US Has 'Tons Of Solutions' To Secure Rare Earth Production If China Halts Exports, Experts Say, But Warn Of Significant Challenges

The United States can explore multiple options to establish a domestic supply chain for rare earths within the next five years to replace China’s global monopoly. However, industry experts warn that the process is fraught with challenges.

What Happened: The U.S. possesses the majority of the 17 rare earth elements and 50 critical minerals. Colorado School of Mines economist Ian Lange said, "I'm on the optimistic side," noting that substitutes exist for the seven restricted rare earths and some manufacturers believe they can manage without them, reported The Epoch Times.

On April 2, President Trump instructed Commerce Secretary Howard Lutnick to recommend strategies within 180 days for how the federal government can support the development of a domestic rare earth supply chain. Economist Antonio Graceffo believes the industry will respond if steps like permit reform, deregulation, and public-private incentives are implemented.

The two main rare earth operators in the U.S. are Australia’s Lynas Rare Earths and MP Materials Corp., based in Las Vegas. Both play a crucial role in processing rare earths for the Department of Defense, which is currently halfway through a five-year plan to establish a "sustainable mine-to-magnet supply chain" by 2027.

According to analyst Lifton, a 145% tariff on China's exports of processed rare earth minerals to the U.S. would make such trade economically unviable. Graceffo noted that there are "tons of solutions" to establish a domestic rare earth supply chain, including ongoing talks with Ukraine.

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Why It Matters: The move to establish a domestic supply chain comes amid rising tensions with China, which has a dominant position in the global rare earths market and has restricted the export of seven critical rare earth minerals. On Thursday, President Donald Trump signed an executive order to fast-track deep-sea mining, seeking to offset China’s dominance in critical mineral supply chains, as reported by CNBC.

Furthermore, American Resources Corporation (NASDAQ:AREC) has recently expanded its operational equipment to meet the rising demand for domestically sourced rare earth oxides. This expansion indicates a growing focus on the domestic production of rare earths.

Also, USA Rare Earth (NASDAQ:USAR) is focused on establishing "one of the largest" rare earth magnet manufacturing facilities in the U.S., aiming to become a top supplier of high-value rare earth magnets and critical minerals.

However, the challenges in refining and processing these critical minerals remain a significant hurdle. Mining and refining projects can take 10 to 20 years to get approved, say experts. Moreover, the country lacks the industrial capacity to refine these into processed metals and magnets, according to Melissa "Mel" Sanderson, board member of American Rare Earths and co-chair of the Critical Minerals Institute.

USA Rare Earth stock surged 97.17% over the past month. On Thursday, it closed 21.6% higher at $13.23, as per Benzinga Pro.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.