Modern society is completely dependent on 17 obscure metallic elements with special magnetic, heat-resistant and phosphorescent properties. While quite abundant in the Earth’s crust, these minerals are difficult to find in sufficient concentrations to mine economically, and just as hard to process and refine—hence, their label “rare earths.”

So many high-tech aspects of contemporary society are dependent on them—from smartphones, consumer electronics, and electric vehicles to industrial motors, medical equipment and aerospace systems—that they have become imperative to our way of life.

Which is problematic, because China currently commands this space, producing roughly 70% of the global rare earth output and controlling about 90% of rare earth refining capacity. In the age of digitalization, how in the world did the United States become dependent on its primary global trading and military threat for such strategically critical products?

To understand this challenge, a little history is in order. The U.S. became the global leader in mining rare earth elements (REE) at roughly the same time as the electronics age emerged. The turning point was the discovery of California’s Mount Pass deposit in the late 1940s, which soon became the leading source of these minerals in the world, turning the United States into the global leader in rare earths production.

By the 1980s, though, China had made a calculated decision to ensure its own steady supply, investing heavily in mining at its Bayan Obo deposit in Inner Mongolia as well as in its processing capabilities. Indeed, it recognized a strategic opportunity to become the world leader. As Deng Xiaoping stated in 1992, “The Middle East has oil; China has rare earths.” Thus China put itself on the path to becoming not only the world’s biggest miner of REEs, but also the biggest processor and refiner as well as the leader in industrial magnet manufacturing. 

By the time it joined the WTO in late 2001, China had achieved this goal. Boosted by lower labor costs and government financing, it effectively undercut U.S. competition. Meanwhile, the United States took a laissez faire approach to rare earth minerals, assuming free trade would ensure a steady supply of cheap minerals—at the time not seeing Chinese dominance as a national security risk, an error for which it still may pay dearly.  This led to a steep decline in production at Mountain Pass, which when combined with environmental and regulatory issues led to its shuttering two decades ago. (his was in sharp contrast to the Chinese, whose lack of environmental regulation led to severe pollution and even toxic runoff from their extraction. This has only recently been addressed, with the adoption of a far stricter system of oversight, the Rare Earth Management Regulations.

As a consequence, more companies worldwide, including American companies, were compelled to turn to China for their REE sourcing. By this time, of course, rare earth minerals had become a requisite commodity for our increasingly digitalized economy, essential for the technological revolution occurring globally.

In subsequent years, the gap between China and the U.S. in production and processing only grew, making for a precarious situation for American companies and the U.S. military.

But even excellent strategists make mistakes. In 2010, China overplayed its hand.  The government placed significant restrictions on export quotas of rare earths, which it hoped would force overseas tech firms to relocate their manufacturing facilities to China.  Instead, it led the United States and other countries to develop strategies to become less reliant on China for these minerals.

Which brings us to today. While the shoe is far from being on the other foot, the United States response has been far more strategic, providing hope to manufacturers and the U.S. military and aerospace industry that China will not be able to undermine their operations down the road.

First, MP Materials took control of the long-shuttered Mount Pass mine and resumed mining in 2018. (A second major mine, Red Mountain Pass in Colorado, reopened this year, accompanied by Niocorp’s launch of the Elk Creek Critical Minerals project in Nebraska, with Wyoming’s Halleck Creek Project not far behind.)

Next, the U.S. government placed a stake in the ground in 2025, setting long-term policy objectives to minimize the nation’s reliance on foreign sources by establishing an end-to-end domestic supply chain. The goal: an uninterrupted mine-to-magnet supply chain in this country by 2027. That begins with jump-starting our own extraction, separation, and refining facilities, and thinking beyond the traditional approach of digging minerals out of the ground.

To that end, the Department of Energy has started funding mineral extraction from a broad spectrum of sources—including mine waste and tailings, coal byproducts, industrial waste, and most promising, recycled electronics. Earlier this year, its Office of Critical Minerals and Energy Innovation launched projects in tandem with the Colorado School of Mines and rare-earth recycling startup Phoenix Tailings to design and construct facilities to demonstrate commercial viability of recovering and refining REEs. This complements the Defense Department’s own efforts to dramatically expand this country’s production capacity of magnets, a critical component for military guidance, propulsion and communications systems. To that end, last year DOD announced a public-private partnership with MP Materials, owner of Mountain Pass, to construct a magnet manufacturing facility capable of producing 10,000 metric tons per year.

And MP Materials isn’t alone. In Texas, the firm REEcycle, also with DOD support, has patented a recycling process used to recover magnets from hard drives, EV motors and industrial equipment. HyProMag USA, also in Texas, is similarly focused on recovering and reusing magnetic materials. So is North Carolina-based startup Vulcan Elements. In other words, domestic refining and production capacity are growing rapidly.

Though likely apocryphal, after the World War II attack on Pearl Harbor, Japanese Admiral Yamamoto was said to have written in his diary: “I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve.” The sleeping giant was the United States. Today, Chinese President Xi Jinping may be thinking the same thing about his country’s past actions introducing significant rare earths restrictions on the United States.