Rare Earth Magnets a US-China 'Battlefield'
An OilPrice.com market commentary describes the geopolitical rivalry between the U.S. and China as a struggle over rare earth magnets. The analysis argues that control over this critical resource will determine the ability of the United States to build military equipment at scale.
China's dominance in the rare earth market isn't just in mining; it controls approximately 90% of the refining and 94% of the production of the high-strength permanent magnets vital for modern technology. This gives Beijing significant leverage over materials essential for both commercial electronics and advanced defense systems. These are not just any magnets. Neodymium-iron-boron (NdFeB) and samarium-cobalt (SmCo) magnets are crucial for US military hardware due to their power and resistance to extreme temperatures. They are indispensable components in precision-guided munitions, the electric motors and actuators in aircraft, and satellite systems. The quantities required are substantial. A single F-35 Lightning II fighter jet needs over 900 pounds of rare earth materials, an Arleigh Burke-class destroyer uses 5,200 pounds, and a Virginia-class submarine requires a staggering 9,200 pounds for its systems. These magnets are critical for radar, sonar, and missile guidance systems on these platforms. In response, the U.S. government is aggressively funding a "mine-to-magnet" domestic supply chain. Since 2020, the Department of Defense has invested over $439 million to onshore the processing of rare earth elements into metals and finished magnets, aiming for a self-sufficient supply for defense needs by 2027. American companies are now entering the fray. MP Materials, which operates the only active rare earth mine in the U.S., has begun producing magnets in Texas. Meanwhile, USA Rare Earth is developing a project in Texas and building a magnet manufacturing facility in Oklahoma, with plans for commercial production in 2026. The government is backing these efforts with significant capital. USA Rare Earth received a non-binding agreement for $1.6 billion in federal funding and loans through the CHIPS Act to accelerate its integrated supply chain projects. This is part of a broader strategy that has also seen government investment in other domestic firms like Vulcan Elements and MP Materials.
