Will America Finally Set A Sane Path Forward For Rare Earth Elements?

The good news on rare earth elements is that in the past five years, numerous companies have been laboring to break China’s stranglehold on these vital minerals. The bad news is that the efforts have thus far been too few and far too slow.

REEs are critical for applications using the high-powered magnets made from them, in sectors such as tech, defense, automotive, industrial and aerospace. China’s recent imposition of duties and export controls on them should have been a surprise to nobody. It happened to Japan in 2010, and China’s increasing hostility on the world stage should have been a plain warning that our turn was only a matter of time.

Part of the problem, however, is the complexity of the production steps to get a finished rare earth magnet, which include mining, separation, refining, and final product manufacturing. “That’s where I think a lot of the coverage starts to break down, because we talk about it as this monolith when it’s actually several different pieces of the supply chain that have to come together,” said Ashley Zumwalt-Forbes, now principal at Smoketree Resources, a strategic advisory and venture development firm focused on critical minerals, and formerly the deputy director for batteries and critical minerals at the U.S. Department of Energy. “In the U.S. and broadly in the West, we’re having to stand up the entire supply chain. Inherently, these processes are slow. It’s IP development, hard asset development, enormous capital investments, and so it’s not an overnight process to stand up, particularly with the backdrop of Chinese export bans. You really have to step back and think, ‘How can we scale something quickly as an interim solution?’”

That approach includes both the rapid expansion of all aspects of our domestic rare earths supply chain as well as the identification and scaling up of more collaborative foreign sources.

Domestic supply

For end-to-end U.S. supply, currently the only game in town is MP Materials, a publicly traded company with a market capitalization of over $3.5 billion. It operates the only combined rare earth mining and processing facility in the country in Mountain Pass, California.

“We’ve now scaled production at Mountain Pass really dramatically,” Matt Sloustcher, the company’s chief communications officer, told me in an interview. “On the upstream side, we did over 45,000 tons in 2024. Mountain Pass is the second-largest rare earth mine in the world… And we’ve got a project underway now called Upstream 60k where we think over the next four years, we can scale that top-line production to 60,000 tons.”

On the finished product front, meanwhile, MP Materials is now in the process of scaling up to full commercial production at its newer site in Fort Worth, Texas. “Today we have a factory,” Sloustcher said. “It’s the first fully integrated magnetics factory built in U.S. history. It’s making NDP, our metal at scale commercially, which is the first time in the United States that any rare earth metal has been produced in at least a generation. We’re trial-producing magnets, and at the end of this year, we will be making finished magnets at scale for General Motors traced to materials mined and refined at Mountain Pass.

“It’s significant in the scale of what’s been done in the United States over the past few decades. But globally, it’s rather modest in terms of scale. It will only consume a single digit percentage of the material we mine and refine at Mountain Pass, so we have a lot of optionality to grow that business over time.”

That modest scale means other sources are required for finished magnets. One is USA Rare Earth, founded in 2018 by Pini Althaus. It owns the mining rights to the west Texas REE deposit at Round Top, which the company says contains 15 of the 17 rare earth elements–particularly the rarer heavy REEs such as dysprosium and terbium, along with gallium, lithium and beryllium. The company, which went public last month on the NASDAQ, is also building a 310,000-square-foot magnet production facility in Stillwater, Oklahoma.

“At its peak, we’ll do 5,000 tons of sintered rare earth magnets, NEO magnets in particular,” said Joshua Ballard, CEO of USA Rare Earth. “It’s going to be a highly automated, complex environment… That translates into $700 to $800 million of revenue of capacity that we’ll build here over the next few years.”

The magnet plant construction includes three phases. The first, which is near completion, is building an innovations lab, which will serve as both an R&D center and a pilot plant to prototype potential customers’ magnet designs. Phase two is the construction of the main plant infrastructure and the first full-scale magnet line. “We’re targeting commissioning in the first quarter of next year, if all goes well,” Ballard explained. “That’ll be about 1/4 of our of our capacity–about 1,200 tons per year, $150 to $200 million of revenue.” The final phase will be the scale-up to full production capacity.

Friendly Foreign Sourcing

While these domestic resources are quickly ramping up to provide more reliable sources of REE products, they’re neither quick enough nor sizable enough to solve the current challenges. Partnering with friendly offshore producers is a necessary part of the solution. Raw materials supply for the new USA Rare Earth magnet plant is a good example. While the company expects Round Top to eventually provide a sizable portion of that supply, it has contracted for foreign REE sourcing in the meantime.

