Breaking China's grip on rare earth magnets
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While the U.S. tries to ease an immediate shortage of rare earth magnets from China, the Trump administration is scrambling to line up viable alternatives that would reduce America's reliance on its chief economic rival.
Why it matters: Small-but-powerful rare earth magnets are essential to high-tech products, from cars and robots to electronics and weapons. But China controls 90% of the world's supply of the critical components.
- The contentious trade relationship between the U.S. and China has amplified the economic and security risks of that reliance.
- Global automakers are "in full panic" that China's limits on rare earth exports will trigger supply chain shocks like the pandemic-related semiconductor shortages that occurred in 2021 and 2022.
The big picture: It's not a new problem.
- U.S. officials have been talking about the need to mitigate American dependence on China for years.
- China also dominates the processing of metals like lithium, cobalt, nickel and graphite used in batteries.
The latest: After two days of talks in London, the U.S. and China on Tuesday agreed to a new trade deal that President Trump says would provide the U.S. the full necessary supplies of rare earth materials, and also permit visas for Chinese students.
Yes, but: There's still an urgency to find alternative sources, and the Trump Administration and both parties in Congress are pushing for solutions.
Zoom in: One deal that's getting a lot of attention is a potential partnership signed in May between California-based MP Materials and Saudi Arabia's flagship mining company, Maaden.
- MP Materials operates California's Mountain Pass, the only rare earth mine in the U.S., which produces 12% of the global supply. But it's just beginning to produce coveted magnets.
- Maaden, a fast-growing, government-controlled mining company, is developing mines for a variety of critical minerals, but doesn't produce rare earths today.
What to watch: Together, the companies seek to jointly develop a vertically integrated rare earths supply chain in Saudi Arabia—mining, separation, refining and magnet production—for global consumption.
Reality check: The preliminary deal is nonbinding, so it could still fall apart.
- Any production is still years away, so it won't solve the current shortage of rare earth magnets.
- Demand is only going to increase with AI and robotics.
The bottom line: The U.S. needs both short-term and long-term solutions to its supply chain problems.
Axios' Daniel Moore contributed.
