Rare Earths and Magnets Industry Explained: The U.S. View
Rare earths are a group of metals used mostly to make permanent magnets for electric motors, wind turbines, electronics and weapons. The United States mines them: Mountain Pass in California produced most of an estimated 51,000 tons of rare-earth oxide in mineral concentrates in 2025, according to the USGS, second only to China's 270,000 tons. The weak link is everything after the mine. Separating oxides, making metals and pressing magnets is concentrated in China, and in 2021–2024 China supplied 71% of U.S. imports of rare-earth compounds and metals. China used that position in 2025: it tightened export controls on seven rare earths in April, expanded them to five more in October, then suspended the October rules for one year in November while keeping the April ones. Washington responded with money. In July 2025 the Defense Department agreed to a $400 million equity stake in MP Materials, a 10-year price floor of $110 per kilogram for neodymium-praseodymium (NdPr) and a 10-year offtake of all magnets from a new plant due to start commissioning in 2028.
- U.S. mining
- USGS: U.S. mines produced about 51,000 tons of rare-earth oxide in 2025
- China controls
- China tightened rare earth export controls in April and October 2025
- Price floor
- DoD set a 10-year $110/kg price floor for NdPr in July 2025
How the chain works
Mining, separation and magnets
| Mining | Separation and metals | Magnets | |
|---|---|---|---|
| U.S. position | Second-largest miner (USGS) | Growing: compounds and metals output about 8,900 t in 2025 | Small; new plants under construction |
| China's position | About 270,000 t of 390,000 t world output | Dominant; 71% of U.S. compound and metal imports | Dominant |
| 2025 events | U.S. output up to about 51,000 t | China export controls on 7, then 12 elements | DoD offtake for a 10,000-ton-a-year plant |
| What to watch | Mountain Pass output | Heavy rare earth separation | Magnet plant commissioning in 2028 |
Mines are not the bottleneck
According to the USGS Mineral Commodity Summaries 2026, U.S. mines produced about 51,000 tons of rare-earth oxide in concentrates in 2025, up from 45,500 tons, mostly bastnaesite from Mountain Pass, California, plus monazite from heavy-mineral sands in the southeast. World output was about 390,000 tons, of which China produced about 270,000.
The harder steps come next. Separating the 17 elements, reducing them to metal and making magnets takes chemistry, know-how and scale that China built over decades. U.S. production of rare-earth compounds and metals has grown from about 120 tons in 2021 to an estimated 8,900 tons in 2025, but imports of compounds still jumped to about 21,000 tons, and the USGS puts net import reliance for compounds and metals at 67% in 2025.
China's export controls
In April 2025 China added export controls on alloys, compounds, metals and oxides of samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium. In October it expanded the list to europium, holmium, erbium, thulium and ytterbium. In November it suspended the October controls for one year; the April controls stayed in force, although China began issuing general export licenses to selected exporters, according to the USGS.
Several of these, such as dysprosium and terbium, are heavy rare earths added to magnets so they keep working at high temperatures in motors. Controls on them can hit automakers and defense suppliers quickly, because there are few other sources.
Washington steps in
On July 10, 2025 MP Materials announced a deal with the Defense Department: $400 million of preferred stock plus warrants that could give the department about 15% of the company, a price floor of $110 per kilogram for NdPr products for 10 years, and a commitment to buy all magnets from a new "10X" plant for 10 years after commissioning, which is expected to begin in 2028 and lift the company's magnet capacity to about 10,000 tons a year. JPMorgan and Goldman Sachs committed $1 billion of financing, and a $150 million Defense Department loan was planned for heavy rare earth separation.
The government also buys for its stockpile: fiscal 2025 potential acquisitions included 300 tons of NdPr oxide and 450 tons of neodymium-iron-boron magnet block, per the USGS.
How the U.S. view differs from the China view
The Chinese version of this page is written from the side that holds the cards: China mines most rare earths, sets production quotas, separates and refines most of the world's supply, and uses export licenses as a policy tool.
From the U.S. side the issue is building a whole chain outside China. The U.S. already mines; what it lacks is separation, metal and magnet capacity, and the government is using price floors, equity stakes and guaranteed purchases to make those plants economic against Chinese competition.
2025: export controls and a price floor
In April 2025 China put export controls on seven rare earths, many of them used in high-temperature magnets. In October it added five more.
In July the U.S. Defense Department took a stake in MP Materials and guaranteed a $110/kg floor for NdPr, well above 2025's average NdPr oxide price of about $69/kg reported by the USGS, plus a 10-year magnet offtake.
In November China suspended the October controls for a year but kept the April ones. The episode showed that the choke point is processing and magnets, and that market prices alone did not justify building those plants in the U.S.
- Owning the mine is not enough; separation and magnets are the bottleneck.
- Export controls can be eased or tightened quickly, so supply risk stays.
- U.S. plants need government price support to compete with China.
Common misreadings
MythThe U.S. has no rare earth mining.
RealityU.S. mines produced about 51,000 tons of rare-earth oxide in 2025, second to China.
MythRare earths are physically rare.
RealityThe USGS says they are relatively abundant in the crust; minable concentrations are less common.
MythChina's November 2025 suspension ended the controls.
RealityOnly the October controls were suspended; the April controls remained in effect.
MythMarket prices will pay for new U.S. magnet plants.
RealityThe DoD floor of $110/kg compares with an average NdPr oxide price of about $69/kg in 2025.
Controls, subsidies and demand: scenarios
| Scenario | Main effect | How it passes through |
|---|---|---|
| China reinstates October controls | Heavy rare earth supply | Shortages for motors and defense |
| China eases April controls | Magnet supply | Prices fall, pressure on U.S. projects |
| U.S. magnet plants start up | Import reliance | Less dependence on China |
| NdPr prices stay below the floor | Government cost | DoD pays the difference |
| EV sales slow | Magnet demand | Weaker demand growth |
| Allies build separation capacity | Non-China supply | More options for U.S. buyers |
Supply and demand by segment
| Segment | Supply rigidity | Concentration | New demand | Policy role | What to watch |
|---|---|---|---|---|---|
| Mining | High (permits, years) | High (China) | Low | High | Output, new mines |
| Separation and metals | Very high (know-how) | Very high (China) | Yes | Very high (export controls) | Non-China capacity |
| Magnets | Very high | Very high (China) | Yes (EVs, wind, defense) | Very high (DoD offtake) | Plant commissioning |
| Defense stockpile | Not applicable | Government | Yes | Very high | Stockpile purchases |
Supply rigidity: how long new capacity takes and whether money can speed it up. Concentration: whether output sits in a few countries or companies. The more rigid and concentrated, the more prone to shortages.
How to track it
| Indicator | What it tells you | Where to find it |
|---|---|---|
| U.S. production, imports and prices | Supply and reliance | USGS Mineral Commodity Summaries, yearly, free |
| China export control announcements | Supply risk | China Ministry of Commerce, free |
| Company production reports | U.S. separation and magnet progress | Quarterly results of U.S. producers, free |
| Defense Production Act awards | Government support | Department of Defense announcements, free |
| Tungsten, antimony, gallium, germanium | Other China-controlled minerals | U.S. view: minor metals |
Sources
- USGS: Mineral Commodity Summaries 2026, Rare Earths
- The Northern Miner: MP Materials lands $400M Pentagon deal (2025-07-10)
Last updated 2026-10-18.