tax revenue: $2-4 billion annually by 2035

 

2. Strategic Returns:

  • Reduced supply chain vulnerability

  • Enhanced national security

  • Technological leadership in critical sectors

 

3. Environmental and Social Benefits:

  • Improved environmental standards compared to Chinese production

  • Reduced global transportation emissions

  • Development of circular economy capabilitiesA

Implementation Frameworks for Key Initiatives

 

KEY POINTS

Successful implementation of the rare earth element strategy requires detailed frameworks for each key initiative. These frameworks provide concrete guidance for developing mining assets, establishing processing infrastructure, building magnet manufacturing capabilities, and creating recycling systems. Each framework addresses technical requirements, organizational structures, financing mechanisms, and risk mitigation approaches to ensure effective execution.

 

Mining Asset Development Framework

Developing domestic and allied nation mining assets requires a structured approach:

 

Resource Identification and Prioritization:

 

1. Geological Assessment:

  • Conduct comprehensive surveys of potential rare earth deposits in the United States

  • Prioritize deposits with favorable mineralogy and higher heavy rare earth content

  • Utilize advanced exploration technologies to reduce discovery costs

 

2. Project Ranking System:

  • Develop a standardized evaluation framework for rare earth projects

  • Consider factors including resource quality, accessibility, environmental impact, and economics

  • Create a tiered classification of projects based on strategic importance and development timeline

 

3. Land Access Strategy:

  • Identify high-potential areas on federal lands

  • Develop streamlined processes for exploration permits on public lands

  • Create incentives for private landowners to allow rare earth exploration

 

Development Acceleration:

Accelerating the development timeline for rare earth mining projects is critical for addressing near-term supply vulnerabilities.

 

1. Permitting Fast Track:

  • Implement coordinated permitting processes with designated lead agencies

  • Establish clear timelines and milestones for regulatory approvals

  • Provide technical assistance to project developers for environmental compliance

 

2. Infrastructure Support:

  • Develop shared infrastructure for mining regions (power, water, transportation)

  • Create public-private partnerships for infrastructure development

  • Coordinate with state and local governments on supporting infrastructure

 

3. Technical Assistance:

  • Provide geological and engineering support through USGS and DOE programs

  • Develop standardized best practices for rare earth mining operations

  • Create technical advisory services for project developers

 

Financing Mechanisms:

 

1. Public-Private Partnerships:

  • Establish joint ventures between government entities and private companies

  • Create risk-sharing structures for early-stage development

  • Develop revenue-sharing models for projects on public lands

 

2. Capital Formation:

  • Create tax incentives for investments in rare earth mining projects

  • Establish dedicated investment funds for critical mineral development

  • Provide loan guarantees for project financing

 

3. International Collaboration:

  • Develop joint mining ventures with allied nations

  • Create cross-border investment vehicles for rare earth projects

  • Establish offtake agreements with international partners

 

Processing Infrastructure Development

Establishing domestic processing capabilities is the most critical aspect of supply chain development:

 

Technology Selection and Adaptation:

 

1. Process Engineering:

  • Evaluate and select appropriate separation technologies for different ore types

  • Adapt existing technologies to U.S. regulatory and environmental requirements

  • Develop improved processes with reduced environmental impact

 

2. Facility Design:

  • Create standardized designs for modular processing facilities

  • Incorporate advanced automation and process control systems

  • Design for environmental performance and worker safety

 

3. Technology Transfer:

  • Acquire licenses for proven processing technologies

  • Partner with international experts for knowledge transfer

  • Develop domestic expertise through training and collaboration

 

Facility Siting and Development:

Strategic siting of processing facilities can create regional hubs that maximize efficiency and minimize environmental impacts.

 

1. Location Selection:

  • Identify optimal locations based on access to resources, infrastructure, and workforce

  • Consider co-location with existing chemical or metallurgical facilities

  • Evaluate environmental considerations and community impacts

 

2. Phased Development:

  • Begin with light rare earth separation capabilities

  • Expand to heavy rare earth processing as technologies mature

  • Scale facilities based on market demand and resource availability

 

3. Regulatory Compliance:

  • Develop standardized environmental compliance frameworks

  • Create templates for permitting and approval processes

  • Establish clear guidelines for waste management and disposal

 

Operational Excellence:

 

1. Workforce Development:

  • Create specialized training programs for process operators

  • Develop partnerships with universities and technical colleges

  • Establish apprenticeship programs for rare earth processing

 

2. Process Optimization:

  • Implement continuous improvement methodologies

  • Utilize digital twins and advanced process control

  • Develop key performance indicators for operational excellence

 

