The US is Racing to Build a Rare Earth Magnet Supply Chain

Subscribe to our free newsletter today to keep up to date with the latest mining and minerals news.

Last month, China cut exports of rare earth magnets by 74 percent compared to the prior year. Shipments to the United States alone dropped by 93 percent. The move followed Beijing’s April introduction of tighter export controls on finished magnets, a signal to Western governments that strategic minerals remain central to China’s geopolitical influence.

Neodymium magnets are among the most critical materials affected. While China controls less than 70 percent of global rare earth oxide production, it still accounts for over 90 percent of neodymium magnet output. With Beijing limiting export licenses to six-month intervals, manufacturers face renewed urgency to reengineer their supply chains.

The United States, long reliant on imported magnets, now confronts the challenge of building a domestic alternative. Against this backdrop, two companies, MP Materials and USA Rare Earth, have emerged at the forefront of efforts to create a homegrown supply chain.

MP Materials and USA Rare Earth

MP Materials operates the only large-scale rare earth mine in the United States, located at Mountain Pass, California. In 2024, the facility produced more than 45,000 metric tons of rare earth oxides and about 1,300 tons of neodymium-praseodymium oxide. Its Texas-based Independence facility began commercial production of neodymium-praseodymium metal in early 2025. By the end of the year, it expects to deliver its first automotive-grade magnets to General Motors.

Meanwhile, USA Rare Earth is building a 310,000-square-foot magnet factory in Stillwater, Oklahoma. Scheduled to begin production in 2026, the plant will initially produce 600 tons per year, with plans to scale up to 5,000 tons. That level of output could generate $800 million in annual revenue. The company also holds a 70 percent stake in the Round Top deposit in Texas, one of the most promising sources of heavy rare earth elements in the country. Pilot-scale production of dysprosium and terbium has already reached 99 percent purity.

Why rare earth magnets matter

Despite their small size, neodymium magnets play a significant role in modern technology. From missile guidance systems to electric vehicle drivetrains, these magnets enable performance and efficiency that no current substitute matches.

The Department of Defense has identified rare earths as essential to national security, investing more than $439 million since 2020 to develop refining and manufacturing capabilities. Beyond defense, global demand for rare earth magnets is projected to rise nearly 500 percent by 2040, driven by the transition to clean energy.

Federal support, global politics, and the road to independence

To jumpstart domestic production, the federal government has used the Defense Production Act and allocated substantial funding to rare earth initiatives. MP Materials received $1.2 billion to support its Texas facility, while USA Rare Earth has secured early-stage contracts and backing from the Department of Energy.

Globally, G7 nations have pledged to reduce their reliance on Chinese critical minerals. However, trade negotiations remain complex. A partial resolution in June 2025 eased some US–China tariffs, but China retained control over licensing magnet exports. For now, Beijing’s influence on supply remains strong. Still, US policymakers are advancing tax credits, federal procurement incentives, and direct investments to help bridge the production gap.

Even with federal support and corporate momentum, substantial challenges remain. The United States lacks commercial-scale refining technology for several heavy rare earths. Upgrading old facilities and building new ones is expensive and time-consuming. There is also a shortage of trained metallurgists and process engineers, which may slow efforts to scale operations.

Economically, even a full ramp-up to 5,000 tons per year at USA Rare Earth’s Stillwater plant would still fall far short of China’s estimated 300,000-ton output. Achieving meaningful independence will require production expansion, as well as investment in research, education, and international collaboration.

Sources:

• Washington Post article on U.S. rare earths