*Paper written as final class deliverable for Miami University Independent Study*

Brad Hornback

IES4772

1. Introduction and Background

The critical minerals and rare earths markets are incredibly important to both the national security but also economic viability of the United States. Critical minerals and rare earth elements (REEs) are “essential materials in a broad range of technologies significant to national security, energy systems, medicine, and consumer products. REEs occur throughout the earth’s crust, commonly at low concentrations” (National Energy Technology Laboratory [NETL], n.d.). Products made with REE’s include semiconductors which are found in all consumer, medical, and military products, electrical generation equipment necessary for grid infrastructure, automobile and aerospace equipment, communications equipment, and most prominently AI development in both the creation from CPUs and the storage with data centers. Of note for the AI sector is the role of neodymium, a rare earth element essential for the high-powered magnets used in data center cooling systems, electric motors, and the hard drives that store the vast quantities of data AI systems require. The shortlist of what REE’s are critical for is evidence of their intense effect and impact on our modern lives. This necessity for our economy is further shown by the projected demand increase for these elements in 2040: Lithium demand is projected for 5x growth, graphite and nickel 2x growth, Cobalt 50-60% growth, and copper 30% growth (IEA, 2025).

REEs are found in small concentrations and as a consequence deposits viable for extraction are exceptionally scarce. Currently China sits in the lead for the mining and refining of REEs with 60% of the mining supply and 90% of the refining process running through China (Congressional Research Service [CRS], 2026; USGS, 2023). This extreme reliance that both the United States and the world have on the Chinese control over these elements represents not only an economic liability but also a sustainability and ecological issue due to the Chinese Government’s lack of environmental concern and regulation for the extraction and refinery process. This lack of sustainable production by the Chinese has already been displayed by severe ecological damage found in the nation as far back as 2010. The Chinese State Council said that the release of these metals due to unsafe mining processes was causing “the destruction of vegetation and pollution of surface water, groundwater and farmland” (as cited in Rosen, 2023). This lack of sustainable production for REEs from China’s chokehold represents a huge motivation to break the supply chain and reshore critical mineral manufacturing back to the United States. These factors display a clear point: Chinese and foreign control of these REE’s is harmful not only for the environment but the United States’ economic, political and sustainable goal and moving production back to the United States is the best way to create a more sustainable and better economic vehicle for society.

The United States cannot achieve long-term economic resilience, environmental sustainability, or national security without reshoring its critical manufacturing base and the convergence of geopolitical risk, industrial policy investment, and clean energy transition creates a once-in-a-generation window to do so in a way that is both economically competitive and environmentally responsible for a sustainable future.

1.1 Project Goal and Objectives

The goal of the independent study was to evaluate reshoring as a sustainability strategy for the United States with a focus on critical minerals and rare earth supply chains. Four objectives guide the work. First, document what is driving the reshoring movement and whether those drivers hold beyond short-term political cycles. Second, evaluate whether reshoring improves environmental sustainability or just shifts the problem to the United States, and what conditions decide the outcome. Third, assess the national security and resilience case for bringing critical mineral, semiconductor, defense, and pharmaceutical supply chains home. Fourth, identify the real constraints that determine where and when reshoring works, and understand the decisions that led to positive outcomes.

1.2 Scope and Definitions

Reshoring in this paper means relocating manufacturing, refining, and supply chain operations back to United State. Additionally, reshoring was counted if it was moved to trusted allies specifically countries with high dependency. This covers full domestic production, partial reshoring of high-risk steps, and to allies where it cuts import dependency.

Sustainability for this paper uses a three part framework across three areas. Environmental sustainability covers total emissions, energy use, and ecological impact. Economic sustainability covers total cost, job creation, and cost stability. Strategic sustainability covers supply chain resilience, reduced import concentration, and national security. The paper focuses on the upstream-to-midstream chain, meaning extraction, refining, and component manufacturing, across critical minerals, semiconductors, defense manufacturing, and pharmaceutical ingredients. These sectors are designated critical by United States Geological Survey, Department of Defense, and Department of Energy because a supply disruption in any of them would cascade across the broader economy and national defense (USGS, 2023; DOD, 2023).

2. Literature Review

Research on reshoring draws from economics, supply chain management, environmental science, and national security policy. Four themes shape this: drivers of the reshoring movement, its impact, resilience and national security, and what real constraints stand in the way. Each theme answers a different part of the question: under what conditions does reshoring make things better for the United States?

2.1 Why Reshoring Is Happening Now

For roughly forty years, cheap overseas labor made offshoring an easy decision. United States manufacturers chased those cheap wages that in some sectors ran 10 to 1 against domestic labor costs (Autor et al., 2013). The model held until the hidden costs of that strategy became impossible to ignore. Rising Chinese wages, unpredictable lead times, quality problems, and intellectual property theft began eating into the offshore cost advantage around 2010 (Reshoring Initiative, 2023). The financial case for offshoring was weakening on its own before anything forced the issue.