3. Supply Chain Integration:

  • Coordinate feedstock supply from multiple mining operations

  • Develop product specifications aligned with downstream requirements

  • Create inventory management systems for process intermediates

 

Magnet Manufacturing Capability Development

Building domestic magnet manufacturing capacity is essential for completing the value chain:

 

Technology Acquisition and Development:

 

1. Manufacturing Process:

  • Acquire licenses for proven magnet manufacturing technologies

  • Develop improved manufacturing processes with higher efficiency

  • Invest in research on next-generation magnet production techniques

 

2. Quality Control Systems:

  • Establish testing and certification protocols for rare earth magnets

  • Develop in-line quality monitoring systems

  • Create traceability systems for materials and products

 

3. Product Development:

  • Research application-specific magnet designs

  • Develop magnets with reduced heavy rare earth content

  • Create customized solutions for defense and critical infrastructure applications

 

Production Scaling:

Scaling up magnet production requires a phased approach that balances risk management with the urgent need for domestic capacity.

 

1. Pilot Facilities:

  • Establish demonstration-scale production lines

  • Validate manufacturing processes and quality standards

  • Train initial workforce and develop operating procedures

 

2. Commercial Expansion:

  • Scale production based on market demand and material availability

  • Implement phased capacity expansion to manage investment risk

  • Develop specialized production lines for high-performance applications

 

3. Supply Chain Integration:

  • Coordinate metal and alloy supply from processing facilities

  • Develop just-in-time inventory systems to reduce working capital requirements

  • Create forecasting systems to align production with end-user demand

 

Market Development:

 

1. Defense Applications:

  • Establish long-term supply agreements with defense contractors

  • Develop qualification processes for defense-specific magnets

  • Create secure supply chains for classified applications

 

2. Commercial Markets:

  • Develop partnerships with electric vehicle and wind turbine manufacturers

  • Create standardized products for common applications

  • Establish competitive pricing strategies to compete with imported magnets

 

3. Export Potential:

  • Develop export markets in allied nations

  • Create international quality certifications

  • Establish trade promotion initiatives for U.S.-made magnets

 

Recycling and Circular Economy Framework

Developing recycling capabilities is essential for long-term sustainability:

 

Collection and Feedstock Development:

 

1. End-of-Life Product Recovery:

  • Establish collection systems for products containing rare earth magnets

  • Create incentives for consumers and businesses to return rare earth-containing products

  • Develop disassembly technologies to efficiently recover rare earth components

 

2. Industrial Waste Recovery:

  • Identify and quantify rare earth-containing industrial waste streams

  • Develop collection systems for manufacturing scrap and byproducts

  • Create standards for waste segregation and handling

 

3. Urban Mining:

  • Develop technologies to recover rare earths from electronic waste

  • Create urban mining facilities in major metropolitan areas

  • Establish logistics networks for e-waste collection and processing

 

Processing Technology Development:

 

1. Separation and Recovery:

  • Adapt hydrometallurgical processes for recycled materials [17]

  • Develop physical separation techniques for specific product types

  • Create standardized processes for different feedstock streams

Recycling technologies for rare earth elements represent a significant opportunity for the U.S. to establish leadership in an emerging field with both economic and environmental benefits.

 

2. Purification and Refinement:

  • Develop methods to achieve high-purity recycled rare earth oxides

  • Create quality control systems for recycled materials

  • Establish specifications for recycled rare earth products

 

3. Direct Recycling:

  • Develop technologies for direct reuse of rare earth components

  • Create processes for magnet-to-magnet recycling

  • Establish testing and recertification protocols for recycled components

 

Market Development:

 

1. Product Certification:

  • Create standards for recycled rare earth content

  • Develop certification systems for recycled materials

  • Establish traceability for recycled rare earth products

 

2. Policy Support:

  • Implement recycled content requirements for certain applications

  • Create tax incentives for using recycled rare earth materials

  • Develop extended producer responsibility regulations

 

3. Circular Design:

  • Promote design-for-recycling principles in rare earth applications

  • Create guidelines for product designers to facilitate recycling

  • Develop standards for disassembly and material recovery

Risk Assessment and Mitigation Strategies

 

KEY POINTS

Developing a resilient rare earth element supply chain involves numerous risks that must be carefully managed. This section identifies key risks across market, technological, geopolitical, and environmental dimensions, and outlines comprehensive mitigation strategies for each. A proactive risk management approach is essential for successfully implementing the strategic roadmap and achieving supply chain resilience.

