All Mines Lead to China 🇨🇳

Ford’s Chicago Assembly Plant has a special place in America’s fabled automobile history. Opened in 1924, this historic facility helped put the nation on wheels, assembling the legendary Model T and later the Model A. 

Today, nearly a century later, the plant still hums with life. Spread across 113 acres on Chicago’s South Side, it employs close to 4,700 workers and is the beating heart behind the country’s most beloved SUVs, the Ford Explorer and Lincoln Aviator. Typically, the facility rolls out over 20,000 Explorers in a month. 

However, in May 2025, the assembly line came to a sudden halt.

For one week, the plant was shut down, and not a single car was assembled. It was not due to labor unrest or equipment failure, but rather a shortage of rare-earth magnets — a bargaining chip in the rising trade tensions between the U.S. and China.

It may sound like a minor part, but rare-earth magnets are anything but. They’re embedded in almost everything in an automobile, from steering and braking systems to electric motors and audio units. And it’s not just cars. They are found in fighter jets, wind turbines, and even MRI machines.

These tiny components are made from critical minerals like neodymium and dysprosium, which must first be mined and then refined. And that’s where the real choke point lies. China controls over 85% of the world’s critical mineral refining capacity. 

In this edition of CrossDock, we dive deep into how China came to conquer the critical mineral refining. What the U.S. and other Western countries missed, and how they’re now scrambling to reclaim control over one of the most vital links in the critical mineral supply chain.

Before China rose to dominate the critical mineral supply chain, that position belonged to another country —  it was the United States. 

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In 1939, in Hitler’s Germany, physicists had discovered nuclear fission — the process by which atoms split and release enormous amounts of energy. This breakthrough meant that a nuclear weapon was now scientifically possible. To counter this threat, the U.S. launched the top-secret Manhattan Project. Its mission: beat the Axis powers to nuclear weapons.

But there was a problem here. 

The highly pure uranium needed for nuclear weapons was contaminated with rare earth elements. They were interfering with the nuclear reactions and trigger mechanisms. And separating them became a herculean task. That is because the uranium ore was laced with rare earth elements, which were too chemically similar to be filtered out easily.

That’s when Frank Spedding, a chemist at Iowa State, stepped in. Working with Harley Wilhelm and a group of metallurgists under the Ames Project (a subprogram of the Manhattan Project), Spedding developed one of the world’s first rare earth separation techniques using ion-exchange and solvent extraction. 

It was the first time in history that rare earth separation had been achieved on a large scale. By 1945, the team had produced over 1,000 tons of purified uranium, all while laying the foundation for a technology that would one day become the building block of the modern world. 

After World War II, critical minerals became central to both U.S. defense and industrial growth. As the Cold War intensified, critical minerals were essential for missiles, jet engines, nuclear weapons, and radar systems. 

At the same time, the postwar economic boom fueled demand for these minerals in cars, electronics, color television, and petrochemical refining.

With growing demand for critical minerals, Washington poured resources into domestic critical mineral mining and research.

Enter, Mountain Pass Mine in California. Discovered in 1949, the mine soon became the crown jewel. It also operated an on-site chemical separation plant, making the U.S. one of the only countries capable of both producing and refining rare earth elements domestically. 

The facility processed and refined a wide range of high-purity rare earth metals, including gadolinium, samarium, cerium, neodymium, and dysprosium. These materials were essential for emerging high-tech and military applications, such as x-ray shielding, permanent magnets, and guided missile components.

During the 1960s and ’70s, the Mountain Pass mine processed between 150,000 and 440,000 metric tons of ore annually, producing around 10,000 to 26,400 metric tons of rare earth oxides, according to the U.S. Geological Survey. 

By 1984, the United States was supplying over 60% of the world’s rare earth elements and refining them domestically. 

The U.S. critical mineral supply chain didn’t stop at extraction and refining—it also moved downstream into advanced manufacturing. 

For example, in the mid-1980s, General Motors established a subsidiary called Magnequench, based in Indianapolis, which quickly became the world leader in producing rare-earth neodymium (RE–Nd) magnets. 

By the end of the decade, Magnequench was responsible for producing over 85% of the global supply of these magnets, which were essential components in precision-guided munitions, missile actuators, and high-performance motors used across the U.S. military.

But this dominance was short-lived. Soon, the plot of America’s fall in critical mineral production and refining began to unravel. 

By the late 1980s, cracks were beginning to show in America’s rare earth stronghold. The Mountain Pass mine in California — once a symbol of U.S. dominance — was slowly becoming an environmental liability. 

