Can the rest of the world challenge Beijing's dominance of high-performance magnets, used in everything from consumer electronics to weapon systems, by developing new projects for mining, processing, and synthetic products?
As China exploits its control over the global supply of high-performance magnet components, the rest of the world is becoming more desperate for alternatives.
Many of the 17 rare-earth elements, including the heavy elements dysprosium, erbium, holmium, and terbium, as well as other elements considered critical by various countries, are needed for manufacturing magnets used in products ranging from consumer electronics and electric vehicles to radar, satellites, laser equipment, quantum computers, wind turbines, and the US’ most advanced fighter jet, the F-35.
By 2030, however, China will control 51% of rare-earth element production and 76% of their refining, according to the International Energy Agency. Beijing’s share of rare-earths production and refining is even higher today. That dominance results from the Chinese government, under the Chinese Communist Party, engaging in “a coordinated, decades-long scheme to control different critical minerals and bend the global market to their will,” according to a report released in November by a bipartisan select committee of the US Congress. China’s basic strategy, the report states, is to subsidize and control production to keep prices low enough to discourage competition.
US President Donald Trump has engaged in a trade war with Beijing aimed partly at reducing its control over the supply of rare earths; but it has had little effect, and most economists say it’s unlikely to have much more impact in the end.
Western companies and researchers are pursuing some of the most promising options by stepping up efforts to locate, extract, and refine rare earth and other critical element deposits, while also developing methods to reduce reliance on them or replace them altogether.
Rare earths aren’t actually rare, as countries like Australia, Brazil, India, Russia, the US, and Vietnam also have large reserves. However, rare earths often bind to other elements and minerals, which discourages many nations from investing in rare-earth mining. The extraction and refining processes can be too costly and polluting to do on a commercial scale.
Building A New Supply Chain
Nonetheless, a growing number of mining and processing companies are making fresh efforts to extract, separate, and refine rare earths and other critical elements. Those companies include Aclara Resources, Lithium Americas, MP Materials, and Ramaco Resources. Additionally, Niron Magnetics, a Minneapolis-based company that has received $300 million in funding from General Motors, Stellantis, and Samsung, is working on developing a synthetic alternative to rare-earth magnets made of iron and nitride. Three of these companies’ executives testified in November before a US congressional select committee about their progress. Other companies and researchers are exploring different alternatives.
Although quickly freeing the market from Chinese control might be a nearly impossible task, the executives told the committee that they are actively trying, increasingly with government help. “We’re scaling technology as quickly as possible to reach a 10,000-ton capacity of iron nitride, where we can really move the needle on magnet supply,” Jonathan Rowntree, CEO of Niron, told the committee. As the globe’s second-largest source of rare-earth elements, the US produces only about 45,000 to 46,000 tons of rare-earth oxide annually, compared with China’s 270,000 tons.
The challenges in narrowing that gap are technical, environmental, and financial, as Aclara CFO François Motte told Global Finance in early December. Based in Santiago, Chile, Aclara is exploring projects in Peru, Brazil, and Chile, and building separation facilities in Louisiana.
Because of the lengthy process needed to extract, separate, and metalize rare earths, the investment cost for producing magnets from these elements is high. This often requires government support for initial funding, usually through public-private partnerships that provide support in the form of loans and equity.
Motte says Aclara’s 10% to 12% weighted-average cost of capital is a significant disadvantage in competing with China. “Until a market is created outside of China, we’ll have to rely on government financing,” he notes. Aclara has received a grant of up to $5 million for its project in Brazil from the US International Development Finance Corporation, which has the right to invest an additional $100 million in equity.
Other companies are in a similar position. Las Vegas-based MP Materials signed a public-private partnership agreement with the Department of Defense in July 2025 under the Defense Production Act. This agreement not only includes a $150 million loan and $400 million in equity but also offers price support for the company’s production at its Mountain Pass site in California, the largest rare-earth production site in North America.
The partnership sets a 10-year price floor of $110 per kilogram for neodymium-praseodymium produced by MP. When market prices drop below $110, the Pentagon pays MP the difference; and when prices exceed the floor, MP returns 30% of the increase to the Pentagon. MP Executive Vice President Matthew Sloustcher told the congressional committee that the agreement takes China’s price manipulation “off the table.”
Challenges
But while price support helps MP because of its vertically integrated strategy, companies focused on refining rare earths or manufacturing magnets alone may still find China’s dominance an issue to the extent it depresses prices for their output.
Also helpful are partnerships with other private companies. General Motors, for example, has entered a strategic alliance with MP that will see the carmaker buy magnets developed from rare-earth materials sourced from Mountain Pass and manufactured for electric motors at a new facility in Texas.
“Restoring the full rare-earth supply chain to the United States at scale would not be possible without US manufacturers like GM recognizing the strategic consequence and acting with conviction,” MP’s chairman and CEO, James Litinsky, said in announcing the partnership in 2021.