 

Market and Economic Risks

The rare earth market presents significant economic challenges that must be addressed:

 

Price Volatility:

Risk: Rare earth prices are highly volatile, making long-term investment decisions difficult. China can influence global prices through production quotas and export controls, potentially undermining the economic viability of non-Chinese projects.

 

Mitigation Strategies:

  • Develop price stabilization mechanisms through strategic reserves

  • Create long-term offtake agreements with price floors and ceilings

  • Implement risk-sharing arrangements between public and private sectors

  • Develop financial hedging instruments for rare earth markets

 

Economic Viability:

Risk: Many rare earth projects outside China struggle with economic viability due to higher operating costs and environmental compliance requirements. As noted in a September 2024 analysis, "16 rare earth assets representing around half of ex-China supply in 2030 would struggle to maintain production if PrNd oxide prices drop below $60 per kilogram." [24]

 

Mitigation Strategies:

  • Provide production tax credits to offset higher operating costs

  • Implement targeted subsidies for strategic projects

  • Support vertical integration to capture value across the supply chain

  • Develop cost-reduction technologies and process improvements

 

Market Development:

Risk: Developing domestic processing and manufacturing capabilities requires assured markets for products, creating a chicken-and-egg problem for new entrants.

 

Mitigation Strategies:

  • Establish government procurement preferences for domestically produced rare earth products

  • Create incentives for commercial customers to source from domestic suppliers

  • Develop phased market entry strategies aligned with capacity development

  • Implement content requirements for critical applications

 

Technological and Operational Risks

Developing rare earth capabilities involves significant technological challenges:

 

Technology Gaps:

Risk: The U.S. lacks expertise in key rare earth processing technologies, particularly for heavy rare earth separation and high-performance magnet manufacturing.

 

Mitigation Strategies:

  • Acquire licenses for proven technologies from allied nations

  • Establish international technology transfer agreements

  • Develop partnerships with experienced operators from allied countries

  • Create focused R&D programs to address specific technology gaps

 

Operational Challenges:

Risk: Rare earth processing involves complex operations with significant technical challenges, including handling of radioactive materials and managing complex chemical processes.

 

Mitigation Strategies:

  • Develop comprehensive operational standards and best practices

  • Create specialized training programs for technical personnel

  • Establish centers of excellence for rare earth processing

  • Implement rigorous safety and environmental management systems

 

Workforce Development:

Risk: The U.S. faces a critical shortage of skilled workers across the rare earth value chain, with an aging mining workforce and limited educational programs in relevant fields.

 

Mitigation Strategies:

  • Expand funding for mining and metallurgical engineering programs

  • Create specialized rare earth processing curricula at technical colleges

  • Develop apprenticeship programs with industry partners

  • Establish international exchange programs with allied nations

 

Geopolitical and Supply Chain Risks

The global context presents significant risks to rare earth supply chain development:

 

Chinese Countermeasures:

Risk: China may respond to U.S. supply chain diversification efforts with aggressive countermeasures, including price manipulation, technology restrictions, or targeted export controls.

Mitigation Strategies:

  • Develop contingency plans for various Chinese response scenarios

  • Create strategic reserves to buffer against short-term disruptions

  • Establish diversified supply chains with multiple international partners

  • Implement monitoring systems for early detection of market manipulation

 

International Coordination:

Risk: Developing alternative supply chains requires coordinated action among multiple countries, which can be challenging due to differing priorities and approaches.

Mitigation Strategies:

  • Establish formal coordination mechanisms with allied nations

  • Create shared investment vehicles for multinational projects

  • Develop common standards and certification systems

  • Implement regular strategic dialogues with key partners

 

Resource Nationalism:

Risk: Countries with rare earth resources may implement export restrictions or nationalization policies that disrupt supply chains.

Mitigation Strategies:

  • Develop long-term bilateral agreements with resource-rich nations

  • Create mutual benefit frameworks that provide value to producing countries

  • Establish investment protection mechanisms for international projects

  • Diversify sourcing across multiple countries and regions

 

Environmental and Social Risks

 

Rare earth development presents significant environmental challenges:

 

Environmental Impacts:

Risk: Rare earth mining and processing can have substantial environmental impacts, including radioactive waste management challenges, water pollution, and habitat disruption.

Mitigation Strategies:

  • Develop and implement best-in-class environmental management standards

  • Invest in research on more environmentally friendly processing technologies

  • Create transparent monitoring and reporting systems

  • Implement progressive rehabilitation practices for mining operations

 

Social License:

Risk: Local opposition to mining and processing facilities can delay or prevent project development, particularly in regions without a history of extractive industries.