A federal investigation later revealed that over 60 pipeline spills, some of which had never been reported, had occurred between 1984 and 1998. In total, more than 600,000 gallons of radioactive and hazardous wastewater had leaked onto the Mojave Desert floor.

Unocol paid a $1.4 million settlement in 1998 to resolve claims brought by the California Department of Toxic Substances Control (DTSC) and San Bernardino County.

As public scrutiny mounted, regulators tightened oversight. New environmental rules demanded costly upgrades. But instead of investing in modernization, operators backed off. The refining process, already complex, became economically unviable under mounting compliance pressure.

This was also a time when critical mineral mines faced stiff competition from China. China’s rise in rare earth production during the 1990s created a flood of low-cost supply on the global market. 

Backed by state subsidies, cheap labour, and lax environmental rules, Chinese producers drastically undercut prices. U.S. firms like Unocal couldn’t compete with artificially cheap exports. The economics of domestic refining became unsustainable. This price war played a key role in forcing Mountain Pass to shut down.

By 1995, China's production of rare earth oxide reached 48,000 metric tons, nearly double the US's output, and it became the leader in critical mineral production.

The closure of the U.S. Bureau of Mines meant there was no central organization to monitor critical minerals, no roadmap, no industrial policy, and no long-term vision.

When the U.S. was letting its grip on critical minerals slip, China was quietly tightening its hold on them.

While America stepped back from critical minerals, China was already sketching the blueprint for global dominance. It began under the leadership of Deng Xiaoping, who in a 1992 speech declared: “The Middle East has oil, China has rare earths.”

China identified critical minerals not as a niche commodity, but as the bedrock for future industrial, military, and technological power. While Western nations retreated from critical mineral refining and mining due to environmental and cost pressures, Beijing began treating it as a strategic asset. 

The result: Between 1985 to 1995, China’s annual critical mineral mining production leaped from 8500 metric tons to almost 50,000 metric tons, according to the Center for International Strategic Studies. 

The government implemented long-term industrial planning, invested in state-owned enterprises, and most importantly, prioritized vertical integration. 

The rare earth supply chain has three main steps: mining, refining, and manufacturing. First, raw materials are mined from the earth. Next, they're chemically refined into high-purity oxides. Finally, those oxides are used to make magnets and other advanced components.

China, from the beginning, understood that merely controlling the mining would not suffice; for total dominance, it must be heavily involved in all three steps. 

Hence, it began to build technical expertise in this area, and the Chinese government invested billions of yuan in scientific research and metallurgical innovation. 

A significant example is the Program 973 (also known as the National Basic Research Program), launched in 1997 to fund cutting-edge research in rare earth science, including separation chemistry, alloy development, and magnet performance.  Furthermore, state-sponsored institutes — such as the Baotou Research Institute of Rare Earths — were tasked with making China the global center for rare earth research and development. 

If one part of China’s critical mineral dominance was built on technology and long-term planning, the other came from a more tactical playbook: driving down prices to eliminate the competition. 

Backed by state subsidies, cheap labor, and lax environmental regulations, China was able to sell refined critical minerals—such as neodymium and dysprosium—at prices well below the global average. Refining, the most expensive and complex part of the supply chain, was hit the hardest. Western producers, especially in the U.S., were unable to match the artificially low costs and began shutting down operations.

One of the classic examples is Magnequench, the GM subsidiary. In 1995, it was sold to a Chinese state-backed consortium. Within a few years, its U.S. operations were shut down and the equipment shipped to China—a direct consequence of price undercutting that made domestic production economically unviable.

Today, China controls nearly 90% of global rare earth refining, 87% of oxide separation, and 94% of magnet production, according to the Centre for European Policy Studies. 

China is also the dominant global refiner of several key critical minerals, producing over 95% of battery-grade graphite, 95% of rare earth elements, 70% of lithium chemicals, and more than 40% of refined copper, according to the International Energy Agency’s Global Critical Mineral Outlook 2025.

China’s dominance doesn’t stop there. It also controls 70% of global cathode production, 85% of anode production, and a staggering 78% of the world’s EV battery cell manufacturing capacity.

Interestingly, even outside its borders, Chinese companies hold significant ownership stakes in global refining capacity. For example, it controls 65% of the world’s nickel refining, much of it through operations in Indonesia such as Tsingshan Group and Jiangsu Delong. 

In cobalt refining, China’s dominance is even more pronounced, accounting for over 75% of global capacity.

In short, even if other countries mine their own critical minerals, they still rely heavily on China to refine them into usable materials.

