US Accelerates 'Mine-to-Magnet' Push to Counter China's Grip
Washington has deployed billions in funding to build a domestic rare earths supply chain by 2027, signaling a strategic shift for the critical minerals sector.
The United States is escalating its efforts to construct a fully domestic rare earths supply chain, backed by billions of dollars in government funding and a strategic goal to become self-sufficient by 2027. The initiative aims to break China's long-standing dominance over the critical minerals essential for electric vehicles, advanced weaponry, and renewable energy technologies.
This strategic push, described as a "mine-to-magnet" endeavor, has gained significant momentum in 2024. The Department of Defense (DoD) has set an ambitious target to establish a supply chain capable of meeting all U.S. defense needs within the next three years. Since 2020, the DoD has directed over $439 million toward this goal, according to government statements, funding everything from mineral processing to the manufacturing of high-performance magnets.
The urgency of this industrial policy was underscored this year by Beijing's decision to impose export restrictions on several rare earth elements and related technologies. China currently processes nearly 90% of the world's rare earths, giving it significant leverage over global supply chains. Washington's response involves a coordinated financial and legislative strategy to mitigate this dependency.
Key beneficiaries of this government support include companies central to the nascent U.S. supply chain. MP Materials (NYSE: MP), which operates the only commercial-scale rare earth mine in the U.S. at Mountain Pass, California, recently disclosed it would receive nearly $60 million in tax credits through the Inflation Reduction Act to advance its magnet manufacturing facility in Fort Worth, Texas. Other significant investments include over $288 million for Australia-based Lynas to establish oxide production in the U.S. and more than $94 million for E-VAC Magnetics to build a magnet facility in South Carolina.
Beyond direct funding, the Bipartisan Infrastructure Law and the Inflation Reduction Act provide a powerful legislative framework. The Department of Energy has announced access to over $3 billion for projects aimed at processing and recycling critical minerals, as outlined in a White House fact sheet. Further protection for the fledgling domestic industry is planned, with the White House directing the U.S. Trade Representative to increase tariffs on permanent magnets from China starting in 2026.
While the commitment from Washington is clear, building a resilient and competitive supply chain from the ground up presents significant challenges. The process is capital-intensive and requires scaling complex industrial processes that have been offshored for decades. For investors, the sector represents a long-term play on the rewiring of global supply chains, heavily dependent on continued government backing and successful technological execution.
MP Materials shares have reflected the sector's volatility, trading far below their 52-week high of over $100. Still, the company stands as a primary vehicle for exposure to the U.S. rare earths strategy. The concerted push from Washington, combining direct investment, tax incentives, and protective tariffs, signals a foundational shift in policy that could reshape the global landscape for critical minerals for years to come.