Mitigation Strategies:

  • Implement comprehensive community engagement programs

  • Develop benefit-sharing arrangements with local communities

  • Create transparent communication channels for addressing concerns

  • Establish independent monitoring and verification systems

 

Regulatory Uncertainty:

Risk: Changing environmental regulations and permitting requirements can create uncertainty for project developers and investors.

Mitigation Strategies:

  • Develop clear, stable regulatory frameworks with predictable timelines

  • Create streamlined processes that maintain environmental standards

  • Establish technical assistance programs for regulatory compliance

  • Implement adaptive management approaches that can accommodate regulatory evolution.

Future Outlook and Scenario Planning

Key Points

The future of U.S. rare earth independence depends on multiple uncertain factors, including geopolitical dynamics, technological breakthroughs, and policy continuity. Under the most optimistic scenario, the U.S. could reduce Chinese rare earth imports by 40% by 2035 through domestic production expansion, international partnerships, and recycling innovations. However, failure to address regulatory barriers and sustain investment could leave the U.S. vulnerable to continued Chinese dominance. China may respond with price manipulation, technology theft, or further export restrictions, requiring robust contingency planning. Emerging technologies like sodium-ion batteries could reduce pressure on certain rare earth supply chains, while advanced recycling could create circular economy opportunities.

Key Uncertainties and Driving Forces

The future of U.S. rare earth independence is subject to several key uncertainties and driving forces:

1. Geopolitical Dynamics: The trajectory of U.S.-China relations will significantly impact rare earth markets and supply chains. Continued deterioration could accelerate Chinese export restrictions but also increase political will for domestic investment in the United States.

2. Technological Breakthroughs: Advances in rare earth processing, recycling, and alternative technologies could dramatically alter the competitive landscape. Breakthroughs in areas like biochemistry-based extraction or machine learning-optimized separation could reduce China's technical advantages.

3. Policy Continuity: The sustainability of U.S. rare earth initiatives across political administrations remains uncertain. As Newsweek reported, "Developing a domestic rare earth supply chain will require significant long-term investment and legislative stability, which is currently uncertain due to changing political administrations." [1]

4. Environmental Regulations: The evolution of environmental regulations in both the United States and China will impact the relative competitiveness of rare earth production in each country. Stricter regulations in China could reduce its cost advantages, while streamlined permitting in the United States could accelerate domestic development.

5. Market Demand Growth: The pace of growth in rare earth demand, particularly for clean energy and defense applications, will influence investment decisions and supply adequacy. As CSIS reported, "Critical minerals demand is projected to grow dramatically: from 8 million metric tons in 2020 to 50 million in 2030, 105 million in 2040, and 150 million by 2050." [24]

Scenario 1: Accelerated Independence

Under the most optimistic scenario, the United States achieves significant rare earth independence by 2035, reducing Chinese imports by approximately 40%. This scenario assumes:

- Successful implementation of the mine-to-magnet strategy outlined in this report

- Sustained bipartisan political support for rare earth initiatives

- Breakthrough technologies in separation and processing

- Effective international partnerships, particularly with Australia

- Significant growth in recycling and urban mining

In this scenario, MP Materials expands production to meet most U.S. light rare earth needs, while USA Rare Earth's Round Top project and other domestic sources provide significant heavy rare earth supplies. Recycling technologies mature to provide 15-20% of total rare earth supplies by 2035. International partnerships through AUKUS ensure diversified sources for remaining imports.

The defense industrial base achieves complete independence from Chinese rare earth supplies by 2030, eliminating a critical national security vulnerability. Commercial applications follow, with domestic production of NdFeB magnets reaching 50% of U.S. demand by 2035.

Scenario 2: Partial Progress

In a more moderate scenario, the United States makes significant progress but achieves only partial independence by 2035, reducing Chinese imports by approximately 20-25%. This scenario assumes:

- Partial implementation of the mine-to-magnet strategy

- Fluctuating political support across administrations

- Incremental technological improvements without major breakthroughs

- Limited success in international partnerships

- Modest growth in recycling and urban mining

In this scenario, domestic production expands but remains concentrated in light rare earths, with continued dependence on imports for most heavy rare earths. The defense industrial base achieves priority access to critical materials but faces potential supply constraints during periods of high demand.

Regulatory barriers continue to slow project development, with permitting timelines improving but still averaging 10-15 years for new mines. Cost competitiveness remains a challenge, with domestic rare earth products commanding a 15-20% premium over Chinese alternatives.