And China does not want to cede this supremacy easily. 

In December 2023, Beijing formally banned the export of rare earth magnet manufacturing technologies, adding them to existing restrictions on the extraction and separation of critical minerals like neodymium and dysprosium. 

According to an investigative report in Reuters, the updated export control list includes techniques for producing neodymium-iron-boron, samarium-cobalt, and cerium-based magnets, as well as methods for creating rare-earth alloys and calcium oxyborates — effectively barring foreign nations from accessing the technical know-how that makes high-performance magnets possible.

China has never hesitated to flex its muscles in critical minerals. In 2010, a Chinese trawler collided with Japanese coast guard ships near the Senkaku Islands, prompting Japan to detain the captain. In retaliation, China reportedly halted rare earth exports to Japan. In December 2024, it blocked antimony, gallium, and germanium to the U.S. after tech sanctions, sending antimony prices up 250% and rattling supply chains. 

Then, in April 2025, Beijing retaliated against new U.S. tariffs with export controls on seven rare earths and magnets, including dysprosium and terbium. The move choked off key inputs for EVs, aerospace, and defense. Western buyers scrambled, but the message was clear: China still holds the upper hand in critical minerals.

So, how is the United States planning to reduce dependence on China when it comes to critical minerals? 

​​There’s been broad bipartisan support in Washington to rebuild America’s critical mineral supply chain. Under President Biden, initiatives like the Inflation Reduction Act and Bipartisan Infrastructure Law allocated billions to support domestic mining, refining, and battery production.

President Trump sees this as a national emergency and has invoked emergency powers to reshape the American critical mineral landscape. 

In a sweeping executive order, Trump tapped the Defense Production Act (DPA)—a Cold War-era law—to declare the nation’s reliance on foreign minerals a national security threat. The order directed federal agencies to fast-track the approval of domestic mines and identify Pentagon-controlled lands that could be used for mineral processing.

“The United States was once the world’s largest producer of lucrative minerals, but overbearing federal regulation has eroded our nation's mineral production,” Trump said in the order.

That message is now backed by money. As part of a $150 billion defense funding boost, Congress is proposing $2.5 billion specifically for domestic critical mineral production and stockpiling, signaling that Washington.

The private sector is responding. In Oklahoma, USA Rare Earth is scaling up what could become the largest neodymium magnet factory in the Western Hemisphere. It plans to start producing 600 metric tons annually in early 2026 and ramp up to 5,000 metric tons, enough for millions of EVs, smartphones, drones, and weapons systems, generating up to $800 million a year in revenue.

Similarly, Westwin Elements has developed a nickel refining demonstration facility located about 85 miles south of Oklahoma City. The site currently processes around 200 metric tons of nickel per year, with plans to scale up to 34,000 metric tons annually by 2030. The facility is part of broader efforts to strengthen the U.S. battery metals supply chain, particularly for electric vehicles and energy storage.

It’s not just the United States that’s sounding the alarm over critical mineral dependence — Western allies are stepping up, too.

The European Union passed its ambitious Critical Raw Materials Act in 2023. Through the act, the EU aims to mine at least 10% of its annual critical raw material consumption domestically, refine 40% internally, and ensure that no more than 65% comes from any single external source. 

As of March 2025, Brussels has greenlit 47 “strategic projects” across 13 member states—including rare earth processing in France, lithium refining in Portugal, and recycling in Germany. 

Australia, a long-time major producer of lithium and rare earths, is now shifting its focus downstream. Lynas Rare Earths has fully commissioned its Kalgoorlie processing plant, marking the first domestic rare earth cracking and leaching facility in Australia. The site feeds into Lynas’s separation facility in Malaysia, which in 2025 produced its first batch of heavy rare earth dysprosium oxide.

Japan, scarred by China’s rare earth embargo in 2010, has taken diversification to another level. The country maintains strategic stockpiles covering six months of demand and is backing recycling, substitution, and global sourcing initiatives. 

China’s grip on critical mineral refining isn’t accidental—it’s the result of decades of deliberate strategy. And it hasn’t hesitated to weaponize that dominance. These minerals aren’t just the backbone of modern technology; they power fighter jets, radar systems, hypersonic missiles, satellites, and next-generation energy grids—the very systems that underpin national security.

The U.S. cannot afford to repeat the mistake of ceding control over such a vital industry.. What’s needed now is a bold, long-term industrial policy that rebuilds domestic mining, restores refining capacity, and scales magnet manufacturing — all on American soil.

This newsletter was written by Shyam Gowtham

Thank you for reading. We’ll see you at the next edition!