ZGXT(SZ:000831) Sou Hu Cai Jing·2025-11-11 10:42Core Viewpoint - The announcement of the first domestically produced rare earth magnet in the U.S. in 25 years is portrayed as a significant achievement, but it is largely seen as a political maneuver rather than a true industrial breakthrough [1][3][5]. Industry Analysis - The complete rare earth industry chain includes mining, smelting, separation, purification of rare earth oxides, and production of high-performance magnets, which requires mature technology, stable production capacity, and specialized talent [3]. - Currently, China dominates the global rare earth processing capabilities, holding over 80% of the market and more than 90% of magnet production capacity, a result of decades of industry development [3]. - The only U.S. rare earth mine in development, Mountain Pass, has a reserve of only 1.4 million tons, representing just 1.3% of global reserves, and primarily consists of light rare earths, lacking the heavy rare earths critical for military and high-end electronics [3][5]. - The U.S. has long relied on Chinese technology for smelting and separation, and prior to Chinese export controls, U.S. mined rare earths were sent to China for processing [3]. Cost and Competitive Landscape - Rare earth mining and processing are characterized as labor-intensive and environmentally challenging, with significant capital investment required for compliance with environmental standards [5]. - Without substantial government subsidies, U.S. rare earth products lack competitiveness in the market, while China can achieve economies of scale due to its complete supply chain and established technology [5]. - Experts estimate that establishing a fully independent rare earth supply chain in the U.S. could take at least 10 years, which is beyond the current administration's term [5]. Political Context - The announcement of the rare earth magnet coincides with the upcoming midterm elections, suggesting a political motive to showcase achievements and bolster support for the current administration [5]. - The U.S. government's emphasis on this development is seen as an attempt to distract from other domestic issues and to reinforce the narrative of "American resurgence" [5][7]. - China's export controls on rare earths are framed as a means to regulate industry development and ensure global supply chain stability, contrasting with the U.S. approach of unilateral restrictions [7]. Strategic Implications - The U.S. effort to challenge China's dominance in the rare earth sector is viewed as unrealistic given the significant technological and industrial gaps that have developed over decades [7]. - A sustainable approach to developing the U.S. rare earth industry would require respecting industry dynamics and fostering international cooperation rather than relying on political rhetoric [7].