Scenario 3: Continued Vulnerability

In the most pessimistic scenario, the United States makes limited progress toward rare earth independence and remains highly vulnerable to Chinese supply disruptions through 2035. This scenario assumes:

The lack of U.S. rare earth processing infrastructure is the result of decades of allowing China to flood the market and undercut domestic production.

- Insufficient investment in domestic rare earth capabilities

- Inconsistent political support and policy reversals

- Limited technological progress in separation and processing

- Ineffective international partnerships

- Minimal growth in recycling and urban mining

In this scenario, MP Materials remains the primary domestic producer, with few additional projects reaching commercial production. Heavy rare earth processing capabilities remain undeveloped, leaving the United States completely dependent on Chinese imports for these critical materials.

The defense industrial base implements workarounds and stockpiling strategies but remains vulnerable to prolonged supply disruptions. Commercial applications continue to rely predominantly on Chinese rare earth materials and components, limiting U.S. competitiveness in clean energy and advanced manufacturing.

Chinese Response Strategies

China is likely to respond to U.S. efforts to reduce rare earth dependence with various countermeasures:

1. Price Manipulation: China may temporarily lower rare earth prices to undermine the economic viability of emerging U.S. producers, repeating strategies used successfully in the past.

2. Technology Theft: China may target U.S. rare earth processing technologies through cyber espionage, talent recruitment, and other means to maintain its technical advantages.

3. Export Restrictions: China may implement additional export restrictions on rare earth materials and technologies, potentially targeting specific applications or companies.

4. Supply Chain Control: China may seek to maintain control over critical nodes in the rare earth supply chain, particularly in processing and magnet manufacturing, even as mining diversifies globally.

5. Market Consolidation: China may accelerate consolidation of its domestic rare earth industry to improve efficiency and strengthen its competitive position against emerging producers.

Emerging Technology Impacts

Emerging technologies could significantly impact rare earth markets and supply chains:

​

1. Alternative Materials: Research into alternative materials that reduce or eliminate rare earth content could disrupt current market dynamics. As Discovery Alert reported, "Emerging technologies like sodium-ion batteries could capture 15% of the EV market by 2030, potentially reducing pressure on constrained mineral supply chains." [13]

​

2. Advanced Recycling: Improvements in recycling technologies could create a significant secondary supply of rare earth materials. REEcycle's technology demonstrates the potential for high recovery rates from electronic waste. [20]

​

3. Process Innovations: Novel separation technologies like ReElement's LAD chromatography and biochemistry-based extraction methods could reduce processing costs and environmental impacts, improving the competitiveness of non-Chinese producers. [18] [27]

​

4. Circular Economy Models: The development of comprehensive circular economy approaches to rare earth materials could reduce primary demand and create new business models focused on material recovery and reuse.

5. Digitalization and Automation: Advanced digital technologies and automation could help offset labor cost disadvantages in the United States, improving the competitiveness of domestic rare earth production.

​

The United States faces a critical juncture in addressing its rare earth element supply chain vulnerabilities. China's dominant position across the entire value chain—from mining to magnet manufacturing—represents a significant national security and economic risk that requires comprehensive action. As of April 2025, China controls approximately 70% of global REE mining production, 85% of processing capacity, and 90-92% of rare earth magnet manufacturing. [1] [2] [3] This dominance has been strategically developed over decades and is supported by an integrated policy framework that gives Chinese producers significant advantages.

"The path to rare earth supply chain resilience will not be easy or quick. It requires sustained commitment, substantial investment, and coordinated action across government, industry, and international partners."

The most acute vulnerability lies in heavy rare earth elements like dysprosium and terbium, which are essential for high-performance magnets used in defense applications and clean energy technologies. As CSIS noted in April 2025, "There is no heavy rare earths separation happening in the United States at present," [11] despite Department of Defense goals to develop a complete supply chain by 2027. This vulnerability was highlighted by China's April 2025 export restrictions on seven critical rare earth elements, demonstrating Beijing's willingness to use these materials as geopolitical leverage. [11] [12] [14]

​

The strategic roadmap outlined in this report provides a comprehensive approach to addressing these vulnerabilities through a phased implementation plan spanning 2025-2035. The strategy encompasses regulatory reforms, financial incentives, international partnerships, workforce development, and technological innovation to create a resilient domestic supply chain. Key elements include:

 

A three-phase approach that balances short-term risk mitigation with long-term structural changes, with specific milestones and objectives for each phase.

2. Heavy Rare Earth Focus: Targeted strategies for securing supply of the most critical elements, including domestic resource development, international partnerships, and recycling initiatives.

