China Pauses Rare Earth Export Controls for One Year as US Pushes Forward【SMM Analysis】

At the end of October 2025, the US-China trade rivalry took a dramatic turn. China's Ministry of Commerce announced a one-year suspension of new regulations on rare earth exports, putting on hold strict measures that would have required foreign enterprises to obtain export permits even if their products contained trace amounts of Chinese rare earths. This decision provided US enterprises with a breathing space, but given the current situation, the idea that the US could establish an independent rare earth supply chain within a year is nothing short of a fantasy. China controls 90% of the world's rare earth refining capacity, a dominance that cannot be overturned in the short term. However, the fact that it cannot be easily shaken does not mean no action should be taken. Expanding rare earth cooperation, ensuring domestic rare earth supply, and diversifying the entire industry chain—whether these measures can challenge China's rare earth dominance is not actually critical for the US itself. With this goal in mind, within one month after the new regulations were introduced, the US shifted its rare earth development strategy.

MP Mine: As the only scaled rare earth mine in North America, MP Materials is accelerating the development of this resource. The mine is primarily rich in light rare earths, but the company plans to launch a heavy rare earth separation facility by the end of 2025, challenging China's dominance in the heavy rare earth sector.

Utah Silicon Ridge Project: The ion-adsorption deposit discovered by Ion Mineral Resources Technology Company offers unique advantages, with a rare earth grade of 0.27%, higher than the industry average. The project has obtained mining permits and is equipped with supporting processing facilities, enabling rapid commercialization.

Texas Round Top Project: American Rare Earths has moved forward the commissioning time of this heavy rare earth project to 2028, reflecting the urgency of accelerating the development of domestic rare earth resources in the US.

The US is adopting a "friendshoring" strategy, collaborating with allies such as Canada and Australia to build a diversified rare earth supply system. This strategy aims to reduce dependence on Chinese rare earths and enhance supply chain security.

The US has also demonstrated a comprehensive approach in building its rare earth industry chain: EVA plans to increase the magnetic material production capacity of its Sumter plant to 2,000 mt per year by Q1 2026, with plans to expand it to six times this capacity in the coming years. The company sources raw materials from MP Materials to ensure supply chain stability. The US Department of Defense provided a $620 million loan to magnetic material producer Vulcan Elements to support the expansion of its rare earth separation and magnetic material capacity. This collaboration model between the government and enterprises plays a crucial role in the development of the US rare earth industry.

Meanwhile, the cooperation between the United States and Canada is a key link in building a North American rare earth supply chain system:
Resource Complementarity: Canada possesses the world's largest known rare earth resources, with reserves of 15.2 million metric tons of rare earth oxides, which the Pentagon views as a "lifeline" for ensuring supply chain security.
Capacity Sharing Mechanism: Canada has proposed a "capacity sharing" strategy, planning to allocate the produced rare earths to various allied markets rather than solely meeting domestic demand. This approach has received positive responses from allies such as Germany.
Specific Cooperation Projects: U.S. magnet producer REalloys has signed a five-year rare earth materials purchase agreement with the Saskatchewan Research Council in Canada, involving key materials such as Pr-Nd alloy, dysprosium oxide, and terbium oxide.

The US is advancing on multiple fronts in rare earth technology R&D: The Advanced Research Projects Agency-Energy (ARPA-E) of the US Department of Energy (DOE) has awarded a research team at the University of California, Davis, $3 million to develop a biologically based process for recovering rare earth elements. This innovative technology aims to use engineered acid-tolerant microorganisms to selectively capture rare earth elements from acidic mine drainage and industrial wastewater. Momentum Technologies presented its proprietary membrane solvent extraction technology to the US House of Representatives, describing it as a domestic processing solution to address vulnerabilities in the US critical mineral supply chain. This technological breakthrough poses a potential challenge to China's dominance in rare earth refining technology. Currently, the US rare earth industry is experiencing an unprecedented investment boom, with Wall Street giants from JPMorgan to Goldman Sachs committing $1 billion in construction funding for MP Materials. The US Department of Defense has become the largest shareholder of MP Materials, holding approximately 15% of the equity. As 2026 approaches, whether the US can fully capitalize on this window of opportunity beyond the aforementioned strategies remains to be seen.