Rare earths boosted by Trump funding flow to South Korea, Japan

Even as the Donald Trump administration pours vast sums into building a self-sufficient rare earth supply chain, much of the output produced with US government backing is ending up in South Korea and Japan. The United States still lacks a strong domestic magnet manufacturing base, while South Korea and Japan already have the capacity to process rare earths into advanced magnets — making them the primary buyers of American-mined material.

MP Materials, Energy Fuels and Phoenix Tailings are supplying rare earths produced with billions of dollars in US government support to companies in South Korea and Japan, the Financial Times reported Thursday. Washington set out to reduce its dependence on China by building up its own supply chain, but in practice Asia has become the largest market for the output.

Rare earths are a key ingredient in neodymium-iron-boron (NdFeB) magnets used across advanced industries including electric vehicles, semiconductors and defense. As China has restricted exports of rare earths and critical minerals, the United States and its Western allies have made supply chain diversification a core national security priority.

Experts warn, however, that mining rare earths and processing them into magnets are entirely different industries. Thomas Kruemer, a rare earth analyst, said only China and Japan currently produce NdFeB magnets at scale, describing the United States as still in its early stages.

The production gap is stark. According to John Ormerod of rare earth consultancy JOC LLC, Japan produces between 10,000 and 15,000 metric tons of rare earth magnets annually and South Korea between 2,000 and 3,000 metric tons, while US output remains below 1,000 metric tons per year.

US producers are therefore targeting South Korea and Japan first. Nick Myers, CEO of Phoenix Tailings, said most of his company's customers are currently South Korean and Japanese firms, warning that if American defense contractors do not move quickly to buy, all production will be sold overseas. "Other companies are offering higher prices faster," he added.

Energy Fuels is also accelerating its push into the South Korean market. The company received a conditional $725 million commitment from the US government in June and said it plans to supply rare earth oxides to South Korea soon. CEO Ross Bhappu said a major South Korean manufacturer used the company's neodymium and praseodymium to produce magnets on a trial basis last year.

Energy Fuels is also pursuing an acquisition of Australian firm ASM, which operates a rare earth metal production facility in South Korea — a move aimed at making South Korea a key hub within its US-linked supply chain.

MP Materials, the largest rare earth producer in the United States, supplies most of its core neodymium and praseodymium oxides and metals to Japanese customers through Sumitomo Corp.'s US subsidiary. Some volume is also being sold to an American technology and industrial company under a contract struck in the first quarter of this year.

MP Materials previously sold rare earths to China's Shenghe Resources but halted the arrangement under a contract with the US government. Its long-term plan is to build its own magnet production capability and supply American companies including General Motors and Apple.

Phoenix Tailings, which received a conditional $500 million grant from the US government last month, said the funding would help expand production of rare earth metals and oxides and "grow the overall size of the market."