US rare earths flow to Asia as domestic demand is slow to emerge
| Source: Ars Technica AI
Tags: rare earths, MP Materials, supply chain, critical minerals, China, Phoenix Tailings, national security
US rare earth producers backed by billions in government funding—MP Materials, Energy Fuels, and Phoenix Tailings—are routing output to Japan and South Korea rather than domestic buyers, exposing a gap between the Trump administration's supply chain independence push and the absence of US magnet manufacturing capacity to absorb that output.
Details
Three US rare earth companies that together received billions in government support are routing production to Asian customers—primarily Japan and South Korea—because domestic demand has not materialized. MP Materials, the largest US producer, generates most of its neodymium-praseodymium (NdPr) oxide and metal revenue via an agreement with Sumitomo Corporation of Americas, which distributes to Japanese buyers. The company stopped selling to China's Shenghe Resources under a government deal, but US magnet manufacturers are not yet ready to absorb the supply. Phoenix Tailings, backed by CIA-funded venture firm IQT, similarly sells primarily to Korean and Japanese customers. Its CEO warned that US defense contractors must act fast or lose access to materials being bought at premium prices by Asian companies. The structural constraint: NdPr magnets are only manufactured at scale in Japan and China today. MP Materials plans to build its own magnet production—with forward supply agreements signed with Apple and GM—but scaling that capacity takes years. For the AI and tech sector, this matters because rare earths feed into semiconductor manufacturing, data center motors, and defense electronics. Supply chain independence from China is a stated US policy goal, but execution lags: miners are producing while US downstream industry is not yet ready to consume.