American Rare Earth Miners Backed by Billions in Federal Funds Are Selling to Japan and Korea

A striking paradox has emerged at the heart of America's rare earth ambitions: the companies Washington has funded with billions of dollars to build a domestic critical minerals supply chain are selling much of their output to Japan and South Korea. Firms like MP Materials, Energy Fuels, and Phoenix Tailings — collectively recipients of enormous federal backing — are turning to established Asian manufacturing partners because US demand for rare earth materials simply hasn't scaled fast enough to absorb their growing production.

MP Materials, the dominant US rare earth producer based in Nevada, disclosed in its latest quarterly earnings that its neodymium-praseodymium (NdPr) oxide and metal sales were 'primarily generated' through an agreement with Sumitomo Corporation of Americas, which routes the material to Japanese customers. The company only recently stopped selling mined concentrate to China's Shenghe Resources as part of its restructured government deal, and it is now pivoting toward long-term partnerships with General Motors and Apple — though shipments of finished magnets to GM are only expected to begin sometime this year.

Phoenix Tailings, a startup backed by CIA-funded venture capital firm IQT, is also finding its most eager customers abroad. CEO Nick Myers said Japanese buyers were 'clamoring' for the company's rare earth metals, particularly given China's dramatic reduction in export volumes this year. Myers was candid about the commercial pressure, warning that unless US defense contractors move quickly to secure supply, Asian firms willing to pay premium prices will absorb Phoenix's entire output.

Energy Fuels, which secured a conditional $725 million in government funding in June, is also eyeing Asia in the near term. The company is in the process of acquiring Australian Strategic Materials, which operates a rare earth metal-making facility in South Korea, and separately announced a $1.9 billion deal to acquire German magnet manufacturer Vacuumschmelze. CEO Ross Bhappu said NdPr oxides would be heading to South Korean partners in the near term while the company works to build out its own downstream capabilities.

The underlying structural issue is one of industrial scale. Outside China, only Japan produces neodymium iron boron magnets in significant volume — an estimated 10,000 to 15,000 tonnes annually — while South Korea adds another 2,000 to 3,000 tonnes. The entire US produces roughly 1,000 tonnes or less per year. Until American magnet manufacturing catches up, rare earth producers have little choice but to sell into the markets that can actually absorb their materials, even if that means shipping critical resources to foreign partners rather than feeding a homegrown supply chain.