Highlights

• China engineered its critical minerals dominance through:
  • State backing
  • Export controls
  • Controlling midstream processing—the hard middle that turns raw materials into magnets, batteries, and technology
• Western rare earth initiatives risk failure without:
  • Price floors
  • Workforce development
  • Sustained demand signals
  • Decade-long policy commitments that survive political cycles and market downturns
• Industrial policy for critical minerals isn't about market control—it's about ensuring supply chain continuity from mine to magnet so that Defense, Electric Vehicles (EVs), and Clean Energy don't depend on geopolitical rivals.

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Picture this: it’s the late 2020s. New U.S. magnet plants open with fanfare. Politicians cut ribbons. Investors pile in. Then demand softens. Prices slide. Chinese producers—armed with scale, cash, and state backing—flood the market. Western plants shudder. Distressed assets get picked up quietly, but guess who…

The monopoly didn’t break. It reset.

That future isn’t science fiction. It’s the baseline risk for rare earths without a durable industrial policy.

What Industrial Policy Really Means

Industrial policy is when a government decides certain things must be made at home (or nearby with friends)—and kept alive through bad cycles—because they matter for national security, jobs, and future technology. Instead of trusting short-term markets, governments use long-term contracts, price floors, loan guarantees, fast-track permits, tariffs, and stockpiles to keep critical industries standing.

For rare earth elements and critical minerals, the goal is unforgivingly simple: a reliable chain from mine to refinery to metal to magnet—so a country can build hybrid vehicles to EVs, drones to robotics, wind turbines, chips, and weapons systems without getting squeezed when politics or prices turn.

How China Built Its Critical Mineral Empire

China didn’t stumble into dominance. It engineered it.

Over decades, Beijing used quotas, licensing, export controls, and consolidation along with state backing to shape prices and pull downstream manufacturing—refining, metals, alloys, magnets—inside China. Around 2010–2011, tightened export quotas made one thing unmistakable: China could turn the supply tap on or off at will, as documented by the U.S. Geological Survey.

China focused on what the West ignored: the hard middle. Mining is loud. Processing is power. Separation plants, metal-making, alloying, and magnet production became chokepoints that China controls today. The International Energy Agency now warns that concentration risk in critical minerals is not theoretical—it’s systemic.

And it’s not just rare earths. As Rare Earth Exchanges™ has reported, China holds near-monopoly positions across graphite, lithium refining, cobalt processing, high-purity manganese, and tungsten—often where processing, not mining, decides who wins.

America Should Not Copy China—But It Must Grow Up Fast

China is a centrally controlled, communist-hybrid market system. The U.S. should not, and will never, replicate it. But resilience requires far more than speeches, tariffs, and one-off equity deals, and a hierarchy of deals based to some extent on access to power and money.

Yes, Section 232 actions, emergency authorities, and deals like the investment in MP Materials matter. But we also must look very carefully under the hood of it all.  And remember, supply chains don’t care who wins elections. They respond to price stability, skilled workers, and guaranteed demand.

REEx has warned repeatedly: splashy dollar totals without “plumbing” are eventually mirages. You can’t rebuild a 30-year Chinese ecosystem in 24 months. And if policy whipsaws every four years with seemingly ever more extreme factions in American politics, investors will price in collapse—and act accordingly.

What Must Happen—or the Crisis Is Inevitable

1) Price floors that survive politics

Rare earth markets are thin and brutal. A glut plus Chinese dumping can erase new Western entrants overnight. Temporary support invites permanent failure. Price stabilization must last a decade, not a news cycle.

2) Build the midstream—and the people

Mining alone is a dead end. Yes, accessing Greenland sounds sexy for the news cycles, but it’s the boring midstream plumbing that really matters.  The U.S. must scale separation, metals, alloys, and magnet-grade output—while training engineers, metallurgists, and operators. Plants without people are monuments, not industries. China’s locked down its rare earth talent for a reason.  How many moves on the chessboard are we thinking ahead?

3) Create demand on purpose

Factories need customers. If EV policy, defense procurement, or electrification signals weaken, Western capacity will starve—handing China the win by default. REEx calls this policy without plumbing. Aggregate markets better.  For defense, do we not want to supply all of Europe, for example?  Incentives for electrification have gone a long way in America, but we seem to stand alone in that way. A contrarian bet. What if we are wrong?

4) Don’t replace one monopoly with another

An incomplete policy risks crowning a single “too-big-to-fail” domestic champion and an incomplete situation.  If rivals collapse during a downturn, the system becomes fragile—and easy prey when valuations crater.

The Bottom Line

Industrial policy isn’t about control. It’s about continuity. Without it, the next magnet glut won’t just hurt investors—it will finish the job China started decades ago.

The question isn’t whether the U.S. acts.

It’s whether it acts long enough.

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