Start-ups are also moving away from dependence on China. Noveon Magnetics, a rare earth magnet manufacturer in the US, raised USD 75 million by May. It has started commercial production of magnets at its base in San Marcos, Texas, going to use neodymium procured from South Korea. The company aims to increase annual production to 10,000 tones over the next five years, increasing its workforce from just over 60 to 100 by the end of the year.

Technology is also being developed to reuse magnets recovered from used EVs and other vehicles, restoring them to the same performance as new ones. The company also plans to create a rare-earth supply network in the US using recycled materials.

Peter Afiuny, Chief Commercial Officer, told Nikkei that Nidec is among the initial customers, and said "We are also in talks with Japanese car manufacturers to supply them.” He did not disclose their names.

It is not easy to reconfigure a supply network that has long been dependent on China from scratch. The US, with its high inflation, is also at a cost disadvantage. Some believe that it will take 10 years to seriously move away from China" (a senior executive of an automobile manufacturer).

The Department of Defence is also supporting Noveon with approximately USD 35 million, symbolising that rare earth production cannot be separated from national security. Despite the hurdles, a fundamental shift in the supply chain to de-risk of China has steadily begun.