Rare Earth Elements: US Aims to Diversify Supply Chain Amid China Tensions
Pic Source: AFP
(Ruchika Kakkar)
In his second term, United States (US) President Donald Trump has elevated rare earth elements (REEs) and critical minerals to a top strategic priority, comparable to semiconductors, due to their indispensable role in defence, clean energy, electronics, and advanced manufacturing. Throughout 2025, the administration pursued an ambitious diversification strategy through international agreements, domestic incentives, and trade negotiations to counter China’s dominance. China controls approximately 70 per cent of global REE mining and 90 per cent of processing.
Since early 2025, the US has actively pursued multiple REE agreements, signaling the formation of strategic alliances with key global partners. These include a binding US–Saudi Strategic Framework on Critical Minerals signed on November 19; the first-ever White House summit with five Central Asian states on November 6; a non-binding critical minerals framework with Japan on October 28; and multiple Association of Southeast Asian Nations-linked agreements on October 26 with Malaysia, Thailand, Cambodia and Vietnam. Additional milestones include an USD 8.5 billion US–Australia critical minerals framework finalised on October 20; Pakistan’s entry into REE cooperation with a USD 500 million deal and its first consignment sent on October 2; multilateral G7 and European Union cooperation in June; and US–Ukraine mineral and reconstruction agreements concluded between April 30 and May 13. Simultaneously, domestically, the US has launched five major public–private partnerships since January 2025. While reflecting ongoing vulnerabilities, the 2025 United States Geological Survey List of Critical Minerals, released on November 6, identifies REEs supply chain restrictions, which underscores greater concern for their availability for future production.
U.S.-China tensions escalated after China restricted exports of seven REEs in April, followed by 12 elements in October. A one-year pause on China’s REE export controls was negotiated at the Busan Summit in South Korea in exchange for tariff reductions and soybean purchases, a move that followed on US tariffs and technological restrictions. China’s retaliation had impacted USD 150 billion of American auto production and drove neodymium oxide prices from USD 70 per kilogram in 2020 to USD 120 per kilogram. REEs – critical yet difficult-to-extract metals – are essential for clean energy, defence, electronics, and medical technologies, making them strategically indispensable in the contemporary and highly competitive global order.
Of course, potential alternative sources include the US Mountain Pass mine, Australian reserves, Ukrainian deposits, Pakistani sites, and emerging projects in Africa and Greenland. However, processing remains the critical bottleneck, as nearly all global refining is concentrated in China. While these initiatives reflect strong strategic intent, experts caution that China’s dominance will likely persist for years. New processing facilities require five to 10 years to become operational and face significant hurdles, including technical complexity, high costs, environmental concerns, possible delays, and local opposition. Moreover, many of the agreements recently signed remain non-binding Memoranda of Understanding, vulnerable to political shifts in partner countries and lacking enforceable commitments. Further, China’s advantages – subsidies, economies of scale, rapid innovation, and control over 70 per cent of global consumption – will ensure it maintains a dominant position even during periods of export restriction.
As a result, the multiple agreements the US has entered into will have limited short-term impact, which could include some price stabilization from diversification signals and the Busan pause, targeted relief for industries, potential US job growth in mining/processing, and future flexibility for allies like Japan. In the long term, these pacts could shift 15 to 20 per cent of refining away from China by the 2030s.
On the other hand, several structural hurdles continue to constrain meaningful progress in diversifying rare earth supply chains. Processing capacity will remain the primary bottleneck, as scaling separation and refining outside China is technically complex, capital-intensive, and slow – often requiring five to 10 years or more to reach commercial viability. Temporary truces and short-term deals with China provide immediate relief but fail to foster genuine independent capacity, leaving the US and its allies vulnerable to renewed export restrictions once the present transient agreements expire. Importantly, Multilateral alignment, while strengthened through new frameworks, remains fragile due to differing national priorities, regulatory environments, and geopolitical pressures, making coordinated long-term investment and execution challenging.
Trump’s strategy signals a move toward pragmatic mineral diplomacy, leveraging bilateral agreements, coalitions, and targeted investments. This approach mitigates some short-term risks and builds strategic momentum, though complete decoupling from rivals will remain a protracted endeavour, extending over the coming decades. While incremental progress in supply channels and cooperative alliances against coercion is probable, expanding domestic capacity will require sustained funding, careful coordination, and structural reforms. Overall, these initiatives underscore the growing significance of mineral geopolitics, potentially strengthening the US position in global competition over time, even as China’s dominance endures. The present agreements highlight a shift toward multipolar, bloc-oriented resource competition, positioning REEs as instruments of geoeconomic statecraft, while exposing enduring vulnerabilities in global supply chains amid ongoing trade tensions.
Author Ruchika Kakkar is Senior Fellow at Institute for Conflict Management.
(The views expressed in the above piece are personal and of the author. They do not necessarily reflect Bharat Fact views.)
