Critical Minerals: US Dependence and Strategic Shift

US Acknowledges Role in China’s Rare Earth Dominance, Flags Strategic Vulnerability​

Washington Reflects on Past Decisions Amid Rising Supply Chain Concerns​

New Delhi, March 18: The United States has identified China’s dominance in rare earth minerals as a significant strategic challenge, even as senior officials acknowledge that past American decisions contributed to Beijing’s current position in the sector.

Rare earth minerals are critical components in the production of electronic goods, defense systems, and electric vehicles, making their supply chain a matter of national importance.

Technology Transfer and Environmental Trade-offs​

According to a report by Defense One, the US had earlier transferred key technologies related to rare earth production to China, largely to avoid the environmental impact associated with mining and processing these materials.

US Assistant Defense Secretary for Industrial Base Policy, Mike Cadenazzi, stated that this decision led to long-term consequences for domestic capabilities.

“After the Cold War, we took our hard-won science and our world-leading investments in technology. And we said, ‘Here, China, why don’t you do this?’ We did because we didn’t want to pollute, and that’s fair. But as a result, we lost two generations of scientists and engineers and businesses who could have learned how to do this better,” he said.

Heavy Dependence on China Raises Strategic Risks​

Cadenazzi highlighted that the US is now heavily dependent on China for rare earth supplies, estimating that nearly 95 percent of its requirement is met through Chinese sources.

“Instead of developing a way to make it cleaner and better, we ended up being 95 percent dependent on China for rare earths,” he noted, underscoring the scale of reliance.

He added that China presents a complex strategic challenge, and emphasized the urgency of bridging manufacturing gaps to ensure secure access to critical minerals.

Manufacturing Gap Widens Between US and China​

The disparity in manufacturing capabilities further complicates the situation. China currently accounts for about 30 percent of global manufacturing output, compared to 17 percent for the United States.

Cadenazzi pointed out that China’s overall manufacturing capacity significantly exceeds that of the US, with control over critical minerals playing a key role in this advantage.

Global Efforts Underway to Diversify Supply Chains​

China produces roughly 70 percent of the world’s rare earth minerals and handles about 90 percent of their processing, reinforcing its dominant position.

In response, the United States has begun investing in refining and processing capabilities. In October, it announced a framework with Australia focused on mining and processing critical minerals and rare earths.

Other countries are also taking steps to reduce reliance on China. Almonty Industries, a Canada-based company, is set to complete a new processing plant at a tungsten mine in South Korea next week. The company claims the facility could meet around 40 percent of global tungsten demand outside China, potentially weakening China’s hold on the market.

Strategic Shift Gains Urgency​

The developments reflect a growing recognition in Washington of the need to rebuild domestic capabilities and reduce dependency on a single dominant supplier, as global competition for critical minerals intensifies.