Although the Mountain Pass mine is the largest non-Chinese rare earth deposit in the world, the mine currently lacks the manufacturing assets and facilities to process the rare earth ore into finished components, such as permanent magnets.

The Mountain Pass mine also does not have substantial amounts of heavy rare earth elements, such as dysprosium, which provide much of the heat-resistant qualities of permanent magnets used in many industry and defense applications.

Other U.S. rare earth deposits exist, such as those in Idaho, Montana, Colorado, Missouri, Utah, and Wyoming, but these deposits are still in early exploratory stages of development. Once a company has secured the necessary capital to start a mine, government and industry officials said it can take from 7 to 15 years to bring a property fully online, largely due to the time it takes to comply with multiple state and federal regulations.

Other factors may affect the rebuilding of a U.S. supply chain:

Capital investment-Industry officials noted that processing companies will need to secure a large amount of capital to begin operations, but investors are concerned about the possibility of the Chinese undercutting U.S. prices and negatively affecting their return on investments.

Processing plants-Industry officials said it would take from 2 to 5 years to develop a pilot plant that could refine oxides to metal using new technologies, and companies with existing infrastructure said they would not restart metal production without a consistent source of oxides outside of China.

Environmental concerns-Some rare earth minerals are accompanied by radioactive products, such as thorium and radium, which make extraction difficult and costly. In addition, U.S. mines and processing facilities must comply with environmental regulations.

Eoin Treacy's view The economic value of rare earth metals continues to increase as the range of applications dependent on them grows. Recently, the expansion of US wind power capacity has been questioned because so many of the turbines were being imported from China, at least in part due to China's cheaper manufacturing and ease of access to rare earth metal supplies. This is one example of where China is utilising its dominant position in rare earth metal production to move up the value chain in terms of manufacturing.

As the above report demonstrates, the USA has the metals in the ground but lacks the political will to fund extraction and processing. The fact that this issue is achieving wider notice in Washington raises the potential that rare earth metal production will be judged from a strategic perspective rather than simply on economic and environmental terms.

China has been careful not to threaten its dominant position by allowing prices to rise to levels which would encourage competition, but it has also made clear that it will give preference to domestic demand and in the process support its manufacturing base. The likely outcome remains that any country seeking to challenge China's dominance in this sector will probably have to stomach higher costs for doing so.