US Ceded Rare Earth Processing to China

Rare earth power was never supposed to matter this much. The 17 metals that make a phone vibrate, polish a screen, amplify an undersea cable, or steer a car are not rare in the way the name suggests. Cerium alone is about as common in the Earth's crust as copper. The hard part is separating those minerals from one another and from raw ore, and that difficulty is where political power lives.

China processes most of the rare earth minerals used around the world. That includes the stuff inside consumer electronics, but also the magnets in the US military's F-35 fighter jets and Virginia-class submarines. And here's the thing. The country that controls processing, which means the refineries, the chemical separation plants, and all the messy industrial steps that turn raw ore into usable metal, controls a very big stick. Beijing has shown it knows how to swing it.

How Washington Handed Over the Keys

The story starts with a simple economic trade. When China expanded its own mining and sold processed materials for less than anyone else could make them, switching suppliers was the obvious call. Buyers got material below their own production cost, with none of the cleanup bills or the bad press that comes with separation. Mountain Pass, the American mine that once anchored domestic capacity, closed its separation plant in 1998. The mine itself stopped in 2002.

In 2017, MP Materials restarted mining at Mountain Pass. Why? Concern about rare earth access was rising. But the US still imported more than two-thirds of the rare earth elements it used as recently as 2025, and that's a fact that shows how slowly domestic supply chains change even when a company like MP Materials brings a major mine back online. China mined about 60 percent of the world's rare earth elements used in magnets in 2024. And it handled about 91 percent of separation and refining.

That gap is not an accident. It is a deliberate trade that buyers made, and the power it handed to the processor was understood. It just did not look threatening at first, coming from a China that was still rising.

Why Rebuilding Is So Slow

The US Government Accountability Office cited estimates in 2010 that rebuilding a domestic supply chain, including mining, separation, and magnet manufacturing, would take as long as 15 years. That timeline has not been kind.

There are several reasons the rebuild drags. China runs its plants with thousands of experienced engineers. The US has far fewer experts. Today's industrial-scale, advanced separation technologies were developed in China, and Beijing has no reason to share them. In December 2023, China banned exports of the separation technology itself.

Money has started moving. The US government has committed more than $7 billion since April 2025 to rebuild domestic rare earth production capacity. The Pentagon bought $400 million of preferred stock in MP Materials in 2025, giving it 15 percent ownership of the company. MP Materials expects its next magnet plant to begin testing equipment in 2028. The Commerce Department signed a letter of intent in 2026 to give a magnet maker, USA Rare Earth, $277 million in direct funding and a $1.3 billion loan, both aimed at facilities in Texas and Oklahoma.

But export roadblocks from China are making the rebuild harder, not easier.

The Controls That Never Went Away

On Oct. 9, 2025, China's Ministry of Commerce announced six wide-ranging export control measures. One of them, Announcement No. 61, reaches even factories abroad. A plant in Germany or Japan would need a Chinese license to export a product if Chinese-origin rare earths made up 0.1 percent or more of its value, or if it used Chinese rare earth technology.

Trump met Xi Jinping that month. After that meeting, Beijing suspended six export controls until Nov. 10, 2026, in exchange for Washington pausing its "affiliates rule" for one year, a deal that locks both sides into a fragile truce neither government has promised to renew. So it's temporary by design. Both controls snap back automatically unless both governments extend their pauses, and they don't have much time to decide.

Here's what the headlines skipped. Some rules never got suspended.

In April 2025, China imposed licensing on exports of seven of the heavier rare earths, and that stayed in place, which means that even though other restrictions may have grabbed all the attention, this particular measure kept operating without interruption, and they're still enforcing it today. So don't assume everything was lifted. It's still there.

Ford Idled a Plant Over Magnets

The consequences are not theoretical. Ford had to idle its Chicago assembly plant for a week in May 2025 for want of magnets, which are critical to speakers and electrical motors. Ford CEO Jim Farley described his supply as "day to day" because he had no alternate source. The company was able to resume production only with Beijing's approval.

"Day to day."

That is a CEO of a major automaker describing his magnet supply, and it tells you everything about who holds the cards.

