There is broad consensus among Western policymakers that China’s near monopoly on critical minerals represents an urgent strategic vulnerability for the United States and its allies. China processes over 90 percent of the world’s rare earth elements (REE), a subset of critical minerals, raising concerns that it will use its dominance to advance geopolitical goals. China processes about 80 percent of the world’s lithium and the same percentage of the world’s lithium batteries, at a time when demand for the metal has skyrocketed. As the West looks to reduce dependency on Chinese supply chains, success will require escaping policy silos and pursuing a comprehensive strategy rooted in domestic investment, international partnerships, regulatory reform, and sustained will.

The United States is 100 percent import-reliant for 12 of the minerals deemed “critical” by the U.S. Geological Survey and over 50 percent reliant for another 29. China dominates production or processing for 29 of these, including rare earths, antimony, cobalt, copper, graphite, and lithium. Even when mined elsewhere, many of these materials still flow to China for processing due to its unmatched midstream infrastructure. The result is a China-centric supply chain vulnerable to disruption and instability amid the broader dynamics of geopolitics with China.

In 2010, China halted REE exports to Japan over a territorial dispute, and in 2023, it banned exports of REE processing technology in an apparent effort to fend off midstream competition. Since then, it has imposed export controls on key elements like antimony, gallium, germanium, and graphite. This has raised bipartisan concern among U.S. policymakers that key industries are over-reliant on China, which has in turn spurred support for new domestic capacity throughout the supply chain. Whether that bipartisanship will continue is open to question because there are plenty of ideological traps that could spring at any time. Climate, environmental, and land use issues are important motivators for base Democratic voters. Purchase guarantees, price floors, and government equity are at odds with free-market conservative orthodoxy.

Recent Developments

For now, however, stakeholders continue to see addressing overdependence on China as a rare area of bipartisan agreement.

  • After first using the authority primarily for wind energy projects, the Biden Administration used FAST-41 (a process created in the 2015 Highway Bill to expedite major infrastructure projects) to approve a mine for the first time in 2023. Since then, the Trump Administration has used FAST-41 to approve copper, Stibnite (antimony ore), lithium, copper, and phosphate mines on U.S. soil.
  • President Biden included critical minerals in his February 2021 Executive Order on “America’s Supply Chains” (EO 14017). President Trump has issued five orders related to critical minerals, including one in 2020 declaring U.S. reliance on foreign adversaries a national emergency (EO 13953). He has issued further executive orders this year to help accelerate domestic production and processing, conduct a Section 232 investigation on imports of processed minerals and derivative products, and expedite permitting and development of seabed mining.
  • Since 2020, the Department of War (DoW) has committed over $439 million to build up midstream capabilities—particularly in Texas, where companies like MP Materials, Lynas USA, and Noveon Magnetics are constructing rare earth separation and magnet manufacturing facilities.
  • This year, the DoW entered into a public-private partnership with MP Materials, including billions in federal investment, a $400 million equity stake, price guarantees, and exclusive procurement of domestically produced permanent (non-electric) magnets.

Processing and Permitting

As significant as these developments are, they are only the beginning of what would have to be larger, lengthy, and sustained efforts by the United States. Increased mining is arguably the easy part; extraction won’t help address supply chain concerns if the ore still must be shipped to China to be processed and turned into batteries, magnets, and other products. The United States has very limited processing capacity at present. It is estimated the MP Materials project can produce 1,000 metric tons of magnets per year at its existing facility (it plans to build a second one). By contrast, China produced more than 138,000 tons of magnets in 2018.

Many also point to the importance of research and development: the best ways to take on an incumbent are to build a better product or to produce the same product more efficiently.

Permitting reform also matters. Projects in the United States are often delayed for years by regulatory hurdles and litigation. The Trump Administration has significantly accelerated approvals, but that only goes so far. Federal laws and regulations, state and local rules, opposition from communities, activist groups, and Indian tribes are among the hurdles that can delay projects for years or decades. Legislation will be needed to address this thicket of rules and regulations. Bills in Congress such as the “Critical Mineral Dominance Act” (H.R. 4090) and the “Mining Regulatory Clarity Act” (H.R. 1366) aim to streamline approvals and clarify legal ambiguities.

Building Consensus

Even in an improved policy environment, rebalancing the West’s mineral supply chain would still require businesses that take risks and invest in solutions. The U.S. government is expending considerable effort to develop a policy environment conducive to that investment, but that could change, and therefore stakeholders need to be vigilant. Changing priorities, a new congressional majority, a new presidential administration, or even short memories could derail existing initiatives. Some investors have already been disappointed with curtailment of Inflation Reduction Act tax credits. It is not hard to imagine a future president walking back the recently approved Ambler Road Project in Alaska. Today’s public-private partnerships could become tomorrows “corporate welfare.” The Export-Import Bank reauthorization controversy of 2014-2015 is a clear example of that sentiment.

A stable policy environment is an important part of de-risking domestic minerals projects. There is a truism that China measures time in centuries while American policymakers measure it in two-year election cycles. Building resilient supply chains will need patience and capital investment that extend beyond news cycles, congresses, and presidencies. There is plenty of reason to doubt that a durable and bipartisan policy consensus is possible in today’s polarized political environment. It has been done before, however, particularly in areas that pertain to foreign adversaries, economic growth, and national security. American foreign policy was remarkably consistent from Truman to Bush (the elder). Stakeholders will need to maintain active communication with policymakers, shield their priorities from partisan cooption, and help the U.S. government keep its eye on the ball.

We will continue to report here on important updates related to critical minerals.