When COVID-19 forced the issue to a massively noticeable size: shortages of personal protective equipment, ventilators, and pharmaceutical active ingredients were common. These critical needs were sourced almost entirely from China and India, which showed that supply chains built on geographic concentration are more fragile than efficient (Gereffi, 2020). The semiconductor shortage of 2020 to 2022 put a price tag on that fragility. TSMC concentration in Taiwan created a single point of failure that shut down automotive, electronics, and defense production at the same time (CSIS, 2022). This was not a surprise it was outcome of decades of offloading strategic risk in exchange for lower costs.

The US government responded at a scale not seen since the postwar era. The CHIPS and Science Act of 2022 committed $52 billion to domestic semiconductor manufacturing and research. The Inflation Reduction Act built domestic content requirements into clean energy incentives. Executive Order 14017 launched a formal government review of the four most exposed supply chain sectors (Congress, 2022a, 2022b; White House, 2021). Reshoring job announcements hit a record high in 2022, driven in large part by those policy incentives (Reshoring Initiative, 2023). Nearshoring to Mexico, Canada, and Australia also gained ground as a middle path that captured most of the resilience benefit without the full cost of bringing everything fully home (Trent & Monczka, 2022). These policy moves signaled a long-term commitment to rebuilding domestic industrial capacity, not just a short-term reaction to COVID.

2.2 Sustainability Impacts of Reshoring

The environmental case for reshoring is huge. Ocean freight shipping is one of the most emission-producing logistics modes on earth. Shorter supply chains cut those large transportation emissions immensely (IEA, 2022). However, the real issue for reshoring is manufacturing emissions. For instance, a study of solar panel manufacturing found that reshoring to the United States produced lower emissions than Chinese production only when United States manufacturing electricity came primarily from renewable sources (Zhong & Bazilian, 2018). States with coal intensive electric grids can undercut the environmental benefit completely. Where reshoring happens is just as important as whether it happens especially in the United States.

The economic sustainability case is easier to understand. One manufacturing job creates two and a half indirect jobs, well above what service sector jobs create (Autor et al., 2013; Manufacturing Institute, 2021). The IRA directly linked reshoring to clean energy investment, which helps domestic production move toward a lower-carbon electricity over time (DOE, 2023). As the US grid continues its shift toward renewable energy projected through 2030, the environmental case for domestic production gets stronger without requiring new political action (IEA, 2022). The two biggest forces of reshoring, the energy transition and grid decarbonization, are moving in the same direction at the same time. Creating a large incentive for continued development.

It is also worth noting that the comparison point for United States production is not a clean baseline. Chinese rare earth extraction and refining have been documented causing destruction of vegetation, contamination of surface water, groundwater, and farmland (Rosen, 2023). Replacing that production with United States manufacturing under EPA environmental standards is an improvement for the global supply chain regardless of what state the production is in.

Table 1: Key Rare Earth and Critical Minerals Primarily Extracted or Refined Outside the United States

Mineral	Available for Mining in the U.S.	Known Extraction / Refining Impacts	Primary End Uses	Sources
Neodymium (Nd)	Yes (limited; Mountain Pass, CA)	Radioactive waste, acid drainage, water contamination; Chinese operations documented causing soil and water damage (Rosen, 2023)	Permanent magnets for EV motors, wind turbines, data center cooling systems, defense guidance systems	USGS, 2023; CRS, 2026; Rosen, 2023
Lithium (Li)	Yes (Nevada, North Carolina); refining capacity limited	High water consumption in arid regions; brine extraction disrupts local ecosystems; refining produces chemical waste	EV batteries, grid-scale energy storage, consumer electronics, pharmaceutical applications	IEA, 2025; USGS, 2023
Graphite (C)	Deposits exist; no active large-scale US mining or refining	Surface mining causes habitat disruption; Chinese production linked to air and water pollution with limited regulatory oversight	Lithium-ion battery anodes (over 95% of anode material); nuclear reactors; lubricants	IEA, 2025; CRS, 2026
Gallium (Ga)	No primary US production; byproduct of aluminum refining	Byproduct recovery from bauxite processing; minimal dedicated environmental footprint but China controls >80% of output	Semiconductors, 5G infrastructure, solar panels, LEDs, military radar and communications	USGS, 2023; CRS, 2026
Cobalt (Co)	Minor US deposits; refining largely absent domestically	Mining in the DRC linked to hazardous working conditions and waterway contamination; refining concentrated in China	Lithium-ion battery cathodes, jet engine superalloys, defense applications	IEA, 2025; USGS, 2023

Note. U.S. mining availability based on USGS deposit data; impacts reflect documented environmental conditions in primary producing nations. DRC – Democratic Republic of Congo.

