China has pledged to delay its latest restrictions on rare earth exports by one year, which are essential for high-tech products, as part of a trade agreement with President Trump, creating an opportunity for the US and its allies to enhance their own production and processing capabilities. However, weakening China's monopoly in the market will be very difficult.
The restrictions China imposed on rare earths this year have been a key issue in the Beijing-Washington trade negotiations. President Trump reacted angrily to China's latest regulations, threatening to impose an additional 100% tariff on all Chinese imports, but later dropped this demand in the agreement. The recent agreement postpones the requirement that foreign companies must obtain special licenses to export products containing trace amounts of rare earth elements from China, even if they are produced elsewhere, but it does not cancel the restrictions imposed by Trump after he levied tariffs in spring. These critical minerals are widely used in various products, from jet engines, radar systems, electric vehicles, and robots to consumer electronics including laptops and mobile phones. China accounts for nearly 70% of global rare earth mining and controls about 90% of global rare earth processing.
Neha Mukherjee, a rare earth analyst at Benchmark Mineral Intelligence, said that the one-year delay in the new Chinese rare earth export controls announced earlier this month provides some short-term relief, allowing exports to return to more normal levels, but it does not change the broader strategic landscape, and it remains important for the US and its allies to continue investing in the industry. Mukherjee said, "This move seems more tactical than structural, aimed at stabilizing trade relations with the US rather than a policy reversal. It is a brief window for the US and its allies to accelerate diversification before the controls may resume." The White House has made reviving and expanding the domestic critical minerals industry a priority, while also seeking supply of these elements from allies. The Pentagon agreed to invest $400 million in rare earth producer MP Materials and committed to ensuring that every magnet produced by its large new factory is purchased, setting a ten-year minimum price for its neodymium and praseodymium products.
Ian Lang, a professor of economics at the Colorado School of Mines who focuses on rare earth research, said he believes the US and its allies can make significant progress within a year, thereby reducing China's dominance in the rare earth market. Many promising efforts are already underway. Noveon will continue producing rare earth magnets at its plant in Texas, while MP Materials and American Rare Earths both plan to start producing magnets in their plants within the next year.
Starting next year, MP Company also plans to process heavy rare earths from the only operating US rare earth mine in Mountain View, California, which were restricted by China this spring. Lang said other efforts to recycle rare earths and produce them as by-products in existing steel and zirconium mines may also begin to yield results. The recent agreement between the US and Australia will also help provide additional materials to counter China. China shows little indication of being willing to export rare earths to defense contractors, which is concerning because it involves national security issues. However, military demand for rare earths is relatively small, so the US could meet its needs by prioritizing the use of rare earths from other sources for fighter jets, guided missiles, and nuclear submarines.
Industry executives said that if the US wants to break China's control over rare earths, it needs to become a "Manhattan Project moment" in the rare earth field. Wade Senti, president of AML Permanent Magnets, said, "We have entered overtime in our competition with China, and they currently have the ball near our goal line. Our best defensive strategy is to tie together our global refining and supply partnerships with allies and rapidly invest in innovation in the US."
Scott Dunn, CEO of Noveon Magnetics, said, "How China implements this pause will be very important, and since the agreement is limited to one year, the US obviously must take advantage of this window to strengthen domestic capabilities and reduce long-term geopolitical risks." Lang said he is generally optimistic because the US is not starting from scratch, and if these efforts continue at the current pace, the US will have significant improvements within a year. Lang said, "Because after a year, we won't care what they do. We have independent supply chains. At least I think we are not far from that goal."
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