HUA BIN -- Rare earth and “reindustrialization” -- Manufacturing is far harder than people realize

 

Rare earth and “reindustrialization”

Manufacturing is far harder than people realize

Hua Bin

May 14, 2025

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The New York Times is not usually mentioned in the same breath with Mining Journal or the Northern Miner, the leading lights for the mining industry.

But between April 14 and 17, NYT ran 5 stories with titles below -

- China halts critical minerals as trade war intensifies (April 14)

- What are rare earth metals, the export halted by China (April 15)

- How China took over the world’s rare earth industry (April 16)

- The mine is America’s, the minerals are China’s (April 16)

- Here is what to know about rare earth minerals and renewable energy (April 17)

In April, NYT also published these titles:

- Elon Musk warns rare earth magnet shortage may delay Tesla’s robots

- US announces deal to share Ukraine’s mineral wealth

- Not just rare earth: US gets many critical minerals from China

- China’s halt of critical minerals poses risk for US military programs

Readers may be forgiven for thinking NYT is entering the arena normally reserved for mining.com.

Tellingly, since April 2 “liberation day”, the New York Times has run more articles on rare earth metals than China’s potential dumping of US Treasuries.

Credit to NYT, it hasn’t focused “2 toys instead of 30” kind of frivolous theatrics from the tariff war. The true trump card China played is the rare earth ban to the US. In short, US buyers will not be able to get rare earth minerals from China even if they are willing to pay the 145% (or whatever the number is on any given day) “reciprocal” tariff. China is going after the jugular with this move.

The New York Times realizes rare earth minerals’ central importance to US high-tech manufacturing and military production (we’ll dive into this later). Clearly, now that China has cut off US access to rare earth, building this industry is far more important to the US economic and national security than assembling iPhones in the US – a fact that naturally escapes financial geniuses like Miran, Navarro, Bessent and Lutnick.

In fact, this should be a top priority and test bed for reindustrializing the US if the Trump regime is serious. For example, without rare earth, the much touted US 6^th generation fighter program F-47 will be dead in the water.

Can the US turn the dream of reindustrialization into reality in the critical rare earth industry to reduce dependency on China? What would such a test case tell us about its prospects to become a manufacturing powerhouse again? Let’s dive in.

Rare earths are silvery-grey metals. There are 17 of them, ranging from lanthanum (atomic number 57) to lutetium (atomic number 73), and most of them are in their own row in the periodic table because of their unusual atomic structure.

By the way, President Trump, the periodic table is not to be confused with ladies’ monthly cycles (“blood coming out of her wherever”).

Their arrangement of electrons can give them remarkable properties such as luminescence—used for the screens of smartphones—and magnetism. They are often added to other metals in small amounts to enhance their performance; magnets with rare earths can be 15 times as powerful as those without them.

Despite their name, rare earth elements (REE) aren’t particularly rare—they’re just difficult to extract. This group of 17 elements can be found on earth’s crust in many place around the world.

What’s special about REE is their unique properties that make them essential in high tech production. Here is an incomplete list of products that need REE to make –

- Smartphone

- Semiconductor

- Aircraft engine

- Electric vehicle

- Wind turbine

- Robotics

- Fibre optic cable

- Guided missile

- High frequency radar

- Avionics and flight control systems

- Thermal barrier coatings, sensors and optics

- Drone and rocket

- Infrared night vision goggle

- Precision laser

- Armor piercing tank shell

The rare earth industry happens to be one that China dominates –

- Reserve advantage: China holds the biggest share of global REE reserve at 37%, roughly 44 million tons

- Mining dominance: China accounted for 168,000 tons out of 240,000 global production, representing 70% of total REE mining

- Processing and refining monopoly: China dominates roughly 90% global REE processing, turning raw ores into usable oxides, metals and magnets. For heavy rare earth such as terbium, ytterbium and yttrium, China’s dominance is absolute at 100%. Heavy REEs (HREEs) are especially important in high tech and military applications (e.g. jet engine coating).

