MP Materials, the largest US rare earth producer, announced it has halted rare earth concentrate exports to China. However, behind this "supply cutoff" lies the frustration and self-rescue of the US rare earth industry chain.

On April 17, MP Materials, the sole US rare earth mine operator, announced it would halt exports of rare earth concentrate to China, specifically the two key minerals neodymium and praseodymium.

The initial "supply cutoff" was due to tariffs, but even after the tariffs were lowered, the "supply cutoff" continued.

The decision to cut off supply is a strategic choice.

MP Materials' decision appears to be a helpless response to Chinese tariffs, but in reality, it represents a strategic move by the US to restructure its rare earth supply chain.

As the largest rare earth producer in the Western Hemisphere, MP Materials operates the only rare earth mine in the US, the Mountain Pass Mine. However, this seemingly powerful company has a fatal weakness: 80% of its revenue depends on exports of rare earth concentrate to China.

This dependence stems from a simple fact: the United States possesses mineral resources, but China controls 90% of the world's rare earth refining capacity. In particular, heavy rare earth separation technology is almost exclusively Chinese.

China dominates the rare earth refining empire.

Rare earths, known as "industrial vitamins," are widely used in new energy, electronics, defense, aerospace, and other fields. Each F-35 fighter jet consumes 417 kilograms of rare earth materials, and each Virginia-class nuclear submarine requires 4.17 tons of rare earth elements.

China's advantages in the rare earth sector extend far beyond its mineral resources. Data shows that China accounts for approximately 70% of global rare earth production, but more importantly, its smelting and separation capacity exceeds 85%.

Magnetic material exports account for 92% of the global market share.

MP can separate and process light rare earth elements, but cannot separate and process equally important heavy rare earth elements, particularly dysprosium and terbium. These two elements are essential for manufacturing high-performance permanent magnets used in F-35 fighter jets, automobiles, MRI scanners, and other electronic products.

The US's path to self-rescue faces numerous challenges.

MP Materials has not been without attempts to change the situation. The company has invested $1 billion in an attempt to rebuild a complete rare earth supply chain in the United States.

The US Department of Defense has also provided $400 million in capital injections and holds a 15% stake in the company.

However, industry insiders point out that the capacity of MP Materials' magnet plant in Texas is only one-tenth of China's monthly exports and it cannot process heavy rare earths.

Financial data shows that the company suffered a net loss of $65 million last year and has long-term debt of $909 million. The road to recovery will not be easy.

Gracelyn Bhaskaran, a critical minerals expert at the Center for Strategic and International Studies, stated bluntly: "The US has two choices: either disrupt the supply chain or negotiate. This will be painful."

The resilience of China's supply chain is highlighted.

China's response to the MP Materials supply disruption was calm and composed. Shenghe Resources has made it clear that its supply chain diversification strategy can effectively cope with this change.

Sichuan mines, monazite, and imported ores from other countries can serve as alternative supplies.

Data shows that China's imports of rare earth raw materials from the United States have declined for two consecutive years, falling by 13.7% in 2023 and 16.9% last year.

More importantly, China is strengthening its rare earth advantage through policy. In August 2025, China issued new regulations on rare earth product control, simultaneously tightening rare earth smelting and separation quotas and implementing special quotas for strategic elements such as praseodymium, neodymium, dysprosium, and terbium.

The United States Plays a Global Game

MP Materials' decision to cut off supply is a step in the United States' restructuring of the global rare earth supply chain. In July of this year, MP Materials reached an agreement with the US government to cease rare earth exports to China and shift to domestic refining.

The US pledged a floor price of $110 per kilogram (roughly double the Chinese market price at the time) to ensure the security of its domestic supply chain.

The US government's recent equity investments in metals and mining companies signal a shift in the US's role in the private sector.

Over the past few months, the federal government has acquired a 15% stake in rare earth miner MP Materials and a 5% stake in Lithium Americas and its Thacker Pass lithium project.

However, building heavy rare earth processing and refining capacity outside of China remains a long way to go. Australia's Lynas Rare Earth Corporation is the largest rare earth separation producer outside of China, but it still ships oxides to China for refining.

The future will be a battle of technology and efficiency.

In the short term, MP Materials' decision to cut supply will indeed have an impact on the global rare earth supply chain. However, this impact will be asymmetric—China will be far less affected in the short term than the United States.

Rare earths are not ordinary soils; their value lies in separation and purification technology. China has accumulated decades of experience in this area, established a complete industrial chain, and formed an insurmountable technological moat.

The United States has mines but lacks the technology, akin to holding a gold mine but unable to unlock it. China has the technology, the market, and multiple raw material channels.

This rare earth war demonstrates a hard truth: the global supply chain cannot be disrupted at will; it ultimately comes down to efficiency and cost. Whoever can perfect complex processes will truly hold the key to the conversation.

The US attempted to reshape the rare earth supply chain by cutting off MP Materials' supply. However, the reality is that the true bottleneck in the global rare earth industry chain isn't mining capacity, but the refining and separation technology that transforms ore into high-purity materials.

China's Ministry of Commerce's latest announcement on export controls on rare earth technology further strengthens this advantage. The escalation from resource warfare to technological warfare indicates that the core of future global high-tech competition will increasingly focus on mastering the processing capabilities of key materials.