The United States is intensifying its push to diversify and secure its supply of rare earth elements (REEs) as new Chinese export controls threaten to disrupt critical industries ranging from automotive to defence and healthcare.

In April, China imposed export restrictions on seven key rare earth elements — dysprosium, gadolinium, lutetium, samarium, scandium, terbium, and yttrium — in response to US tariffs of up to 145 per cent on Chinese goods.

While not outright bans, the new rules require companies to obtain licencses to export these materials, potentially causing delays and uncertainty across global supply chains.

China currently accounts for about 90 per cent of global rare earth processing capacity, amplifying the impact of these restrictions.

“Given the sprawling nature of supply chains, these restrictions will have a global impact, affecting trade partners and customers worldwide, not just those in the US,” said Isabel Al-Dhahir, principal analyst at GlobalData.

In 2024, the US imported an estimated US$170 million worth of rare-earth compounds and metals, mostly from China, while domestic production reached 45,000 tonnes valued at US$260 million.

Recognising its vulnerability, the US government has accelerated efforts to build a self-reliant rare earth supply chain.

This includes federal funding, public-private partnerships, and reopening or expanding domestic mines.

Since 2022, the US has invoked the Defense Production Act and the Inflation Reduction Act to fast-track the development of critical mineral resources.

US Energy Secretary Christopher Wright emphasised the urgency of the situation, stating the need to “focus on building domestic capabilities to extract, process, manufacture, and recover end-of-life critical materials for our [US] industrial needs, energy goals, and national security”.

The Department of Energy (DOE) is supporting these objectives by expediting projects, exploring off-take agreements, and developing new programs to bolster domestic mining and production.

Despite these initiatives, the US rare earth sector remains underdeveloped.

MP Materials operates the only major US rare earth mine at Mountain Pass, California, and is expanding into magnet manufacturing with recent federal support.

Other projects, such as Rare Element Resources’ Bear Lodge and NioCorp’s Elk Creek, are in development but are not expected to come online until later this decade.

Nicole Richards, CEO of Allonnia — a biotech company focused on extracting REEs from waste streams — stated that despite “leaps of progress” in the past few years, the US is still “playing catch-up when it comes to rare earth supply”.

With new mines years away, recycling is emerging as a vital strategy to mitigate REE shortages.

Currently, only about 5 per cent of rare earths are recycled, but this is expected to grow as investments in recycling technologies increase.

The Department of Defense recently awarded US$5.1 million to REEcycle for recovering rare earths from electronic waste, and companies like MP Materials and Cyclic Materials are expanding recycling operations.

“E-waste is a more immediate way to blunt the spear point of economic and national security concerns,” said Nathan Ratledge, co-founder and CEO of Alta Resource Technologies, which is developing innovative biochemical separation methods for REEs.

Biotechnology solutions are also being explored to improve recovery rates and reduce the environmental impact of REE processing.

For example, Allonnia claims its technology can boost metal production by 20 per cent while cutting carbon emissions by 10 per cent.

With domestic capabilities still developing, the US is also seeking to diversify its REE sources by partnering with countries like Australia and Canada.

However, these nations face their own production and infrastructure limitations.

Vietnam, with significant rare earth reserves, is emerging as a potential new supplier as foreign investment in its processing capacity grows.

Ultimately, experts agree that overcoming China’s dominance will require sustained investment, innovation, and international cooperation.

As Nicole Richards noted: “Shifting from China to domestic resources will take a sustained level of public and private partnerships to achieve success.”