Rare Earth Magnets Emerge as U.S.-China Flashpoint

China's dominance in the rare earth magnet sector is a result of decades of strategic planning. The country currently accounts for approximately 91% of global rare earth refining and 94% of sintered permanent magnet production. This control extends across the entire supply chain, from mining to the manufacturing of high-strength magnets essential for modern technology. These are not your average refrigerator magnets. Neodymium-iron-boron (NdFeB) and samarium-cobalt (SmCo) magnets are critical for U.S. defense systems. An F-35 fighter jet, for example, contains about 50 pounds of samarium-cobalt magnets, which are crucial for its engine and power systems due to their high-temperature stability. They are also integral to missile guidance systems, radar, and the electric motors in military vehicles. The U.S. has a significant vulnerability as it has almost no domestic capacity for processing rare earths into the final magnet components. While the U.S. does mine some rare earth oxides, nearly all of it is exported for processing, primarily to China. This dependency creates a critical bottleneck, as turning the raw oxides into usable metals and alloys is a complex step that most Western supply chains abandoned decades ago. In response, the U.S. government is actively funding the creation of a domestic "mine-to-magnet" supply chain. Under the CHIPS Act, USA Rare Earth has a non-binding agreement for approximately $1.6 billion in federal funding and loans to develop its Round Top project in Texas and a magnet facility in Oklahoma. The Department of Defense has also awarded contracts to companies like MP Materials and ReElement Technologies to bolster domestic processing capabilities. One company, REalloys, is already operating North America's only facility in Euclid, Ohio, that converts heavy rare earths into the high-performance metals and alloys needed for defense. The company is supplying these materials for active U.S. military programs and is expanding its facility to significantly increase production capacity for key elements like dysprosium, terbium, and neodymium-praseodymium (NdPr). The challenge for the U.S. is not just in mining but in rebuilding the entire midstream processing infrastructure. While manufacturing of the final magnet is advancing, the capacity to process the raw materials into magnet-grade metals lags behind, creating a timing mismatch that could prolong foreign dependency. Experts estimate that building a fully independent domestic supply chain could take a decade or more.