As part of president Trump’s agreement with Chinese president Xi, China agreed to temporarily back off some of its restrictions on rare earth elements — these are the weird elements toward the bottom of the periodic table with special magnetic and optical properties that find their way into everything from MRIs to intercontinental missiles.

The pause is a temporary reprieve in an ongoing global race.

Back in April, China started to restrict how seven rare earth elements, and magnets made from them, were exported.  Manufacturers freaked out. 

“Ford had to stop manufacturing its Explorer model in Chicago, Suzuki had to stop manufacturing the Swift model,” recalled Gracelin Baskaran, director of critical mineral security at the Center for Strategic and International Studies.

Chinese exporters had to apply for licenses and prove to the Chinese government they weren’t supplying foreign militaries, or even suppliers of suppliers of suppliers to those militaries. The application backlog snarled the global supply chain for months. And then in October, the restrictions were expanded to include more exotic, rare earths. That “would have crippled access to rare earth and permanent magnets for our defense sector,” said Baskaran.

Yttrium is used to coat jet engine parts so they don’t melt. Dysprosium and terbium are in the magnets that guide hypersonic missiles. Lanthanum is used as a catalyst to make military jet fuel; it wasn’t included in China’s restrictions, but strategists are worried it could.

“This year made us realize how vulnerable we are, not just for national security but also for the sustainability of key industries,” said Baskaran.

With the one-year pause on some but not all of China’s restrictions on rare earths, the U.S. has a little more time to continue building its own rare earth supply chain. China has made that difficult too.

“They’ve had the monopoly in this space for a really long time,” said Neha Mukherjee, research manager for rare earths at Benchmark Mineral Intelligence. China controls more than 90% of the refining of rare earths. Mukherjee says it has used its monopoly power, low-cost production, and subsidies to hold down prices. “Any new producer that is trying to come online is not being able to make any money,” she said.

The U.S. government has gone to extraordinary lengths to get around this.

“We are restoring the full supply chain end to end,” said Matt Slouschter, chief communications officer for MP Materials, which owns the Mountain Pass mine in California, about an hour south of Las Vegas. It’s the second biggest rare earths mine in the world and two years ago started refining rare earths too. In July, the Pentagon announced it was becoming the largest shareholder, investing $400 million. It also guaranteed a minimum price for certain refined rare earths. 

“That enables us to earn a fair return, and enables us to continue to have reinvestment economics,” said Slouschter.

As China has bent market forces, the U.S. is learning to do the same. The Pentagon promised that if MP Materials built an additional large rare earth magnet factory, it would buy 100% of the magnets that come out of it for 10 years. That factory is now being built in Texas. “We're going to be scaling up to 10,000 tons of production, which is more than we import,” said Slouschter.

That is on top of the rare earth magnets being produced by another U.S. company Noveon. 

“The U.S. is well on track to being self-sufficient for magnet production by 2030,” said Ryan Castilloux, managing director at Adamas Intelligence. “However, from 2030 to 2040 and beyond, it's going to require a consistent effort” to keep up with demand growth.

“The major bottleneck today that the industry is facing is with respect to the so-called heavy rare earth elements,” said Castilloux.

Heavy rare earths are the more exotic ones, harder to find and harder to refine. They go into laser crystals and supermagnets that can still work while hot. Mountain pass mines them, so does Uranium mining company Energy Fuels, which has also started to refine heavy rare earths in a pilot project this year. Still, a full rare earth supply chain that meets all of the U.S.’ needs with no missing links may be decades away, according to Benchmark Mineral Intelligence’s Neha Mukherjee. “The capacity that is coming online is not enough. There needs to be more investment,” she said.

Time is of the essence, said Castilloux, because the reason for China’s restrictions on the market is not just about competition in defense or building up its own supplies.

“It’s also about undermining and slowing the progress of key industries with which China is competing with the rest of the world, for electric vehicles, for robotics,” he said.

China, he says, is using its rare earth muscle to buy time; time to develop an insurmountable lead in the industries of tomorrow.