2.3 Resilience and National Security

Supply chain vulnerability moved from an academic concern to a formal United States priority over the past decade. USGS tracks 50 minerals where the United States carries significant import dependency. With many running above 90% reliance on a single foreign source, mainly China (USGS, 2023). Executive Order 14017 named semiconductors, large-capacity batteries, pharmaceutical ingredients, and critical minerals as the four sectors of largest concern for the United States (White House, 2021). The DOD identified large dependencies in specialty alloys, microelectronics, and printed circuit boards as top defense vulnerabilities in its Industrial Capabilities Report to Congress (DOD, 2023).

Resilience in the supply chain does not mean bulletproofing it. It means the capacity to absorb shocks and recover faster from it (Sheffi, 2005; Tang, 2006). Reshoring improves that capacity by reducing geographic dependency, shortening lead times, and improving visibility into suppliers. The Minerals Security Partnership (MSP) is the strongest response to this problem. It is a network of 13 allied nations, including the United States, the European Union, Canada, Australia, Japan, South Korea, and the United Kingdom, built specifically to reduce single-country dependency in critical mineral supply chains through coordinated investment (U.S. Department of State, 2022). The MSP represents a shift from individual country responses to a coordinated approach.

China has also demonstrated a willingness to use its mineral dominance as a geopolitical tool. During a territorial dispute with Japan in 2010, China restricted REE exports, causing immediate disruptions for Japanese manufacturers who depended on Chinese minerals (CRS, 2026). The Chinese willingness to use this supply chain as a weapon in this case showed the concentration risk is not a hypothetical. It has already been used. First, against a United States ally and trading partner and possibly next against the United States. The United States has strong reason to take that event as a sign of problems to come when evaluating its own dependence on Chinese rare earths.

2.4 Real Barriers to Reshoring

Reshoring has many real barriers. Skilled labor is the well-known constraint. Deloitte and the Manufacturing Institute (2021) project a 2.1 million manufacturing worker shortfall by 2030, with the deepest gaps in semiconductor fabrication, rare earth processing, and precision defense manufacturing. Closing that gap requires years of investment in technical training programs, community college manufacturing pipelines, and apprenticeship infrastructure for roles that do not exist at large scale in the United States.

US mine permitting is a problem specific to minerals. Permits average seven to ten years from application to production approval in the United States, compared to two to three years in peer nations like Australia and Canada (National Mining Association, 2022). No financial incentives can shorten that timeline. Policy decisions made today will not produce new domestic mineral supplies until the mid-2030s at the earliest. The United States also lacks the rare earth refining infrastructure to process domestically mined material even if mining activity rose, because that processing capacity was never built at a large enough scale domestically. Higher United States regulatory and compliance costs create a cost difference compared to most countries operating under weaker rules, however that cost is reflected in the environmental and labor standards that make domestic production more responsible (NIST, 2022).

These constraints are incredibly important to understanding the current need for reshoring and the difficulties it faces. Despite their severity, many industries treat them as manageable conditions rather than the large barriers they are. Permit reform, workforce investment, and infrastructure development are all based in political action from the government. The question is whether there will be enough bipartisan support to address them with the same urgency that drove the CHIPS Act and the IRA. The strategic and economic case for doing so is strong and grows stronger as China consolidates its position and demand for critical minerals grows.

3. Conclusion

The evidence from the research is clear. Reshoring critical mineral and manufacturing supply chains is not just economically viable. It is a necessity of national security and environmental improvement over the current landscape. The United States has spent decades building a dependency on Chinese rare earth refining that now threatens its ability to produce semiconductors, operate defense systems, and build the clean energy infrastructure the country needs.

The three-part case for reshoring holds up in many ways. Economically, the offshore advantage is narrowing as Chinese wages rise, logistics costs seesaw, and the cost of supply disruption increases. The CHIPS Act and IRA have already changed the investment landscape for semiconductor and clean energy minerals. Strategically, the concentration of critical mineral supply foreign countries represents a documented vulnerability that the DOD, USGS, and the Executive Branch have all recognized. The Minerals Security Partnership shows that allies share this assessment. Environmentally, reshoring improves outcomes when paired with cleaner domestic energy, and the United States grid is moving in that direction.

The barriers, including permitting, workforce gaps, and infrastructure lack, are addressable. The United States built the industrial capacity to win World War II in less time than it currently takes to permit a mine. What the problem requires is a bipartisan commitment to solving it with the same urgency that produced the CHIPS Act, applied now to the permitting reform, workforce development, and refining infrastructure that make reshoring viable at scale.

This paper was focused on evaluating when reshoring improves sustainability across economic, environmental, and strategic areas. The answer from the research is that it does, and that building those conditions is the central challenge for United States supply chain strategy over the next decade. The cost of waiting grows every year while the United States dependency continues.

References

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