Rare Earth Magnets Seen as US-China Battlefield
The geopolitical competition between the United States and China is increasingly focused on the supply of rare earth magnets, according to a market commentary. These components are critical for determining whether the U.S. can build military equipment at scale, making them a central element in the strategic rivalry.
China's dominance in this sector is stark; the country accounts for approximately 70% of global rare earth mining and controls nearly 90% of the refining process that turns the raw materials into usable metals. This near-monopoly extends to the manufacturing of the final high-performance magnets. The dependency of the U.S. military is measured in pounds. A single F-35 Lightning II fighter jet requires over 900 pounds of rare earth materials for its radar, sensors, and electronic warfare systems. A Virginia-class submarine needs roughly 9,200 pounds for its quiet electric propulsion and sonar systems, while an Arleigh Burke-class destroyer uses about 5,200 pounds. The United States was a global leader in rare earth production until the 1980s, with California's Mountain Pass mine as the primary source. However, the mine ceased operations in 2002 amid price pressure from Chinese suppliers, who benefited from state support and lower labor costs, effectively ceding the market to Beijing. In response, the U.S. Department of Defense has set a 2027 goal to establish a fully domestic "mine-to-magnet" supply chain, investing over $439 million since 2020 to achieve it. This push includes significant government investments, such as a $1.6 billion injection into the company USA Rare Earth announced in January 2026. China has demonstrated its willingness to leverage this supply chain control. In April 2025, Beijing imposed export bans on seven specific rare earth elements crucial for defense and high-tech applications, signaling a direct challenge to the U.S. defense industrial base. Efforts to reshore production are underway. MP Materials, which revived the Mountain Pass mine, is now building a $1.25 billion magnet factory in Texas. Meanwhile, Ohio-based REalloys Inc. is already processing heavy rare earths into metals and alloys under contract for the Department of Defense.
