Song Zuokai, 81, peering at a rare earth mine in Baisha, in China’s Guangdong Province in 2010. China nationalised and consolidated the mines in the south into a single state-run company. Photo / Christie Johnston, The New York Times
China seized mines and built factories. Japan took note and invested in Australia. But the United States did little despite concerns about control of supplies.
China shook the world in 2010 when it imposed an embargo on exports of crucial rare earth metals to Japan. Panicked Japanese executives appeared on television to warn that they were running out of the critical raw materials.
The embargo, prompted by a territorial dispute, lasted only seven weeks. But it changed the global supply chain for these metals. When the embargo was over, China took forceful control of its mineral bounty. Top officials in Beijing rooted out corruption, crushed smugglers and consolidated the industry under state control.
The world was put on notice, especially Japan and the United States, two of China’s biggest customers for rare earth metals used in everything from cars to smartphones to missiles. Governments from both countries drafted detailed plans for how to mitigate their dependence on China. Japan has largely followed through on its plans and today can source the minerals from Australia.
Not the United States. Even after 15 years, the country is still almost entirely reliant on China for the processing of rare earth metals. As a result, American automakers, aerospace companies and defence contractors have been left vulnerable.
Angry about President Donald Trump’s tariffs, China has suspended all exports of certain rare earths, as well as the even more valuable magnets made from them.
These small yet powerful magnets – no bigger than a ring for a person’s finger, yet with 15 times the force of a conventional iron magnet – are an inexpensive and often overlooked component of electric motors. They are used in electric and gasoline-powered cars as well as robots, drones, offshore wind turbines, missiles, fighter jets and many other products.
The American failure to devise an alternative to its dependence on Chinese supplies has spanned Democratic and Republican administrations.
“US policymakers for 15 years have done very little to address the risk of dependence on China for rare earths, and specifically rare earth magnets,” said Milo McBride, a specialist in critical minerals at the Carnegie Endowment for International Peace in Washington.
Rare earths, he said, are “the most strategic minerals of all the minerals that have been discussed for the last several administrations”.
Beijing’s 2010 embargo against Japan was undermined by Chinese organised crime syndicates that controlled much of the industry in south-central China in collusion with local officials. The gangsters had been smuggling up to half of China’s annual rare earths production out of the country.
Weeks after the embargo ended, Beijing took revenge. Government forces acting under national security orders stormed the valley near Longnan in Jiangxi province where much of the world’s heavy rare earth minerals were produced. They seized the privately run mines and jailed thousands of people across southern China. Regulation of the industry was transferred from local governments to Beijing.
The mines were later nationalised and consolidated into a single state-run company, China Rare Earth Group. During a visit last week to the valley without the knowledge of the local authorities, there was no sign of the thugs who used to guard southern China’s rare earth mines.
China has recently developed its own magnet industry instead of shipping the materials to magnet factories in Japan. Beijing has poured money into building advanced magnet factories in Ganzhou, a city near Longnan.
China now produces 90% of the world’s magnets. Further construction was under way at two of Ganzhou’s largest magnet factories last week.
China’s top leader, Xi Jinping, said in a speech in 2020 that it was important for China’s national security that the West’s supply chains remain dependent on his country.
“We must build up our strengths and consolidate our international lead in industries where we have an advantage,” he said a few months after visiting Ganzhou’s most advanced magnet factory. He called for “intensifying the dependence of international industrial supply chains on China, forming a powerful capacity to counter and deter deliberate supply cutoffs by foreigners”.
Japan also took far-reaching actions after the 2010 embargo. Its manufacturers began holding enough rare earths in inventory to meet up to two years of their own needs. They also started looking overseas.
The conglomerate Sumitomo Group, with financial backing from the Japanese Government, helped support the development of Lynas, an Australian mining company. Lynas mines and refines 60% of Japan’s light rare earths, which are mixed with small quantities of heavy rare earths to make rare earth magnets. And the company is preparing to start refining heavy rare earths for Japanese manufacturers this summer in Malaysia, although initially in tiny quantities.
Japan’s biggest magnet manufacturers – Proterial, Shin-Etsu Chemical Co. and TDK Corp. – have moved some production from Japan to China to have reliable access to rare earths, and also to Vietnam, where labour costs are low. But they have also kept considerable production in Japan.
The US rare earth magnet industry started with a subsidiary of General Motors in northern Indiana in the 1980s. But factories shut down and moved to China and Singapore.
After the embargo in 2010, the Japanese company Hitachi Metals, which changed its name in 2023 to Proterial, responding to concern from the administration of former President Barack Obama, built a rare earth magnets factory in North Carolina from 2011 to 2013.
The Hitachi Metals factory, with several dozen employees, had higher costs than the giant complexes being built in Ganzhou. American companies proved unwilling to pay extra for magnets produced in the United States and switched to Chinese suppliers. Hitachi closed the factory in 2020 and the equipment went into storage.
Today the only active rare earth mine in the United States is in Mountain Pass, California. Its operator, MP Materials, plans to start ramping up commercial production of rare earth magnets at the end of the year at a factory in Texas. But even when running at full speed, the facility will produce in a year the equivalent of a day of China’s production.
Chinese factories supply thousands of tonnes of rare earth magnets each year to the country’s manufacturers of electric cars and offshore wind turbines – two industries that Trump has criticised.
Like magnet production, rare earth mining has also had an uneven history in the United States. The Mountain Pass mine produced a majority of the world’s rare earths from 1965 until 1995, when China began flooding the global market with all manner of low-cost exports.
The mine closed in 2002, partly because of ever stricter environmental regulations by California. A US$1.5 billion ($2.5b) upgrade started in 2010, but mining did not resume until 2017 – and then the mine had to ship its ore to China for processing at low-cost refineries there. Only now has the mine begun refining a large share of its production.
Zoning and environmental regulations make it hard to open a rare earth mine in the United States. Opening a rare earth mine in the United States takes 29 years, said Mark Smith, the chair and CEO of NioCorp Developments, which has obtained construction permits to build a mine in Nebraska.
“You can spend a whole career getting a mine up and running,” Smith said.
By contrast, mines in China can be opened quickly and do not have to undergo the same kind of rigorous regulatory approval.
Underpinning all the problems is that the global market for the minerals is tiny next to other kinds of mining, like copper.
Few American companies have wanted to make big investments in rare earths only to face the risk, as Hitachi found, that customers prefer cheaper products from government-backed industries in China.
“US companies have been reluctant to take the plunge,” said David Sandalow, who oversaw critical minerals policy in the Obama administration.
This article originally appeared in The New York Times.
Written by: Keith Bradsher
Photographs by: Christie Johnston and Keith Bradsher
©2025 THE NEW YORK TIMES
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