US Produces Just 300 Tons of Rare-Earth Magnets Against 48,000-Ton Demand

The United States faced a significant critical-minerals shortage ahead of a January 1, 2027, deadline requiring defense contractors and other manufacturers to stop purchasing specified materials from China, Russia, Iran and North Korea. The restrictions cover rare earths, magnets, tungsten, molybdenum and tantalum. President Donald Trump has directed tens of billions of dollars toward almost 150 mineral companies, but interviews with industry executives, investors, analysts and policymakers indicated that American mining and processing capacity remains insufficient. Washington has repeatedly issued waivers because domestic production cannot meet demand, and industry consultant Chris Berry said ending those waivers by January appeared unlikely.

U.S. demand for the most common rare-earth magnet reached approximately 48,000 metric tons in 2025, while domestic sources supplied only 300 tons. American companies were expected to develop capacity for approximately 5,000 tons by the end of 2026, leaving a substantial gap. China controls more than 80% of global mineral refining, while the International Energy Agency estimated that $6.5 trillion of manufacturing activity could be exposed if Beijing restricts rare-earth exports. Ucore Rare Metals, a Pentagon-supported mineral-processing startup, delayed parts of its planned production until at least 2027. MP Materials NYSE:MP, a U.S. rare-earth mining and processing company supported by the Pentagon, has built a Texas magnet facility, but a separate plant for the Defense Department is not scheduled to open until 2028.

The Trump administration launched Project Vault, a $12 billion critical-minerals stockpile program, in February. Officials acknowledged that the program would initially need to purchase materials from global suppliers, potentially including China. Lockheed Martin NYSE:LMT, a U.S. defense contractor, provided the Defense Department with a list of minerals it wanted included in the stockpile. MP Materials expects magnets from its Texas facility to receive initial customer approval from General Motors NYSE:GM, a U.S. automobile manufacturer, by the end of 2026. Partnerships with South Korea, Japan and other allies may provide temporary supply alternatives until American processing capacity expands. Investors may focus on companies receiving government financing, although project delays, technical difficulties and continued waivers suggest domestic supply-chain development could require several more years.