Niron’s Rowntree told the congressional committee in November, “At scale, we don’t necessarily need the price support,” but he added that his company would also benefit from such “offtake” agreements. Aclara, meanwhile, is in discussions with all the major automakers in the US, Europe, Japan, and Korea for a similar agreement, according to Motte.
A-no-less critical part of the challenge, at least for mining companies, involves permitting sites for development, especially in the US, as extraction and refining are environmentally hazardous. Aclara’s Motte notes that the entire process for getting a mine into production can take at least five years outside China and as long as 10 years in the US, in large part due to permitting requirements that discourage private investment. The executives who testified before Congress urged lawmakers to pass pending legislation to reform permitting by imposing time limits on the process, including the appeals process.
Jonathan Evans, CEO of Vancouver-based Lithium Americas, told the committee that his company could have been in operation with the planned development of Thacker Pass, a lithium deposit in northern Nevada that is the largest in the US, 18 months before his testimony if private capital hadn’t remained on the sidelines, primarily because of permitting appeals, which Evans termed “a real barrier.”
France might help lower that barrier, as companies there are beginning to apply their experience in handling nuclear waste to rare-earth refining and processing. Lyon-based rare-earth startup Carester recently invested €216 million (about $253 million) in a refining plant in Lacq, France; and Belgian chemical giant Solvay has expanded its facility in La Rochelle, France.
Creating synthetic alternatives to rare-earth metals such as iron nitride can lessen environmental impacts and reduce dependence on China, since these materials don’t require rare-earth metals. As a November 2024 white paper by Irvine, California-based rare-earth magnet manufacturer Stanford Magnets states, “Iron nitride permanent magnets are an emerging alternative to traditional rare-earth magnets, offering unique advantages in terms of performance and sustainability.”
But there are questions about iron nitride’s magnetic properties. Research shows that iron nitride magnets can lose their strength when exposed to other magnetic fields, common in high-tech applications.
Another potential alternative being studied by Laura Lewis, a chemical engineer at Northeastern University in Boston, is high-performance magnets made from a mineral called tetrataenite, which consists of thin layers of iron and nickel stacked together and is found in some meteorites.
Yet critics argue that seeking substitutes for rare earths in magnets will slow down the development of a supply chain that can compete with the current one dominated by China. As Randall Atkins, CEO of Lexington, Kentucky-based Ramaco, explains in an email: “The concept of ‘substitution’ suggests that any critical mineral might be engineered out of the supply chain if we just put our minds to it. However, if you substitute elements in permanent magnets or semiconductor chips, often a complete redesign is required; and the closest substitute pales in comparison.”
For her part, Lewis tells Global Finance that hopes for iron nitride are partly based on “hype.” But the skepticism about such alternatives expressed by Atkins is broader. As he puts it, The substitution myth may be a dangerous illusion.”
Ramaco recently discovered the first new rare-earth element deposits in the US in 70 years and estimates that the site it plans to develop at the Brook Mine in Wyoming contains 400,000 tons of seven critical mineral oxides.
“No other material can perform at the level of traditional high-performance magnets at present,” notes Jack Howley, senior technology analyst at technology-research firm IDTechEx, based in Cambridge, England. Still, Howley says synthetic replacements may work well as a “hedge.”
And as Nicola Morley, a professor of materials physics at England’s University of Sheffield, points out, even if iron nitride magnets can be used only in applications that require less performance, that would help ease pressure on the rare-earth supply chain. Motte also takes a nuanced view of iron nitride magnets, noting that “one solution isn’t enough,” and that they will have “their own space.”
‘Thrifting’ Shows Promise
There are also efforts underway at companies such as the Swedish-Swiss multinational ABB and Noveon Magnetics of San Marco, Texas, to reduce the amount of rare earths needed in high-performance magnets through a process called “green boundary diffusion,” or more informally, “thrifting.” As Howley describes the process, by concentrating rare earths on the surfaces or edges of magnets, “you don’t need complete diffusion.” Research shows that the technique can cut the amount of rare earths needed in high-performance magnets by up to 70%. However, Motte notes that such magnets are currently very expensive.
The supply of rare earths and other critical minerals could also be increased through recycling. The US Department of Energy announced in December that it would allocate $134 million to fund a demonstration project for separating rare-earth elements from feedstock derived from acid mine drainage, mine waste, or “other deleterious materials.”
Recycling is a major focus of European efforts because the continent has limited reserves or mining of rare-earth elements. Carester’s new plant in Lacq, set to become Europe’s first large-scale separation facility, combines recycling with refining. Still, recycling methods currently have very low recovery rates.
The University of Sheffield’s Morley mentions that repurposing permanent magnets by removing them from one device and using them in another is an option worth considering. She admits this approach isn’t common now, but she expects it to become more widespread in the next five to 10 years.
Now, then, putting the pedal to the metal to produce these metals may be the West’s best bet.