3. Policy Framework: Comprehensive policy recommendations across regulatory reform, financial incentives, and research support to create an enabling environment for rare earth development.

4. International Collaboration: Strategic partnerships with allied nations, particularly through the Quad Alliance (U.S., Japan, Australia, India), to leverage complementary strengths and diversify supply chains.

5. Implementation Frameworks: Detailed frameworks for developing mining assets, processing infrastructure, magnet manufacturing capabilities, and recycling systems to ensure effective execution.

6. Risk Management: Comprehensive assessment of market, technological, geopolitical, and environmental risks, with specific mitigation strategies for each.

​

The total investment required to implement this strategy is estimated at $20-30 billion over the next decade, with significant economic, strategic, and environmental returns. By 2035, a successful implementation would enable the United States to meet 75% of its rare earth magnet demand through domestic production and process 50% of its rare earth consumption within its borders.

​

​

Looking forward, several emerging trends will shape the evolution of rare earth supply chains:

1. Technological Innovation: Advances in separation technologies, magnet manufacturing, and recycling processes will continue to improve the economics and environmental performance of rare earth production.

​

2. Geopolitical Realignment: The global rare earth landscape will be shaped by evolving relationships between China, the United States, and other key players, with potential for both increased competition and selective cooperation.

​

3. Market Evolution: Rare earth markets will likely become more transparent and liquid as alternative supply chains develop, potentially reducing price volatility and improving investment certainty.

​

4. Circular Economy: Recycling and urban mining will play an increasingly important role in rare earth supply, reducing dependence on primary production and improving environmental sustainability.

​

5. Material Substitution: Research on alternatives to rare earth elements will continue, potentially reducing demand for certain applications while maintaining performance requirements.

Conclusion and Recommendations

Key Points

The United States faces a critical strategic vulnerability in its rare earth element supply chain, with China controlling approximately 70% of global mining and up to 90% of processing capacity. This dominance represents both an economic and national security risk, particularly for the defense sector. Achieving greater independence requires a comprehensive "mine-to-magnet" strategy implemented across multiple time horizons, supported by substantial investment, regulatory reforms, and international partnerships. By leveraging domestic resources, innovative technologies, and strategic alliances, the U.S. can build a resilient rare earth supply chain that supports national security, economic prosperity, and technological leadership.

​

The United States faces a critical juncture in securing its rare earth element supply chain. China's near-monopoly control, particularly over heavy rare earth elements, creates significant national security and economic vulnerabilities. While substantial challenges exist, a coordinated strategy involving resource development, processing capabilities, workforce development, and international partnerships can achieve meaningful independence within a decade.

Summary of Key Findings

1. Current Vulnerability: The United States faces severe supply chain vulnerabilities due to its dependence on Chinese rare earth supplies. Between 2019 and 2022, the U.S. imported over 95% of its rare earth elements, predominantly from China. [11] This dependency creates significant national security risks, particularly for defense applications like the F-35 fighter jet, which requires approximately 900 pounds of rare earth elements per aircraft. [6] [10] [19]

​

2. Root Causes: The current U.S. dependency stems from multiple factors, including historical policy decisions that allowed China to flood the market with underpriced materials, regulatory barriers including thorium restrictions, significant economic disadvantages in processing costs, and a severe technical expertise gap. The permitting process for new mines takes an average of 29 years in the U.S. versus 2-3 years in China. [7]

​

3. Emerging Capabilities: Despite these challenges, there are positive developments in the U.S. rare earth supply chain. MP Materials produced over 45,000 metric tons of rare earth oxides at its Mountain Pass mine in 2024, [3] [5] and is developing magnet manufacturing capabilities at its Texas facility. USA Rare Earth has produced high-purity dysprosium oxide from its Round Top deposit in Texas, [16] and Energy Fuels has developed capabilities to produce six of the seven rare earth oxides subject to Chinese export controls. [17]

​

4. Technological Opportunities: Innovative technologies offer promising solutions to rare earth processing challenges. ReElement Technologies' LAD chromatography, [18] Rainbow Rare Earths' CIX/CIC process, [28] and Alta Resource Technologies' biochemistry-based extraction methods [27] represent potential breakthroughs that could reduce China's technical advantages.

​

5. International Models: Japan's successful strategy to reduce rare earth dependence on China from over 90% to 58% within a decade provides valuable lessons for the United States. [35] [36]  The JOGMEC model of targeted investments and offtake agreements offers a proven approach that could be adapted to the U.S. context.

