The U.S.-China trade war is turbocharging the revival of America’s rare earth industry. After Beijing’s export controls exposed U.S. vulnerability, public and private capital is pouring into domestic firms to build a secure supply chain.
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US-China Tensions Fuel Revival of American Rare Earth Industry

The CEO of USA Rare Earth – a company launched in 2019 with the goal of reviving America’s rare earth magnet supply chain – was having a hard time raising capital from Wall Street until a few months ago.

China has dominated the rare earths sector for decades, with its firms having a huge competitive advantage due to their lower costs and massive capacity, making the American company’s vision a tough sell to investors.

But then came US President Donald Trump’s return to office. After a US tariff blitz led Beijing to impose export controls on seven rare earth elements, America’s vulnerability was exposed in vivid fashion as a string of blue-chip American companies warned that a lack of magnets could soon disrupt their production.

All of a sudden, the investment environment “all changed”, Ballard said, and the CEO has been quick to take advantage.

“We’re looking at how we can accelerate,” he told the Post in an interview near his home in the San Francisco Bay Area. “We want to be a major player in this.”

Capital is now pouring into the US mining sector as Washington invests huge resources to reduce its reliance on China for critical minerals, which are needed to produce everything from smartphones to fighter jets.

Last month, the Pentagon invested US$400 million to acquire a big stake in MP Materials, which owns America’s only operating rare earth mining and processing facility. Apple also struck a US$500 million deal with the company to create a recycling facility to shore up its rare earth magnet supply.

Meanwhile, the Trump administration approved a licence for a new mining facility in the state of Wyoming – the first approval granted for a US rare earth mine in 70 years.

USA Rare Earth is also reaping huge benefits from a surge of investor interest, as the company targets becoming the second largest player in America’s rare earth sector after MP Materials.

It has already raised US$170 million over the past year for its 600-tonne capacity magnet production line. Ballard said the extra US$300 million that he aimed to raise for a second, third and possibly fourth production line was now “all raise-able”.

The company’s March listing on the Nasdaq exchange has brought in a growing number of retail investors, as well as three strategic US-based investors, according to Ballard. Private equity investors and buyers with a long-term need for metals may also be willing to invest, with USA Rare Earth already in talks with more than 60 potential clients, he added.

By the end of 2026, USA Rare Earth plans to expand the rare earth magnet production capacity at its plant in Stillwater, Oakland, to 1,200 tonnes, with a goal of eventually hitting a capacity of 5,000 tonnes.

“There’s been a proven moment here and there’s plenty of demand,” Ballard said.

The American company, which currently has about 50 employees, is working to set up an internship programme with Oklahoma State University to train future engineering talent.

The global rare earth elements market was worth US$12.44 billion last year and is projected to more than triple in size by 2033 to reach US$37.06 billion, according to the market research firm IMARC Group.

Ballard expects global demand for rare earth metals to double over the next decade to 250,000 tonnes, with the United States and Europe accounting for 100,000 tonnes of that demand and China around one-third.

USA Rare Earth’s Round Top rare earth and lithium project in Texas has found reserves of 15 of the 17 rare earth elements. The mine is leased from the state government on a remote mountainside a 90-minute drive from the city of El Paso.

To move ahead technologically, the USA Rare Earth mine is “actively developing rare earth separation capabilities” and advanced magnet production techniques, industry information platform Rare Earth Exchanges said.

Ballard said the mine recycled acids, reagents and water to sustain its operations and ease any future environmental concerns – an issue that has held back the US’ rare earth industry in the past.

The company could expand faster if the US had a better way of recycling used cars and smartphones to harvest their rare earth content, Ballard said.

However, the CEO cautioned that China would still play an outsize role in supplying rare earth metals to the US even if American industry got stronger.

“I’m not going to try and compete with China on price – I’m not saying we’re going to get 100 per cent of anything, that’s a silly expectation,” Ballard said.

Beijing began fast-tracking more export permits for rare earths in June, easing global supply issues, but China still maintains a stranglehold on the industry. The country controls roughly 60 per cent of global rare earth mining and 90 per cent of the world’s refining capacity.

“The biggest strength for the US rare earth elements industry right now is in that they have the support of Washington to increase production so China can’t hold the supply of magnets over the USA in a trade fight,” said Jon Hykawy, president of the Toronto-based industry advisory Stormcrow Capital.

But Chinese mines benefited from a larger and cheaper labour force and often had a higher rare earth output than peers in the US, Hykawy said. The US restrained its industry’s development in the past over land degradation and water contamination fears.