China's List, and Who Is On It

On June 22, 2026, China's Ministry of Commerce put 10 US companies on its export control list. It's a hard line. Neither Chinese nor foreign firms can sell those companies any goods with both civilian and military uses, which means the supply chain for those 10 businesses, whether they're buying from Beijing or from Berlin, has just been cut off in a way that few saw coming this summer. Most of them build drones, radar, aerospace systems, and military vehicles. And they're now stuck.

Two of them stand out. MP Materials and USA Rare Earth, the federally backed American companies furthest along in building a mine-to-magnet chain, are the ones that matter most here. Beijing said its move was a response to a similar move by the Pentagon. So they're linked. The read here is that China picked those two because they're best placed to reduce America's need for Chinese processing, and that's a calculation you can't ignore when you look at how far along each company is compared with everyone else in the sector.

• China announced six export control measures on Oct. 9, 2025, then suspended them until Nov. 10, 2026.
• Announcement No. 61 requires a Chinese license for foreign factories if Chinese-origin rare earths make up 0.1 percent or more of a product's value.
• April 2025 licensing on seven heavier rare earths was never suspended.
• Ford idled its Chicago plant for a week in May 2025 over magnet shortages.
• MP Materials and USA Rare Earth were added to China's export control list on June 22, 2026.

Three Paths, None of Them Easy

For the US, leaving processing in China is the fastest and cheapest solution. It also leaves the country exposed to Beijing's restrictions whenever the mood shifts. Rebuilding a domestic supply chain would remove most of that dependence and the political power it implies, but it takes longer, startup costs run into the billions of dollars, and separation produces acidic, sometimes radioactive residues.

Building a supply chain with allies such as Australia or Japan, both of which have started to build capacity, would lower the risk of the US being cut off unilaterally. Japan has run this play with some success. But the suspended Chinese rules affect any use of their technology abroad, which complicates the ally route.

President Xi's Sept. 24, 2026, meeting with Trump may help determine the status of the Nov. 10 restrictions. But the larger conflict over rare earth power will continue regardless of what happens at that table.

An extension of the pause on Nov. 10 would honor the truce. The heavy rare earth licenses and the June 22 ban on the targeted firms would still apply. The truce means both parties get to play nice. It does not mean they are being nice.

That is the thing about ceding an industrial base. You do not lose it in a single decision. You lose it in a series of reasonable ones, each one cheaper than the alternative, until the cheap option is the only one left and someone else is holding the switch.

Frequently Asked Questions

What share of the world's rare earth separation and refining did China handle, according to the article?

The article states that China handled about 91 percent of separation and refining. It also notes that China mined about 60 percent of the world's rare earth elements used in magnets in 2024.

Why did American buyers originally switch to Chinese processed rare earth materials?

When China expanded its own mining and sold processed materials for less than anyone else could make them, switching suppliers was the obvious call. Buyers got material below their own production cost, with none of the cleanup bills or the bad press that comes with separation.

How did Ford's magnet shortage in 2025 demonstrate the consequences of rare earth leverage?

Ford had to idle its Chicago assembly plant for a week in May 2025 for want of magnets, which are critical to speakers and electrical motors. Ford CEO Jim Farley described his supply as "day to day" because he had no alternate source, and the company was able to resume production only with Beijing's approval.

When did China add MP Materials and USA Rare Earth to its export control list, and why does the article say those two companies matter most?

On June 22, 2026, China's Ministry of Commerce put 10 US companies on its export control list, including MP Materials and USA Rare Earth. The article says China picked those two because they are the federally backed American companies furthest along in building a mine-to-magnet chain and best placed to reduce America's need for Chinese processing.

What does the article say about the status of China's export controls after the Trump-Xi meeting, including any measures that were never suspended?

After Trump met Xi Jinping in October, Beijing suspended six export controls until Nov. 10, 2026, in exchange for Washington pausing its "affiliates rule" for one year, a deal the article describes as temporary by design. However, licensing that China imposed in April 2025 on exports of seven of the heavier rare earths was never suspended and is still being enforced today.