- Production concentration: 6 state owned companies control 90% of the REE industry in China such as China Norther Rare Earth and Shenghe Resources. Refining facilities are concentrated in 2 provinces – Inner Mongolia and Jiangxi in southern China.

- Dominance in every part of the supply chain: China’s rare earth strength extends from mines, extraction, separation, to processing and production of final product such as magnets. China owns proprietary mining, separation and processing technologies and develops most of the specialized chemicals, machinery, tooling, and equipment. China has by far the largest pool of REE scientists, engineers, and technicians in the world

- Control over global supply chain: as mentioned, rare earth elements are found in many places, including Vietnam, Australia, Myanmar, and the US. But even non-Chinese mines send ores to China for processing for technical know-how and processing facilities. For example, the Mountain Pass mine in California used to send most of its ores to China for processing before the tariff war

- Cost and quality competitiveness: due to the large scale of REE production and processing in China as well as its control over key technologies, Chinese producers are the most competitive in cost and quality. Chinese producers dictate REE price in the global market (which actually is quite small, compared with more commonly used minerals such as lithium, nickel, or copper, given the niche nature of the product)

The US military relies on Chinese REE to produce much of its arsenal

According to a recent CSIS report, REEs are crucial for a range of defence technologies, including F-35 fighter jets, Virginia- and Columbia-class submarines, Tomahawk missiles, radar systems, Predator unmanned aerial vehicles, and the Joint Direct Attack Munition series of smart bombs.

For example, the F-35 fighter jet contains over 900 pounds of REEs. An Arleigh Burke-class DDG-51 destroyer requires approximately 5,200 pounds, while a Virginia-class submarine uses around 9,200 pounds.

CSIS report gave examples such as how US fighter jets depend on China-sourced REE in the form of magnets and stealth coating, engine coating. For example, yttrium is required for high temperature jet engine coatings; such thermal barrier coatings on turbine blades stop aircraft engines from melting mid-flight.

Back in 2022, the Pentagon temporarily suspended deliveries of F-35 jets after Lockheed acknowledged an alloy made in China was in a component of the jet, violating federal defence acquisition rules. But it had to exempt Lockheed and resume delivery because no replacement could be found. Pentagon ended up violating US laws in order to build weapons to fight China with parts sourced from China.

CSIS pointed out this is akin to buy bullets from your enemy to fight the same enemy.

On the other side, most Chinese have come to think the Chinese companies selling such minerals to US military industrial complex need to be tried for treason. But that’s another story.

According to Govini, a defence acquisition information firm, China’s tightening export controls on critical minerals could hit more than three-quarters of the US weapons supply chain.

In a report titled From rock to rocket: critical minerals and the trade war for national security (a short 11-page document readily available online), Govini identified 80,000 weapons parts that were made using antimony, gallium, germanium, tungsten or tellurium – the global supply of which are all dominated by China – “meaning nearly 78 per cent of all [Pentagon] weapon systems are potentially affected”.

“China’s recent export bans and restrictions on critical minerals have exposed an open secret: despite political rhetoric, the US is fundamentally dependent on China for essential components of its weapon systems.”

These materials are critical in manufacturing military equipment across all services – from 61.7 per cent of the Marine Corps’ weapons to 91.6 per cent of the Navy’s. In the past 15 years, the use of the five minerals in US weapons has increased by an average of 23.2 per cent per year, according to the report.

Some of the key components named in the report included the use of antimony in the infrared focal plane arrays of the F-35’s missile warning system; gallium in advanced AN/SPY-6 radars; germanium in nuclear detection systems and the Javelin missile’s infrared optics; tungsten in armour-piercing tank shells and tellurium in the thermoelectric generators on RQ-21 Blackjack drones.

The report examined the whole production process of 1,900 weapons systems and found China was involved in the bulk of the supply chains, ranging from 82.4 per cent in the case of germanium to 91.2 per cent for tellurium.

