US Rare Earths Shift to Asia as Domestic Demand Lags Behind

US rare earths produced by Washington-backed companies are increasingly flowing to Japan and South Korea, as domestic demand has yet to materialize, despite efforts from the Trump administration to develop a national supply chain. Companies like MP Materials, Energy Fuels, and Phoenix Tailings, which have received billions in government support, are selling rare earth products to Asian firms, where magnet manufacturing remains more robust than in the US.

Growing Demand for US Rare Earths in Asia

According to Nick Myers, chief executive of Phoenix Tailings, Japanese customers are "clamoring" for rare earth metals due to significant cuts in exports from China this year. He noted that the company's clients are "primarily in Korea and Japan," emphasizing that if US defense contractors do not act quickly, they risk losing out to competitors who are offering higher prices.

China's control over global supplies of rare earths has raised national security concerns in the US and other Western nations. These metals are essential for modern technology, being used in various applications, from electric vehicle batteries to advanced weaponry.

US Rare Earth Producers and Their Strategies

MP Materials is the top US producer of rare earths, with significant sales of neodymium-praseodymium (NdPr) oxide primarily generated through an agreement with Sumitomo Corporation of Americas. This partnership supplies Japanese customers, while a portion of their output is now redirected to an unnamed US technology company.

• MP Materials sales to Japan through Sumitomo Corporation
• Energy Fuels plans to send oxides to Korea
• Production capacity: Japan (10,000-15,000 tonnes/year), South Korea (2,000-3,000 tonnes/year), US (1,000 tonnes or less)

Energy Fuels, which secured $725 million in conditional government funding, is also eyeing the Asian market. The company plans to scale up production and has previously supplied NdPr to a major South Korean manufacturer, which converted it into magnets.

Future Prospects and Industry Challenges

Despite the backing from the US government, the rare earths industry in the US is still in its infancy and will take time to mature, according to experts. MP Materials aims to produce its own magnets at scale, which will require consuming a significant portion of its production. The company has agreements with General Motors and Apple to supply magnets and expects to start shipping to GM this year.

Moreover, Phoenix Tailings, which received $500 million in conditional funding, is focused on scaling its production of metals and oxides, which it believes will benefit the entire industry. As the demand for rare earths continues to rise globally, the US must accelerate its production capabilities to compete effectively.