Strategic Recommendations

Based on these findings, we recommend a comprehensive strategy to achieve greater U.S. independence in rare earth elements:

​

1. Establish a Dedicated Critical Minerals Corporation: Create a JOGMEC-like entity with the authority to make equity investments, provide loan guarantees, enter into offtake agreements, coordinate research and development, and facilitate international partnerships. This would address the current fragmentation of U.S. efforts across multiple agencies.

​

2. Implement Regulatory Reforms: Streamline permitting processes for critical mineral projects, modernize regulations related to thorium handling, and establish standardized environmental assessment frameworks. The goal should be to reduce permitting timelines from the current average of 29 years to 5-7 years while maintaining environmental standards.

​

3. Invest in Processing Technology: Accelerate funding for innovative rare earth processing technologies, with a focus on heavy rare earth separation capabilities. Support the scaling of promising approaches like ReElement's LAD chromatography, Rainbow's CIX/CIC process, and biochemistry-based extraction methods.

​

4. Develop Workforce Capabilities: Expand educational programs in metallurgy, mining engineering, and related fields to address the critical shortage of technical expertise. Support initiatives like Montana Technological University's Critical Minerals Education Program and establish industry-academic partnerships to provide practical training.

​

5. Forge International Partnerships: Leverage the AUKUS framework to develop strategic partnerships with Australia, which possesses significant rare earth resources. Establish joint investment in processing facilities, technology transfer agreements, coordinated stockpiling, harmonized standards and regulations, and joint research and development programs.

​

6. Accelerate Recycling and Urban Mining: Support the development and scaling of rare earth recycling technologies like REEcycle's process that can recover over 98% of critical rare earth elements from electronic waste. [20] Establish collection systems and incentives to increase the recycling rate of rare earth-containing products.

​

7. Implement Strategic Stockpiling: Develop a comprehensive stockpiling strategy for critical rare earth materials, particularly heavy rare earths like dysprosium and terbium. This should include both government-held stockpiles and incentives for private companies to maintain inventory buffers.

​

8. Support Domestic Magnet Manufacturing: Expand domestic magnet manufacturing capabilities to reduce dependence on imported magnets. Build on MP Materials' Texas facility, which is projected to produce approximately 1,000 metric tons of finished NdFeB magnets per year. [3]

​

9. Establish a National Rare Earth Strategy Office: Create a dedicated office within the federal government to coordinate rare earth initiatives across agencies, engage with industry stakeholders, and oversee implementation of a comprehensive national strategy. This office should have sufficient authority and resources to drive meaningful action.

​

10. Implement a Federal Critical Mineral Processing Initiative: Following the recommendation from War on the Rocks, establish a comprehensive federal initiative to develop domestic processing capabilities for critical minerals, including rare earth elements. "Congress will need to allocate hundreds of billions of dollars over the next few decades... To jumpstart this initiative, Congress should allocate $20–40 billion of seed and debt funding over the next decade through a Critical Minerals Industrial Act." [21]

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11. Prioritize Heavy Rare Earth Elements: Focus immediate efforts on addressing the most critical vulnerability—heavy rare earth elements like terbium and dysprosium. This should include accelerating development of the Round Top deposit in Texas, investing in innovative processing technologies, and securing international supply agreements for these specific elements.

​

12. Create a Rare Earth Investment Fund: Establish a dedicated investment fund, modeled on Japan's JOGMEC, to provide financial support for rare earth projects across the supply chain. This fund could offer loans, loan guarantees, and direct investments, with the ability to take up to 75% stakes in strategic projects to reduce private sector risk.

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13. Reform Permitting Processes: Implement targeted reforms to streamline permitting for critical mineral projects while maintaining environmental standards. These reforms should aim to significantly reduce the current 29-year average timeline for bringing new mines online in the United States.

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14. Develop a Rare Earth Workforce Initiative: Create a comprehensive program to develop the workforce needed for a domestic rare earth industry, including specialized training programs, university partnerships, and initiatives to attract international expertise.

​

15. Expand International Partnerships: Build on the Minerals Security Partnership to develop stronger international collaborations on rare earth supply chains. This should include strategic investments in projects in allied nations, technology sharing agreements, and coordinated research efforts.

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16. Implement Defense Procurement Requirements: Establish requirements for defense contractors to progressively increase the use of domestically sourced rare earth materials in military systems. These requirements would create demand certainty for domestic producers and incentivize investment in the sector.

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17. Invest in Recycling and Urban Mining: Provide financial and technical support to scale up rare earth recycling operations, which can provide a domestic source of materials while reducing environmental impact. This should include both technology development and infrastructure for collecting and processing end-of-life products.

