As is widely known, China holds a significant advantage in the global rare earth industry. According to data from the U.S. Geological Survey (USGS, 2024), China’s rare earth reserves account for approximately 33.8% of the global total, with particularly abundant reserves of medium and heavy rare earth elements such as terbium and dysprosium, which have limited global substitutes. In 2023, China’s rare earth mineral production reached 210,000 tons, nearly 60% of the global total, far exceeding that of other countries.

At the industrial chain level, China possesses the world’s most comprehensive rare earth industry system, encompassing aspects from mining, smelting and separation, and metal preparation, as well as the manufacturing of functional materials and end products. Notably, the country’s smelting and separation capacity accounts for over 85% of the global total, with mastery of core extraction and separation technologies. Furthermore, China produces about 80% of the world’s rare earth permanent magnets, which are widely used in strategic industries such as new energy vehicles, electric motors, and wind power.

In response to the escalating technological and trade pressure from the U.S. and other Western countries, China has, since July 2023, gradually implemented export controls on germanium, gallium, certain rare earth smelting equipment, and permanent magnet products. These measures have created substantial constraints on Western industries, prompting U.S. and European companies to intensify lobbying efforts with their governments, pushing for policy easing and a shift toward negotiation.

Leveraging its resource endowment and industrial system advantages, China has gained strategic influence in the global rare earth industry. However, the U.S. has not remained passive. In terms of industrial chain restructuring, industry insiders have noted that the U.S. has already taken a series of key steps and is expected to continue advancing these efforts in order to gradually reduce its reliance on China in the rare earth sector.

First, the government provides capital investment and price support to offset China’s low-cost advantage and bolster the American rare earth industry.

On July 10, 2025, the U.S. took its most decisive action yet to weaken China's dominance in the rare earth sector. The U.S. Department of Defense (DoD) announced a USD 400 million investment in MP Materials, the only American rare earth mining and refining company, acquiring a 15% stake and becoming its largest shareholder. In addition, it signed a price support agreement (USD 110/kg) to purchase neodymium and praseodymium at nearly double the Chinese market price.

This move aims to counter the exclusionary effect of China’s “low-price strategy” on Western markets. Previously, MP’s average selling price was only USD 52/kg, which severely squeezed the profit margins and investment incentives of Western companies. The price support mechanism, combined with funding under the Defense Production Act (DPA), has established a price floor for the U.S. rare earth industry. At the same time, JPMorgan and Goldman Sachs committed an additional USD 1 billion investment for MP’s new rare earth magnet plant, which is scheduled to begin operations in 2028 with an annual production capacity of 10,000 tons. Stimulated by this series of developments, MP’s stock price at one point surged by 60%, and shares of other rare earth companies also soared due to the government’s backing of the sector. Australia’s Lynas Rare Earths Ltd, which is building a refinery in Texas, rose by 20%, its highest level in over five years.

Analyses in the U.S. and other Western countries have previously pointed out that Western rare earth companies have gradually fallen behind in production capacity mainly due to the price advantage of Chinese firms. The DoD’s price support represents the kind of price guarantee that key U.S. mineral companies have long sought. This move marks a shift in the West’s approach in the rare earth sector from market mechanisms to strategic intervention. By using state capital and policy-based price support, they aim to break the low-price competition model dominated by China and attempt to build a sustainable rare earth economic ecosystem in the West.

Second, there is the acceleration of the U.S. mineral development, specifically on rare earth resource mobilization.

On July 11, U.S. Energy Secretary, the Governor of Wyoming, and other officials attended the groundbreaking ceremony for Ramaco Resources' rare earth mining project in Wyoming. Originally a coal company, Ramaco discovered in 2023 that its Brook Mine contained up to 1.7 million tons of rare earth oxide resources, primarily including key elements such as neodymium, praseodymium, dysprosium, and terbium. The initial project plan includes launching a pilot plant within the year, with a total projected investment of around USD 500 million. If supported by a price floor mechanism similar to that of MP Materials, the project’s return cycle could be shortened to just three years, making it highly attractive to investors. This could become the first newly developed rare earth mine in the U.S. in 70 years. Its strategic significance lies not only in resource substitution but also in establishing a complete domestic "mining–refining–sales" closed-loop system, ensuring a stable supply of resources to domestic users, particularly in high-end sectors such as defense and technology.