“We’ve signed an offtake agreement with a company in South Korea called KSM, owned by a company called Australia Strategic Minerals,” said Ballard. “They’re developing a deposit in Australia. They also built this metals plant, and they have their sourcing currently not from Australia, but from Southeast Asia, from Vietnam. They have a fantastic facility out there in South Korea… They can scale up with us without a doubt here in the coming years.”

Zumwalt-Forbes sees an active role for the government to play in building this kind of more reliable REE supply chain. “The other concept that you hear is the Department of Defense being kind of a demand aggregator, because this demand is very spread out,” she said. “It’s a lot of different players buying very small quantities… A perfect example is Solvay is expanding capacity at their separation and metallization facility in France, and basically saying, ‘We will move forward with this project, if someone will come buy the offtake from us.’ There are options, but we’ve got to ensure that we’re being very coordinated from a central point within the U.S. government or else, my experience was oftentimes you had folks kind of running in different directions. I think the message needs to be that we both cannot and should not try to do this alone. We need to bring together allies in the pursuit of scaling Western critical minerals supply chains.”

Althaus echoes those thoughts. “You’ve got State, Commerce, Defense, Energy and Interior all working on critical minerals, yet there needs to be someone to harmonize these efforts across the agencies because they’re not necessarily in coordination with each other.”

His new endeavor, Cove Capital, is an investment and advisory firm that operates critical minerals, precious metals, and base metals projects across four continents. It offers another avenue for collaboration among friendly nations.

“Today in Kazakhstan we have 12 concessions that are in fairly close proximity to each other, all similar materials, containing lithium, tantalum, niobium, rubidium, cesium and tin,” Althaus told me in an interview. “And we also have a joint venture with the state-owned mining company of Kazakhstan. We are now 75% owner in a 75/25 joint venture for the Akbulak rare earth project.” Cove Capital secured strategic critical mineral licenses in Kazakhstan and entered into a partnership with the country’s sovereign wealth fund, Samruk Kazyna, and its state-owned mining company, Tau-Ken Samruk,

REE recycling is a final source of supply that merits attention. Althaus also serves as CEO of Reemag LLC, a company that says it has developed the world’s first carbon-free magnet recycling process. “There’s a lot of recycling of rare earths,” Althaus explained. “You’ll see a lot of companies that are in this space. They’re taking end-of-life magnets that are ubiquitous–you know, in our lives for the past 40-50 years that we weren’t necessarily aware of, magnets in our phones, hard drives, et cetera. The Chinese have been recycling end-of-life magnets for many years. This often uses either solvent extraction, but it uses a chemical process.

“In the last three years I entered into a joint venture with the Weitzman Institute of Science in Israel… And we’ve developed with them the first truly carbon free process to recycle end of life magnets… We just announced last week a scale up of almost 100-fold as we move toward commercialization.”

China’s Shot Over the Bow

What all players realize now is that China’s recent moves have made it crunch time and have focused a lot more minds on developing the needed alternative supply sources.

“What most people don’t understand is that magnets are these silent little workers behind most of all the technology they use,” Ballard offered. “It enables modern technology, and it enables a lot of the defense technologies that are protecting ourselves and our allies around the world. What we’re doing here to bring the supply chain back to the U.S. is absolutely critical for our country and I think consumers need to understand that… The way forward is, one, making sure we ask that the products that are being made here. But two, we need to make sure we have that support for the industry… I think this is too important for the U.S. to just ignore.”

“I think the other takeaway needs to be that we need to sort of level the playing field for us competitors,” said Sloutscher. “Our competitors abroad, particularly in China, are backed by a national commitment to this space. There’s all sorts of subsidies. We need a level playing field, and so I think now is a great time to redouble efforts ensure that the playing field is level from a Washington standpoint, so that we can do the rest.”

“We’ll make it a more level playing field when it comes to the cost of actually mining and producing these,” Althaus added. “But that requires the users of these materials to go along with this and understand that they’re going to have some more difficult days, not being able to procure materials that [were] cheaper from China… So you know it’s going to take some brave decisions on how to go forward with this.”

“I don’t think this should be a government-led effort,” said Zumwalt-Forbes. “I think if the government tries to go out and solve this problem alone, it will fail 10 times out of 10. I think industry needs to step up and bring a solution to the government on a silver platter, and say, ‘This is the opportunity for us to have a solution in the near term.’ And then again, government has tools that they can use to support that solution, but I think it’s going to take industry being on the front foot and being very solution-oriented.

“I want desperately for the general population to understand how critical these materials are to our national security,” she concluded. “If we don’t do it here or do it in allied countries, we’re only sticking our head in the sand and subsidizing an operation that likely has less environmental and human rights stewardship than it would in the West.”