The ongoing trade tensions between the US and China have taken a significant turn with the imposition of export restrictions on rare earth components by Beijing, prompting Washington to accelerate efforts to secure alternative sources.
US Commerce Secretary Gina Raimondo's statement that negotiations with China are nearing a deal on rare earth minerals and magnets suggests a possible resolution in the framework implementation. However, this development comes after President Trump accused Beijing of violating their agreement, citing shipments of rare earths as a key issue.
In response to the escalating tensions, China has imposed a six-month limit on export licenses for rare earths to US automakers and manufacturers, requiring domestic exporters to apply for a license. This move is seen as an attempt by Beijing to assert its control over the global supply chain of rare earth components.
The US government has invested $439 million since 2020 to strengthen domestic supply chains, including awards to MP Materials for light and heavy rare earth processing facilities. However, despite these efforts, the country still faces a significant risk of being reliant on China, with only one facility expected to produce 1,000 tons of neodymium-iron-boron magnets annually by 2025.
Australia has emerged as a key ally in this context, with projects like Iluka Resources' Eneabba Rare Earths Refinery in Western Australia set to produce separated rare earth oxides starting next year. The US is also exploring international partnerships to reduce its reliance on Chinese heavy rare earths.