It said only 19 per cent of the antimony needed for US weapon systems was available outside China.

“This heavy reliance on Chinese-refined antimony not only exposes critical defence supply chains to potential political and economic leverage, but may also drive up costs and delay production timelines for US military platforms,” the report added.

Here is a breakdown of US weapon systems dependent on just 3 China-dominated REEs (antimony, gallium, and germanium) –

DoD Parts Requiring:

Antimony: 6,335

Gallium: 11,351

Germanium: 12,777

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Weapons Systems Impacted:

Navy: 501

Army: 267

Air Force: 193

Marines: 113

Coast Guard: 1

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There are 12,486 supply chains that support the production of the 1,000+ weapons systems made with antimony, gallium, and/or germanium. 87% of those supply chains (10,829) rely on a Chinese supplier at some point.

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The report said, “the loop is closing. Even antimony mined in Australia becomes unusable for U.S. systems as it has to be refined in China. The result: 88% of DoD’s critical mineral supply chains are exposed to Chinese influence​.”

“America’s dependence on China for critical minerals represents a glaring and growing strategic vulnerability.” Unless addressed, that vulnerability may soon define the limits of U.S. deterrence – not in dollars or troop strength, but in elemental scarcity.

Since the report’s publishing, Beijing's export bans have expanded to include tungsten and tellurium. Most recently, Beijing put additional 7 HREEs under export control including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium.

Can the US build a rare earth industry? What would this test case say about its prospect to revive manufacturing?

As discussed, rare earth metals can be found in many places. The key is the ability to extract and process them. There is no heavy rare earths separation and processing in the United States at present.

MP Materials, the only US rare earth mine, can produce at full scale (current plus planned) what China produces in one day, according to the New York Times.

Clearly this is an industry the US needs to build. For the US to do so, it needs to go through a number of steps –

- Prospect mine deposits (including the phantom mines said to be in Ukraine or Greenland)

- Permitting process and environmental assessments as rare earth production is high environment-impact, a process that could take many years under current regulations

- Develop the extraction, separation, and processing technologies such as chemical leaching of REE ores and solvent extraction

- Build the specialized tools, chemicals, machinery, and equipment

- Build the processing plants and facilities with related infrastructure

- Develop a skilled engineering work force

Much like the semiconductor supply chain where ASML and TSMC dominate the tooling and production process, China owns most of the proprietary technologies, equipment, and processes in REE industry. REE sits on the upstream of semiconductor production as a key input.

As a reciprocal move for the chip ban the US has put on China, China has imposed the same restrictions on the flow of rare earth related technologies and machinery to the US.

In December 2023, China imposed a ban of REE extraction and separation technologies. It had a notable impact on developing REE supply chain capabilities outside of China as China possesses specialized technical expertise in this field that other countries do not.

For instance, it has an absolute advantage in solvent extraction processing techniques for rare earths, an area where other countries have faced challenges both in implementing advanced technological operations and in addressing environmental concerns.

Beijing has sent a clear message: while the US might attempt to cut China off from the most advanced chips and other cutting-edge technologies, China could go one step further by cutting off the supply chain upstream.

Even if the US can overcome such restrictions and develop its own technologies, the process of building out the factories and facilities will take years, if not decades. Its cost and quality competitiveness with China will remain a wide gap, perhaps in perpetuity.

Meanwhile, the gap between China and the rest of the world in REE mining and refining is getting wider. In March, a new technical breakthrough called electrokinetic mining (EKM), led by Researchers at the Guangzhou Institute of Geochemistry under the Chinese Academy of Sciences, is developed to increase extraction efficiency to 95% while reducing energy use by 60%, reducing leaching agent by 80% and extraction time by 70%.

Importantly, according to CSIS, there are dozens of universities and technical schools in China that offer majors in REE mining, extraction and processing. The human capital pool for REE in China is enormous. In contrast, there is not a single university major in the US that offers technical training in REE mining and processing.

