This Is How The US Can Become a Player in Rare Earth Metals

Summary of This Is How The US Can Become a Player in Rare Earth Metals

by Bloomberg

41m•February 5, 2026
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Overview of This Is How The US Can Become a Player in Rare Earth Metals

Podcast: Odd Lots (Bloomberg) — hosts Joe Weisenthal & Tracy Alloway interview Heidi Kribbe-Redeker (senior fellow, Council on Foreign Relations; former State Department chief economist). The episode examines U.S. vulnerability to China’s dominance in rare earths and critical minerals, surveys emerging technological and policy solutions that could let the U.S. “leapfrog” China’s chokehold, and recommends steps to turn lab-stage breakthroughs into scalable domestic supply chains.

Key points and main takeaways

  • China dominates rare earth extraction, processing, and much of the upstream technology and value chain; that dominance is strategic and has been cultivated for years (e.g., Made in China 2025).
  • The U.S. likely cannot outcompete China on traditional mining/refining alone (cost, scale, environmental tradeoffs).
  • A more promising path is to use U.S. strengths — innovation, national labs, universities, biotech and materials science — to:
    • reduce or replace rare-earth usage (new magnet materials),
    • extract rare earths from waste/tailings/co‑products using biotech (engineered proteins, microbes), and
    • scale domestic recycling and magnet remanufacturing.
  • Several companies and consortia are already moving from lab to scale (examples: Niron Magnetics, Vulcan, ReElement, Alta Research Technology), but they face a “valley of death” — early-stage funding shortfalls, uncertain demand, permitting, and fragmented policy.
  • Policy + financing coordination is essential: offtake guarantees, consortia, VC-like public funds for equity (e.g., In-Q-Tel’s Compass Fund model), R&D support and better waste data/controls could unlock rapid scale-up.
  • Historical analogies matter: synthetic rubber in WWII and the shale/fracking revolution show how tech + industrial policy can overcome single-source vulnerabilities when executed at scale and speed.

Background: how China got here

  • China built an integrated ecosystem: domestic extraction, processing expertise, state-backed firms willing to operate without immediate profitability, and an internal demand pool (EVs, wind, defense).
  • The U.S. once produced rare earths (e.g., Mountain Pass / MP Materials) but offshored much of the dirty, low-margin processing; environmental/social/political tradeoffs discouraged domestic scale-up.
  • A Chinese export cut-off (or export controls) is the shock that exposed U.S. vulnerability and spurred renewed attention.

Technologies that could change the game

  • Material substitution
    • ARPA‑E–funded research produced rare-earth‑free or rare‑reduced magnets (example: University of Minnesota → Niron Magnetics). These reduce dependency by lowering rare-earth intensity.
  • Biotech extraction / biomining
    • Engineered proteins or microbes can selectively bind and extract rare earths from waste, tailings, or low-grade ores. Examples cited: Alta Research Technology and Berkeley research (a “smart sponge” virus concept).
    • Large miners (e.g., Rio Tinto) are piloting microbes to extract metals from deposits previously uneconomic.
  • Recycling and urban mining
    • E‑waste, end‑of‑life magnets in hard drives/phones, coal ash, and tailings are large domestic sources. ReElement and companies like Vulcan plan full domestic cycles: recycle → process → magnet manufacture.
  • Why this matters: these approaches can be cleaner, faster, and potentially cost‑competitive — and they play to U.S. R&D strengths rather than trying to replicate China’s cost-driven model.

Financing, market risk, and demand certainty

  • Offtake agreements matter: early guaranteed buyers (auto OEMs, military, aerospace) reduce market risk and help firms cross cost curves.
  • Consortia (public + private) can aggregate demand and support validation/scale-up.
  • The capital gap is often equity-based, not debt — early-stage tech needs VC-style investors. Existing federal instruments are often loan-based; a dedicated public equity vehicle or VC partnership can bridge the valley of death. In-Q-Tel’s Compass Fund is cited as a relevant government-backed model.
  • Examples of industrial-scale effort: Vulcan raised significant capital (~$1.4B consortium) and aims to roll product by ~2027 (targeting defense and critical industries), demonstrating how industrial policy, capital, and commercial partners align.

Policy levers and recommended actions

  • Create a coordinated national critical-minerals innovation strategy (not fragmented ad hoc actions).
  • Fund and protect national labs and university R&D (Ames National Lab, ARPA‑E, DARPA‑style support), which are key sources of scalable breakthroughs.
  • Deploy financial instruments that provide equity-like capital for deep-tech scale-ups, and encourage public‑private consortia for offtake and de‑risking.
  • Improve data and policy around waste streams:
    • Track e‑waste and tailings more comprehensively,
    • Consider temporary export restrictions or reporting requirements to prevent sending high‑value waste abroad before its value is assessed.
  • Use procurement/demand pulls (military, federal agencies) to create early markets for domestic magnets and recycled material.
  • Streamline permitting and thoughtful environmental oversight; balance speed with sustainable practices and encourage cleaner biotech/mining methods.

Challenges, tradeoffs, and political constraints

  • Environmental impacts and community resistance remain real tradeoffs for traditional mining; biotech and recycling can reduce harm but require validation and scale.
  • Budgetary pressures and potential funding cuts to national labs pose risks to the innovation pipeline.
  • Political coordination is difficult: success requires bipartisan consensus, risk tolerance for public investment in early tech, and alignment across agencies.
  • Capital misallocation fears (e.g., Solyndra legacy) can make policymakers risk-averse; the report argues for accepting some risk to secure strategic supply.

Notable quotes / insights

  • “We can’t out‑mine, out‑process, and out‑spend China… but we can leapfrog them through innovation.”
  • “America’s next mine is waste” — the idea that tailings, coal ash, and e‑waste are under‑utilized domestic reserves.
  • Historical analogy: synthetic rubber in WWII — industrial policy + technology can rapidly replace single-source supply chains when survival/national security is at stake.

Actionable checklist (what policymakers and industry can do now)

  • Fund and expand R&D at national labs and universities focused on alternative magnet materials, biotech extraction, and recycling technologies.
  • Create/scale public equity instruments or VC-like funds to finance deep-tech scale-ups (fill the valley of death).
  • Use federal procurement (DOD, NASA, DOE) to guarantee early demand via offtake contracts.
  • Form industry consortia to aggregate offtake and coordinate standards/validation.
  • Improve data collection and regulation for waste exports; incentivize domestic recycling and urban mining.
  • Pilot and fast-track validation programs for promising biotech and materials technologies (accelerator/wrap‑speed models).

Resources & examples mentioned

  • Organizations: Ames National Laboratory, ARPA‑E, In-Q-Tel (Compass Fund), Council on Foreign Relations.
  • Companies/projects: Niron Magnetics, Vulcan, ReElement, Alta Research Technology, MP Materials (Mountain Pass), Rio Tinto biomining pilots.
  • Historical cases: synthetic rubber in WWII; fracking revolution as a model for a tech-triggered industrial transformation.

Conclusion The episode’s core message: the U.S. does not need to win by mirroring China’s mining model. Instead, it should capitalize on R&D-driven substitutes, biotech-enabled extraction, and recycling — combined with targeted industrial policy, demand guarantees, and equity-focused financing — to break the strategic chokehold and build a resilient domestic rare-earth supply chain.