The US government poured billions into building a domestic rare earths supply chain. There’s just one problem: nobody in America is buying the stuff.
Companies like MP Materials, Energy Fuels, and Phoenix Tailings — which together won billions in government support — are shipping their rare earths to Japan and South Korea instead. American demand simply hasn’t materialized.
MP Materials, the biggest US rare earths producer, has a deal with the US government that guarantees minimum prices. But most of its mined material is heading to Asia, where the magnet manufacturing infrastructure is already built out. That’s not the plan Washington had in mind.
MP does plan to produce its own magnets at scale eventually. It has deals with General Motors and Apple. It said it expects to ship finished magnets to GM this year. But until those production lines are running, the raw material goes where the buyers are.
Energy Fuels won $725 million in conditional government funding in June. CEO Ross Bhappu says the company will send oxides to Korea in the near term. They’re also buying Australian Strategic Materials (which owns a Korean metal plant) and German magnet maker Vacuumschmelze (VAC) for $1.9 billion.
China still dominates global magnet production. Outside China, Japan makes 10,000-15,000 tonnes of neodymium iron boron magnets per year. South Korea makes 2,000-3,000. The US makes 1,000 or less.
China restricted rare earths exports over national security concerns. The US response was to build domestic mining capacity. But mining is only step one. Without domestic magnet manufacturing, the supply chain is still broken — and the rare earths just go back to Asia anyway.
