Going Cold Turkey: Why North America Needs Its Own Rare Earth Supply
China still dominates the rare earths that power EVs, wind turbines, smartphones and modern weapons, leaving North America dangerously exposed. This article breaks down how dependent the U.S. and Canada are on Chinese REEs today, what Washington and Ottawa are actually doing about it, and where the biggest opportunities lie for investors as a new mine-to-magnet supply chain is built on our own turf.
In April 2025, Beijing quietly tightened the screws.
China introduced new export restrictions on key rare earth products, especially high-performance magnets, sending a shiver through European boardrooms. Within months, EU officials were openly talking about “economic blackmail” and debating emergency tools to counter third-country coercion.
Europe just got a preview of what happens when your energy transition, defense industry, and tech sector all depend on one supplier.
North American investors should pay attention, because we’re still in the same support group.
The Addiction: One Supplier, Many Dependencies
Think of rare earth elements (REEs) as the vitamins of modern industry. You don’t need a lot by weight, but without them, the whole system crashes.
EV motors & wind turbines rely on neodymium-iron-boron (NdFeB) magnets.
Smartphones, data centers, and AI hardware need specialized REEs for screens, chips, and cooling.
Defense systems, from precision-guided munitions to radars and submarines, are loaded with rare earths.
Yet the reserve and processing map is brutally lopsided. China controls about 48% of known reserves and an even larger share of production and refining. The U.S. holds only about 1.9 million tonnes of reserves (≈2% of the global total), and Canada about 0.83 million tonnes, according to Visual Capitalists' Visualizing the World's Rare Earth Reserves.
On the processing side, it’s worse: China still accounts for roughly 90% of the world’s refined rare earth products, especially the separated oxides and magnet materials that actually go into motors and weapons, according to Developing Rare Earth Processing Hubs: An Analytical Approach.
That means North America is:
- Strategically exposed – a single export restriction can disrupt supply lines for defense and energy.
- Price-taker, not price-maker – China can influence margins up and down the chain.
- Behind the curve – Europe’s current scramble is a preview of what the U.S. and Canada face if they don’t move fast.
The good news? Washington and Ottawa have finally admitted they have a problem, and they’re putting serious capital behind a new rare earth ecosystem.
Step One: Dig It Up | Mining in the U.S. and Canada
In the United States, the flagship asset is MP Materials’ Mountain Pass mine in California, currently the only active rare earth mine in the country. MP already produces and separates light rare earths (like neodymium and praseodymium) on site, but the next phase is about going deeper into the value chain, according to MP Materials.
In July 2025, MP announced a “transformational” public-private partnership with the U.S. Department of Defense (DoD), backed by loans from the new Office of Strategic Capital. The goal: expand separation and magnet production at Mountain Pass, including heavy rare earth separation, to turn the site into a full mine-to-magnet hub, according to MP Materials.
At the same time, the DoD has been spraying seed capital across the sector:
- Since 2020, the Pentagon has awarded over US$439 million to MP Materials, Lynas USA, Noveon Magnetics and others to build separating, processing and magnet-manufacturing capacity under the Defense Production Act.
- Lynas (Australia’s leading rare earth producer) is building a heavy rare earth processing facility in Texas, backed by DoD contracts, designed to handle feedstock from outside China and produce separated oxides for U.S. industry.
Canada, meanwhile, is positioning itself as the resource engine of a Western rare earth alliance.
Ottawa launched a Canadian Critical Minerals Strategy in 2022, backed by nearly C$4 billion in federal funding to support exploration, infrastructure, and downstream processing of key minerals, explicitly including rare earths.
Recent moves have turned the dial up:
- A 30% Critical Mineral Exploration Tax Credit now applies to targeted minerals like lithium and rare earths, effectively lowering the cost of drilling and early-stage work for junior explorers.
- In November 2025, Canada designated several critical minerals, including rare earths and scandium, as national security priorities under its Defence Production Act, opening the door to guaranteed buyers and potential price-floor mechanisms for domestic producers.
Through the new Critical Minerals Production Alliance, Canada is leading the G7 in fast-tracking about C$6.4 billion (US$4.6 billion) worth of critical mineral projects, with explicit focus on rare earths and graphite, according to Reuters article Canada to accelerate critical mineral projects worth $4.6 billion, energy minister says.
For investors, that’s a powerful signal: Ottawa wants domestic projects to cross the finish line.
Step Two: Don’t Just Mine It, Refine It
Mining is only half the battle. For decades, the West happily shipped rare earth concentrates to China, where the real value, separation, refining and magnet manufacturing, was captured.
The new playbook is different: build processing hubs at home and with trusted allies.
In the U.S.:
- Mountain Pass is being upgraded to extract, separate and refine high-purity rare earths at a single site, turning it into a “national strategic asset” rather than just a mine.
- Lynas’ Texas facility will handle heavy rare earths, critical for high-temperature magnets in fighter jets, missiles and advanced electronics
- New investments are targeting magnet manufacturing itself, so the U.S. isn’t just producing oxides but finished NdFeB magnets.
MP Materials even announced a joint venture to build a refining operation in Saudi Arabia, backed by the U.S. DoD, as part of a broader effort to create non-Chinese processing nodes that can still feed Western supply chains.
Canada's direction is clear:
- Policy papers now emphasize processing tax credits and accelerated capital-cost allowances to push not just mines, but Canadian-based separation and refining plants.
- Ottawa’s recent G7 diplomacy is explicitly about building a “friends-shoring” network, Canadian concentrates feeding allied processing hubs, and vice versa.
When Could North America Go “Cold Turkey” on China?
Here’s the uncomfortable truth: total independence from Chinese rare earth supply is unlikely in the near term.
Even with Mountain Pass, Lynas Texas, new Saudi refining, and Canadian projects ramping up, China’s legacy scale, lower costs, and deep technical know-how will keep it central to global supply through the late 2020s.
But that’s not really the target.
The realistic objective is resilience, not purity:
- Enough domestic and allied capacity to cover defense and critical infrastructure even in a crisis.
- A diversified supplier list so that no single country can weaponize exports the way Europe now fears.
Analysts watching current build-outs suggest that by the early-to-mid 2030s, the U.S., Canada and key allies could command a meaningful share of mine-to-magnet capacity, enough to blunt any attempted embargo and give buyers real alternatives.
For investors, that decade-long runway is precisely where the opportunity lives.
What This Means for North American Investors
From a retail investor’s perspective, this shift is less about chasing the next meme stock and more about understanding a quiet, strategic build-out that government money is determined to complete.
Key themes to watch:
- Explorers and developers in politically stable North American jurisdictions with defined rare earth resources and credible paths to production.
- Processing and separation technologies and companies that can crack the metallurgical code and move from concentrate to separated oxides and alloys.
- Magnet makers and specialty manufacturers plugged into defense, EV, and grid-scale supply chains.
The risk, as always in mining, is execution: complex metallurgy, long permitting timelines, cost overruns and commodity price swings. But unlike many speculative sectors, rare earths now have a powerful tailwind:
Washington and Ottawa need this industry to exist.
As Europe’s recent scare shows, reliance on a single supplier for strategic materials isn’t a bug of the global system—it’s a design flaw. North America is finally rewriting that design.
For investors willing to do the work, such as digging into technical reports, following government funding announcements, and understanding where processing will actually happen, the next decade of rare earth build-out could be less about “going green” and more about owning the picks and shovels of geopolitical power.
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