#China #United States #Rare Earth #Euclid #REalloys

China's Strategic Control Over Rare Earth Elements as a Trade Tool

In 1992, Deng Xiaoping, a pivotal figure in Chinese politics, made an alarming statement: "There is oil in the Middle East; there is rare earth in China." Surprisingly, this warning went unheeded, and for the next three decades, Western nations largely underestimated the significance of rare earth processing, often viewing it as insignificant and relegating it to the lowest cost bidders. However, the situation shifted with the emergence of REalloys and its partners, who began developing domestic processing capabilities while the industry remained oblivious.

As of now, China holds an astonishing 90% control over global rare earth processing. This dominance encompasses not just extraction, but also the refining and manufacturing of these minerals into essential components utilized in everything from military fighter jets to green technologies like wind turbines. Beijing recognized the strategic potential of rare earth elements early on and harnessed them as a long-term weapon to augment its geopolitical strength. The meticulous strategy employed by China involved substantial state-backed investments, aggressive pricing tactics, and export regulations designed to stifle competition from the West.

The effectiveness of this strategy was glaringly apparent during U.S.-China tariff discussions, where Beijing threatened to halt the export of processed rare earths, leading the Trump administration to quickly reverse its stance. The grim reality is that the U.S. military relies heavily on these materials, revealing the precarious dependency America has on a nation that possesses such a monopoly.

Recently, REalloys announced its comprehensive financing plan to construct the largest heavy rare earth metallization facility outside of China. This $40 million facility is anticipated to generate approximately 30 tonnes of dysprosium and 15 tonnes of terbium annually. These particular heavy rare earth elements are crucial in producing the strong magnets found within jet engines, missile guidance systems, and advanced unmanned aerial vehicles, where equipment failure is not an option.

How China Built Its Strategic Monopoly

China's ascension to a monopoly on rare earth processing wasn't coincidental but a result of a meticulously crafted three-decade-long strategy. An inquiry by Congress released in November 2025 laid bare the tactics employed by Beijing.

The Chinese government offered "tens of billions of dollars in zero-interest loans" to state-owned mining companies, established legal frameworks for price manipulation, and engaged in market flooding tactics whenever foreign investment threatened to materialize in the rare earth sector.

Committee Chairman John Moolenaar encapsulated the situation succinctly: "From cell phones to fighter jets, every American is dependent on minerals that China manipulates for its own selfish interests. As we saw last month with its rule on rare earths, China has a loaded gun pointed at our economy, and we must act quickly."

The impacts of this dependence are already being felt on production lines. For instance, when China tightened export approvals in 2025, Ford faced disruption by having to pause its Chicago production line of Explorers due to the inability to acquire the necessary rare earth magnets for essential vehicle components. Defense supply chains experience even tighter restrictions with less flexibility to adapt to unforeseen interruptions.

What REalloys Did Differently

While the majority of the rare earth industry was caught off guard by China's aggressiveness, companies like REalloys took proactive steps. Based in Euclid, Ohio, REalloys has partnered with the U.S. Department of Energy and the Department of Defense to develop innovative processing methods for rare earth elements.

Instead of focusing solely on acquiring mining rights, REalloys invested time and resources into developing metal-making and alloying capabilities, crucial for converting processed rare earths into defense-grade materials. This endeavor involved collaborating with suppliers, pioneering new processing technologies, and meticulously training metallurgists while ensuring output met military specifications. Such advanced initiatives complement the physics and chemistry required, building a facility that operates autonomously without reliance on Chinese technology.

The exclusive agreement REalloys forged with North America's sole heavy rare earth processing plant ensures that 80% of its output feeds a processing system using AI-driven technologies, optimizing efficiency and output purity compared to traditional Chinese facilities.

The Approaching Regulatory Deadline

As the geopolitical climate continues to change, the urgency of these developments becomes even more pronounced. New regulations set to take effect on January 1, 2027, will prohibit the use of any rare earth materials of Chinese origin in U.S. weapons systems. This regulation will close existing loopholes that allowed contractors to process imported Chinese materials in third countries, now requiring verified, non-Chinese sources for all defense-grade materials.

REalloys' imminent heavy rare earth facility will provide much-needed resources as military capabilities become increasingly reliant on non-Chinese rare earths. With expected production ramping up to about 600 tonnes annually by 2028-29, REalloys is on track to contribute significantly to U.S. defense needs and bolster domestic supply chains.

Others are embarking on similar initiatives. For instance, NioCorp Developments is tapping into North America's only niobium, scandium, and titanium project in Nebraska, while Compass Minerals maintains its standing as a stalwart supplier of essential minerals.

As the U.S. stares down a deadline with limited alternatives, strategic initiatives by companies like REalloys could play a pivotal role in fortifying American autonomy over these critical resources. However, the landscape suggests that for the foreseeable future, China will continue to dominate the rare earth market, making it crucial for the West to solidify its supply chains to avoid dependence and vulnerability.

In conclusion, while significant strides are being made, the path toward decoupling from Chinese rare earths is fraught with challenges and requires concerted effort from both the private sector and government to ensure the resilience of essential supply chains for the future.