USA Rare Earth plans $204M France investment to cut China reliance

USA Rare Earth's €175 million investment plan in France marks the latest push to build a non-Chinese rare earth supply chain from mine to magnet.

USA Rare Earth Inc. plans to invest more than €175 million ($204.1 million) in France through 2030 to expand its rare earth metal, alloy and permanent magnet production, the company said Monday, as Western governments accelerate efforts to reduce dependence on Chinese-dominated supply chains.

"The United States and Europe need secure, regional supply chains for the materials that power defense systems, electric vehicles and advanced manufacturing," Barbara Humpton, chief executive officer of USA Rare Earth, said in a statement. "France offers the industrial infrastructure, skilled workforce and policy support to rebuild critical minerals capability."

The planned investment builds on the company's existing French footprint, including a rare earth metals and alloys facility operated by Less Common Metals in Lacq and a strategic investment in Carester SAS alongside infrastructure firm InfraVia Capital Partners. The expansion could generate more than 300 jobs and may receive French government backing through debt guarantees or a direct equity stake in the company's European subsidiary, according to the company.

The urgency behind the investment reflects a broader Western scramble for rare earth supply security. China accounted for about 60% of global rare earth mining and roughly 91% of refining capacity in 2024, according to the International Energy Agency. A Pentagon rule set to take effect in 2027 will restrict the use of Chinese-origin rare earths in defense applications, creating a looming compliance deadline for U.S. weapons manufacturers that rely on magnets made from neodymium, dysprosium and terbium.

Greenland and Europe emerge as alternative supply hubs

The U.S. has pursued multiple supply routes beyond China. In May, the U.S. secured a 15-year offtake agreement with Critical Metals Corp. covering 15% of Phase 1 production from Greenland's Tanbreez project, one of the world's largest known sources of heavy rare earths outside China. Greenland also signed a letter of intent with France in May to strengthen critical minerals cooperation, adding a European track to its minerals diplomacy.

Africa remains a promising but uneven frontier. The continent holds an estimated 30% of the world's proven critical mineral reserves, and Benchmark Mineral Intelligence projects Africa could account for about 9% of the global rare earth market by 2029. However, insecurity in the Democratic Republic of Congo, regulatory delays on Kenya's Mrima Hill project and permitting hurdles in Madagascar have complicated development timelines, pushing Western buyers toward politically stable jurisdictions such as Greenland and France.

USA Rare Earth's investment aligns with U.S. Commerce Department agreements to build a mine-to-magnet supply chain in North America and Europe. The company's French expansion, combined with the Tanbreez offtake deal and REalloys' parallel efforts to establish non-Chinese rare earth processing in North America, signals a coordinated push to create alternatives to China's near-total control of rare earth refining.

This article is for informational purposes only and does not constitute investment advice.