Rare Earth Magnets Key to US-China Rivalry
The geopolitical competition between the U.S. and China is increasingly centered on the supply of rare earth magnets, according to a market commentary from OilPrice.com. The resource is described as critical for the ability of the United States to build military equipment at scale.
The global rare earth magnet market is projected to grow from over $18 billion in 2025 to more than $27 billion by 2030, driven by demand in electric vehicles, wind turbines, and advanced electronics. China currently dominates this landscape, controlling approximately 90% of the refining and 93% of the magnet production globally. This gives Beijing significant leverage over global supply chains. These powerful magnets are indispensable for modern U.S. military technology. An F-35 fighter jet, for example, requires about 920 pounds of rare earth materials, a significant portion of which is used in high-performance magnets for its electrical systems, actuators, and radar. Similarly, a Virginia-class submarine needs 9,200 pounds of these materials, and an Arleigh Burke-class destroyer uses 5,200 pounds. In response to this dependency, the U.S. government has initiated a "mine-to-magnet" strategy to onshore the entire supply chain. Since 2020, the Department of Defense has invested over $439 million in various rare earth projects to bolster domestic production capabilities. The stated goal is to eliminate the reliance on Chinese materials for defense purposes by 2027. A major pillar of this strategy involves significant federal funding for private companies. In a landmark move, the Commerce Department provided USA Rare Earth with a $1.6 billion funding package, including a $1.3 billion loan and $277 million in direct funding, to develop its mining and magnet manufacturing facilities in Texas and Oklahoma. USA Rare Earth aims for its Oklahoma magnet facility to be operational by late 2026, with its Round Top mine in Texas targeting commercial production in late 2028. By 2030, the company projects it will produce 10,000 metric tons of permanent magnets annually. Another key player, MP Materials, which operates the only active rare earth mine in the U.S., is also expanding into magnet production. The company is investing over $1.25 billion to build a large-scale magnet manufacturing campus in Northlake, Texas, with commissioning expected to start in 2028. This facility aims to produce around 10,000 metric tons of NdFeB magnets per year. These domestic efforts have been spurred by China's use of its market dominance as a strategic tool. In 2025, Beijing introduced export controls on certain rare earth elements and magnets, requiring licenses and detailed information on end-users, particularly targeting foreign military applications. Though some measures were temporarily suspended, they highlighted the vulnerability of Western supply chains.