Analysis by U.S. national laboratories shows that the Brook Mine deposit contains 40% rare earth element oxides, namely neodymium, praseodymium, dysprosium, and terbium—as well as three critical minerals of gallium, scandium, and germanium. On July 10, Ramaco Resources CEO Randall Atkins stated in a media interview, “We would intend to mine it here in Wyoming, process it here in Wyoming and sell it to domestic customers including the government”. A consulting report released this week found that fully developing the mine and processing facility would cost approximately USD 500 million. If the rare earths can be successfully mined and sold, the investment could break even within five years. If the DoD’s price support mechanism for MP Materials is extended to other U.S. rare earth facilities, the payback period could be reduced to three years, making rare earth investment even more profitable than other manufacturing sectors.

Third, the U.S. is now building a “Western industrial chain alliance” through coordinating efforts via the G7 and Quad mechanisms.

The U.S. is not merely restructuring its domestic supply chains but is aiming to build a global rare earth supply system that gradually reduces reliance on China. This strategy is being advanced through two key multilateral frameworks: the G7 and the Quadrilateral Security Dialogue (Quad). On June 16, the G7 summit released a draft statement proposing the development of a joint strategy for critical minerals to address supply vulnerabilities caused by China’s export controls, and to accelerate mechanisms such as diversification, coordination, and recycling. Then, on July 1, during the Quad meeting, over 40 companies from the U.S., Japan, India, and Australia held in-depth discussions on mineral cooperation. U.S. Secretary of State Rubio emphasized the need to build an integrated supply chain covering everything from raw material extraction and refining to material production. Among the four countries, Australia has mature capabilities in resource extraction, Japan specializes in refining and recycling, India has potential in refining, and the United States is focusing on military-industrial and capital-driven leadership. Together, they aim to establish a synergistic "alternative-to-China model". In particular, this alliance may gradually reduce dependence on China in key technologies and equipment.

Researchers at ANBOUND believe that, based on the analysis compiled by industry insiders regarding the three major developments in supply chain restructuring, it can be concluded that after China began to "weaponize" its rare earth resources, large-scale, full-industry-chain efforts in the U.S. and other Western countries have been significantly activated. These efforts are being jointly advanced by industry, capital, governments, supporting legal frameworks, and multinational cooperation. This marks the latest evolution in the global rare earth landscape.

However, due to China’s long-term and substantial investment in the rare earth industry chain, the restructuring strategies pursued by the U.S. and Western countries are unlikely to yield immediate results. China is expected to maintain a lasting advantage in several key areas: resource structure with high reserves of medium and heavy rare earths and limited global alternatives, industrial costs benefiting from significant economies of scale in refining and magnet manufacturing, and technological capabilities with some purification and functional material technologies still at the forefront globally. That said, the strategic intent of the U.S. and the West in reshaping the rare earth industry is highly resolute, with little chance of reversal. Since the beginning of this year, U.S. and Australian companies have achieved breakthroughs in medium and heavy rare earth separation technologies, and the U.S.-driven development of bio-extraction methods has also made progress. These developments will certainly continue to pose a sustained challenge to China’s dominant position.

Final analysis conclusion:

While some believe that the U.S. lacks rare earth refining technology, faces stringent environmental standards, and has high manufacturing costs, it would be difficult for it to reduce its reliance on Chinese rare earths. However, current U.S. actions suggest otherwise: through government-backed capital support, price guarantees, and closer coordination with allies, the U.S. has been making consistent efforts to reduce its dependence on China. Given that the U.S. and other Western countries are the primary consumers of rare earth end products, the eventual impact of these measures should not be underestimated.