To summarize, it’s unlikely the US can build a rare earth industry that can meet its high tech and military needs and compete with China in the next decade. It cannot afford to disrupt global supply chains without jeopardizing its own economic and technological ambitions.

Reindustrializing the US may seem simple to New York real estate developer or Wall Street financiers. The cold reality is they have no clue how industry actually works.

In fact, most Americans have become disconnected from manufacturing. They don’t really understand what modern manufacturing requires. The ambition to restore American industry is real, but the tools Trump leans on are rooted in economics and finance (very bad economics and finance at that), not industry.

If the U.S. truly wants to bring manufacturing back, it needs to rebuild the entire ecosystem to support it. This isn’t about fixing a single sector, adjusting a policy direction, or ramping up a specific capability, let alone just raising tariffs.

It would first need to build new factories, purchase equipment, train workers, build supporting infrastructure, and develop manufacturing processes. That alone would take years and generate little to no output at the start. The upfront investment could easily run into many billions and all of it would be built into the final cost. And this is assuming they have the know-how to do it.

Reshoring manufacturing is a long, painful journey. It requires consensus across society—from government, education institutions, to industrial policy and infrastructure. It means rebuilding capability across the board. This isn’t a 4-year term project. It’s a 20 or 30-year commitment.

China has gone through its industrialization over the past 40+ years with thorough and persistent government planning and commitment. And even with that, the results zig and zag depending on industry. The same simply won’t happen in the US political system today.

As I wrote before, China's rise as global factory is not by accident but meticulous industrial planning. Take Made in China 2025 (MIC25) as an example – it took a decade long focus of investment and execution to achieve quantified tangible targets set for 10 industries with 260+ specific metrics. https://huabinoliver.substack.com/p/revisiting-made-in-china-2025-mic25

To be blunt, that level of state capacity for large scale long term planning doesn’t exist outside of China.

After losing to China in free market capitalism, Trump (and Biden before him) has turned to state planning to compete with China. Chips Act, Inflation Reduction Act, or Stargate, they may sport fancy marketing slogans but I doubt they have any staying power. Trump already has deconstructed much of what Biden put together.

China’s rare earth dominance is a great example. China has achieved the pole position because it has planned decades ago to control the most critical parts of the supply chain for high end manufacturing such as EV, wind turbines, smart phones, chips, and military hardware.

China can do this because its national and local leaders are mostly engineers by training who understand the importance of such bolts and nuts matters like rare earth, the refining/processing technologies, and their importance to industries of the future.

Each of the past three leaders in China had an engineering degree – Jiang Zemin with Mechanical Engineering degree from Shanghai Jiaotong University, Hu Jintao and Xi Jinping with Hydro Engineering and Chemical Engineering degrees from Tsinghua University.

You simply cannot expect politicians trained as lawyer or financiers, who don’t even know what a periodic table is, to have the ability to make such decisions.

Let’s be honest – making stuff is much harder than stock speculation or running a printing press for little green pieces of paper with dead presidents’ portraits.

Trump's Ukraine mineral deal and wished-for annexation of Greenland are both pursued with the hope to obtain rare earth deposits, which are not proven by any means. Even if Trump gets his mineral deals with Ukraine, annex Greenland, and have all the access to rare earth deposits, none of the above issues regarding technology, talents, and scale are solved.

The rare earth case also illustrates the fundamental difference between long term and short term planning between Chinese and US businesses. US businesses are short-term, profit driven while state-owned Chinese businesses are long-term goal-driven.

For industries such as rare earth which demands a long investment horizon, years and decades of development, US businesses are inherently more likely to cede ground to China.

The rare earth case shows the US is unlikely able to reindustrialize in a most critical industry, where it is dependent on China. What would happen when it goes to war with an opponent from which it has to source the critical raw material for its war machine?

The US is planning to go to war with China, which is not only its banker (the largest creditor) but also, in a perverse way, its ultimate arms dealer.

What happens when the money and the arms stop? The Trump regime can happily consult that with Vladimir “no cards” Zelensky…

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