Rare Earth Magnets Become US-China Battlefield
The strategic competition over rare earth magnets is intensifying between the U.S. and China. These components are critical for EVs, wind turbines, and guided weapons, and the U.S. is now pushing to diversify supply chains and invest in domestic processing.
China's grip on the rare earths market is a result of decades of strategic industrial policy. While the U.S. dominated production until the 1990s, stricter environmental regulations and China's state-led investment, including tax rebates and R&D funding, allowed it to capture the entire value chain. Today, China accounts for roughly 70% of global rare earth mining and a staggering 90-94% of the more complex processing, refining, and magnet manufacturing stages. The U.S. military's reliance on these components is extensive. A single F-35 Lightning II fighter jet, for example, requires about 50 pounds of samarium-cobalt (SmCo) magnets for its engine and power systems. Neodymium-iron-boron (NdFeB) and SmCo magnets are also essential for the guidance systems in Tomahawk cruise missiles, Patriot air defense systems, and smart bombs like the Joint Direct Attack Munition (JDAM). In a significant escalation, Beijing has weaponized this dominance by implementing export controls on certain rare earth elements and, crucially, the technology used for processing and magnet manufacturing. Citing national security, these rules require licenses for export and specifically target foreign military applications, aiming to prevent Chinese-origin materials from contributing to the defense supply chains of other nations. In response, Washington has committed hundreds of millions of dollars through the Department of Defense and Department of Commerce to rebuild a domestic supply chain. MP Materials, which operates the only active U.S. rare earth mine at Mountain Pass, California, is building a magnet manufacturing facility in Texas with government support. Other companies like USA Rare Earth and Energy Fuels are also developing processing and refining capabilities. However, establishing a "mine-to-magnet" supply chain presents formidable challenges. The U.S. currently has zero commercial-scale domestic capacity for producing permanent magnets and sends most of its mined ore to China for processing. Building new processing facilities is capital-intensive, requiring investments of $500 million to $1 billion, and faces lengthy environmental permitting processes that can take 7-10 years.
