What is Trump’s secret weapon in the rare earth metals war?

Years before trade wars and tariffs erupted, China had already secured industrial dominance through السيطرة on the rare earth supply chain — a strategic reality that has pushed the United States and its allies to pledge more than $8.5 billion today in an effort to regain control over this critical industry.

Over the past two decades, as global manufacturing expanded, rare earth processing gradually disappeared from Western supply chains due to high capital costs, technical complexity, and limited short-term profitability. China, however, maintained and systematically expanded its capabilities while others pulled back.

Libby Sterenheim, CEO of REE Alloys, said China did not win simply through mining, but by building the entire ecosystem — separation, refining, metal production, and magnet manufacturing — in a fully integrated way. As others exited the sector, control effectively became uncontested.

She added that North America lost control of the most critical stage: converting oxides into usable metals and alloys. According to Sterenheim, her company is currently the only one in North America capable of refining heavy rare earths and producing alloys and magnets, while competitors remain years away from commercial production.

The Real Bottleneck: Conversion

To make rare earth materials usable in motors, magnets, and defense systems, they must be converted into metals and alloys. This stage — rather than mining itself — determines who truly controls the supply chain.

REE Alloys is working in partnership with the Saskatchewan Research Council to rebuild conversion capacity within North America, allowing materials to remain within Western supply chains until they become finished defense-ready products.

The company has also signed a long-term, non-binding supply agreement with Altyn Group, linked to the Kokbulak project in Kazakhstan, where rare earth-containing materials — including dysprosium and terbium — are extracted from existing iron ore operations.

Ohio Facility and Defense Production

The company operates a facility in Euclid, Ohio, which it describes as the only industrial-scale site in North America capable of converting heavy rare earth materials into metals and alloys. The site is already producing specialized materials for US government clients.

These developments come as new US regulations set to take effect in 2027 aim to restrict the use of Chinese rare earth materials in defense programs and federally supported manufacturing.

Official US Response

Washington held talks this week with allied countries to reduce China’s grip on critical mineral supply chains, reflecting a shift from industrial competition toward national security priorities.

China has already used export restrictions as leverage. In late 2025, it imposed a direct ban on exporting certain materials and processing technologies linked to military applications. Earlier, in 2010, China restricted exports to Japan during a diplomatic dispute, causing major supply disruptions.

In response, the US Department of Defense has activated authorities under the Defense Production Act to support domestic processing, investing in companies such as MP Materials to expand local production of metals and magnets.

The US government has also launched a $12 billion initiative to build a strategic reserve of critical minerals, including rare earth elements, lithium, nickel, and cobalt, aiming to reduce reliance on China and secure supply for defense and advanced technology sectors.

A Race Against Time

While government action continues through policy channels and long-term projects, REE Alloys argues that it is already operating at the most sensitive stage of the chain — conversion into metals and alloys — where real control lies.

According to the company, building similar facilities requires years of permitting, financing, and qualification with defense clients, making short-term competition nearly impossible.