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18. Support Research and Innovation: Increase funding for research into advanced rare earth processing technologies, recycling methods, and alternative materials. This research should be coordinated across national laboratories, universities, and industry partners to maximize impact and avoid duplication.

Implementation Priorities

To ensure effective implementation, we recommend the following priorities for the next 12 months:

By leveraging domestic resources, innovative technologies, and strategic alliances, the U.S. can build a resilient rare earth supply chain that supports national security, economic prosperity, and technological leadership.

​

1. Establish the Critical Minerals Corporation: Draft and pass legislation to create a dedicated entity for critical minerals investment and coordination, modeled on Japan's JOGMEC.

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2. Expedite High-Potential Projects: Implement the March 2025 executive order to streamline permitting for critical rare earth projects, with a focus on USA Rare Earth's Round Top project, Idaho Strategic Resources' projects, and Energy Fuels' monazite processing capabilities.

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3. Launch a National Rare Earth Recycling Initiative: Establish a comprehensive program to collect and recycle rare earth-containing products, with initial focus on defense and industrial applications.

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4. Initiate AUKUS Critical Minerals Partnership: Formalize a critical minerals partnership with Australia and the United Kingdom under the AUKUS framework, with specific commitments for investment, technology sharing, and market access.

​

5. Create a Rare Earth Workforce Development Program: Establish a coordinated program across multiple universities to expand education and training in metallurgy, mining engineering, and related fields.

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By implementing these recommendations, the United States can build a resilient rare earth supply chain that supports national security, economic prosperity, and technological leadership. While the challenge is significant, the combination of domestic resources, innovative technologies, and strategic partnerships provides a path to greater independence from Chinese dominance in this critical sector.

​

The path to rare earth supply chain resilience will not be easy or quick. It requires sustained commitment, substantial investment, and coordinated action across government, industry, and international partners. However, the strategic importance of these materials for national security, clean energy transition, and economic competitiveness makes this effort essential for the United States' long-term interests.

 

By implementing the comprehensive strategy outlined in this report, the United States can transform its current vulnerability into future strength, creating a resilient, environmentally responsible, and economically viable rare earth element supply chain that supports both national security and sustainable economic growth.

Overview
China's Structural Advantages in the REE Market
Historical Development of China's REE Strategy
Quantification of China's Market Control
China's Policy Framework and Incentives
Technological and Human Capital Advantages
U.S. Supply Chain Vulnerabilities and Gaps
Current U.S. Capabilities Assessment
Critical Chokepoints and Vulnerabilities
Regulatory, Financial, and Technological Barriers
National Security and Economic Implications
Root Cause Diagnostics
Historical Policy Decisions
Regulatory Barriers
Economic Factors
Technical Expertise Gap
Public-Private Partnership Models
Lessons from Japan's JOGMEC Model
Proposed U.S. Partnership Structure
Risk-Sharing Mechanisms
Regulatory Coordination
International Partnership Models
Technological Innovation Pathways
Separation and Processing Innovations
Recycling and Urban Mining
Alternative Sources and Processing Routes
Cost Reduction Strategies
Heavy Rare Earth Element Strategy
Current Challenges and Vulnerabilities
Alternative Sourcing Strategies
Processing Technology Development
Material Efficiency and Substitution
Strategic Partnerships for HREEs
Implementation Roadmap
Phase 1: Immediate Actions (2025-2027)
Phase 2: Capability Development (2028-2031)
Phase 3: Industry Maturation (2032-2035)
Metrics and Milestones
Governance and Coordination
Strategic Roadmap for REE Supply Chain Resilience
Phased Implementation Plan (2025-2035)
Securing Heavy Rare Earth Element Supply
Policy Recommendations and Incentives
International Partnership Strategy
Economic Analysis and Investment Requirements
Implementation Frameworks for Key Initiatives
Mining Asset Development Framework
Processing Infrastructure Development
Magnet Manufacturing Capability Development
Recycling and Circular Economy Framework
Risk Assessment and Mitigation Strategies
Market and Economic Risks
Technological and Operational Risks
Geopolitical and Supply Chain Risks
Environmental and Social Risks
Future Outlook and Scenario Planning
Key Uncertainties and Driving Forces
Scenario 1: Accelerated Independence
Scenario 2: Partial Progress
Scenario 3: Continued Vulnerability
Chinese Response Strategies
Emerging Technology Impacts
Conclusion and Recommendations
Summary of Key Findings
Strategic Recommendations
Implementation Priorities
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