U.S. ambitions to sever dependence on Chinese sources for critical minerals have run into a practical obstacle: domestic mining and processing capacity is not yet sufficient to meet demand. The administration has designated the expansion of U.S. mining and refining as a national security priority and has directed sizable financial support to a wide array of minerals companies. Still, industry participants and analysts say the physical capabilities required to replace Chinese supply are not in place.
Federal regulations set a Jan. 1, 2027 deadline for defense and other federal purchasers to stop acquiring rare earths, magnets, tungsten, molybdenum and tantalum from China, Russia, Iran or North Korea. That timeline is now a little over five months away. Over recent years, Washington has sought to limit such purchases but routinely approved waivers because domestic producers could not satisfy the demand.
Political pressure has increased to curb waivers. In May, President Trump publicly criticized the practice, stating that all federal agencies must buy American. More recently he signed an executive order intended to make it harder for defense suppliers to secure waivers. The order specifies that waivers should be granted only if a contractor demonstrates an "exhaustive effort" to avoid Chinese material and provides a timeline to wean itself from such supplies.
Even with the executive action, interviews with 16 industry leaders, investors, analysts and policymakers indicate U.S. supply remains far from adequate. A key example concerns the most common type of rare earth magnet. In 2025, U.S. demand for these magnets was roughly 48,000 metric tons while domestic production supplied only 300 metric tons, based on analysis from the consultancy Arthur D. Little. Projected capacity by U.S. firms points to approximately 5,000 metric tons by the end of this year, still a small fraction of demand.
Rare earths are one of about 60 minerals Washington considers critical. They must be processed before being converted into magnets that serve a range of applications, including defense systems, automobiles and electronics. Several minerals have not been produced in the United States for decades - tungsten processing has not occurred in the U.S. since 2015, and tantalum not since 1959 - highlighting the scale of the restart required.
Some companies are pursuing projects to restore or expand U.S. production. Guardian Metal Resources is working toward opening a U.S. tungsten mine by 2028. Lion Rock Resources is developing a tantalum deposit in South Dakota, though it has not provided a schedule for commercialization. These and other initiatives illustrate industry interest but also demonstrate the lengthy timelines involved.
Industry analyst Chris Berry summed up the practical constraints bluntly, saying the U.S. industry has little chance of producing enough minerals to end waiver reliance by January. "It’s going to take many more years to get the needed infrastructure in the ground to compete," he said. The United States holds reserves of most critical minerals, but lacks sufficient mining and processing capacity. China established a dominant position in minerals refining toward the end of the 20th century and currently controls more than 80% of the refining sector.
The International Energy Agency has warned that major global manufacturing sectors could be at risk if Beijing imposes export restrictions on rare earths, a move that China has taken intermittently in recent years. The White House referred queries to the new executive order when asked for comment. The Pentagon did not respond to requests for comment for this piece.
Why investment and production have lagged
One major factor depressing U.S. investment has been persistently low prices for many minerals. Officials attribute that price weakness to Chinese subsidies and an overflow of low-cost Chinese product into global markets, which has made many American projects economically unviable. China maintains it follows World Trade Organization rules and aims to ensure market stability; the Chinese embassy in Washington provided no further comment.
Several U.S. companies receiving government support have highlighted technical and timing challenges. Ucore Rare Metals, backed by Pentagon funding, developed a processing method called RapidSX, which the company says is faster, cleaner and less costly than conventional solvent extraction. Ucore had hoped to begin refining by 2025 but adjusted plans after citing shifting Pentagon requirements; it now expects some production no earlier than 2027, according to CEO Pat Ryan. "Can the entire supply chain be propped up by 2027? Boy, I tell you, that’s a battle," Ryan said.
MP Materials - a major U.S. player also supported by Pentagon financing - spent years calibrating solvent extraction equipment, a process CEO Jim Litinsky described as painstaking. MP has constructed a magnet facility in Texas and expects some magnets to be approved for use by its first customer, General Motors, by the end of the year. A separate magnet plant MP is developing for the Pentagon is scheduled to begin operations in 2028.
ReElement Technologies plans to adopt a chromatographic process - a method more familiar in pharmaceutical manufacturing but not previously applied at scale for mineral processing. ReElement aims to establish capacity this year to process 10,000 metric tons of germanium or other minerals, and its CEO, Mark Jensen, stated the firm’s germanium production is "profitable at any volume." The company received a $25 million Pentagon investment earlier this month.
USA Rare Earth, which is building a magnet facility in South Carolina, spent over five years exploring chromatography before shifting back toward solvent extraction; the company did not comment on its processing strategy for this piece. Energy Fuels, which received a $725 million Pentagon loan last month, plans to process small quantities of rare earths by year-end and scale to 6,000 metric tons per year by 2029, and is acquiring an existing U.S. magnet producer.
Ucore, Energy Fuels and ReElement have each committed to supply rare earths to magnet maker Vulcan Elements, which is constructing a manufacturing plant in North Carolina expected to open by 2030. These supply agreements highlight coordination among U.S. firms aiming to build domestic supply chains, but the timelines underscored by these projects extend well beyond the 2027 deadline.
Short-term policy responses
Recognizing the gap between policy goals and industrial capacity, the administration launched Project Vault in February - a $12 billion initiative to stockpile critical minerals for U.S. manufacturers. Officials later acknowledged they will need to initially procure materials from "anywhere in the world," including China, to fill the stockpile. Defense contractors have provided lists of minerals they would like included in the stockpile, according to statements from industry executives.
The stockpiling approach has generated frustration among U.S. miners and processors, who argue that defense contractors should be placing direct orders with them to help scale domestic production. Nick Myers, CEO of Phoenix Tailings, a startup that received a $500 million Pentagon loan to build a processing facility, criticized continued reliance on waivers. "The defense industry is never going to stop if you keep giving waivers," Myers said. Several large defense contractors did not respond to requests for comment; L3Harris declined to comment.
Potential interim solutions
Given the shortfall in domestic capacity, partnerships with allied countries such as South Korea and Japan may provide stopgap options for manufacturers until U.S. producers can scale. Legal and lobbying advisers noted that international partnerships could help bridge supply gaps while U.S. projects develop. That said, existing U.S. projects face technical and regulatory complexities that have delayed start-ups and ramp-ups.
Conclusion
Federal policy is steering to reduce reliance on minerals from adversary nations, supported by significant funding and tighter waiver rules. But multiple company timelines, processing challenges and entrenched global refining capacity controlled by China indicate U.S. producers are unlikely to close the gap by the January 2027 compliance date. In the near term, the administration’s stockpiling strategy and international partnerships may be necessary complements to domestic development, while many U.S. mining and processing projects continue to progress on schedules that extend into 2028 and beyond.