Yesterday Today Tomorrow

Inseong J Kim: Hello, this is Inseong J Kim from Yesterday, Today, Tomorrow. We are covering a very important topic today. It is a three-part series about rare earth mineral issues that we are hearing a lot about. I am going to go over the historical background of how we got here, what happened, and what the plan is. Today, we are actually going backward. We are going to do the plan first, then we will go through the background of how we got here and the similar pattern happening in other sectors of business.

It is very important for us to sit out and not take this lightly. With a notepad, we are studying together about what is going on. Thirty years ago, America sold its rare earth mineral industry to China one quiet transaction at a time. We did not notice until the magnets for our own missiles had to be bought back from Beijing. Today, through the pension fund sitting quietly in your own portfolio, we may be doing it again, this time with our capital instead of factories. For the first time in thirty years, something is actually being done about it. Whether it survives the next election is not someone else's decision; it is ours. It is important for us to be educated. I do not care about the election; governments fail all the time and they do not keep promises. That is not the issue right now that we have to pay attention to seriously and engage in.

In the previous program, I was talking about the monetary issue with the Iran war and briefly mentioned the deficit of China and the US trade deficit. I want to clarify because it is part of the rare earth mineral import seriousness. There are two different data points. The US Census Bureau said it was 6 million in 1985. I want to clarify because people might research it and think I was wrong. I was not wrong. It was 6 million according to the US Census Bureau, but 6 billion according to the Library of Congress research guide. There is a huge difference in data that needs to be reconciled. Most recommendations side with the Census Bureau figure because it is more mathematically close based on what was imported and exported.

Viewed in isolation, the 1985 figure looks almost trivial. A 6 million deficit is a rounding error against the size of the United States economy. Even 200 billion seems minimal as a number. This is exactly why the number is dangerous to read at face value. It is a starting point of the trend, not a meaningful figure on its own. It is important for us to understand the bigger picture of the micro and macroeconomics without just looking at a single number. Using the same US Census Bureau series, the deficit grew from 6 million in 1985 to 295.5 billion in 2024. That is an increase of 4.9 million percent. Even using the most recent tariff-reduced figure of 202 billion, the increase from 1985 is still roughly 3.37 million percent.

The trajectory is important. By any measure, this is not a linear growth; it is a compounding, accelerating dependency that was invisible year to year but is staggering over four decades. What we are experiencing right now with iron ore and what we experienced with COVID revealed that numbers do not really matter. We thought those were cheap items, and since we do not make a profit here, it does not affect our stock market, so we shifted to China. But when COVID hit, we realized those essential items are a matter of life and death. Essential antibiotics are not produced here, or are minimally produced here. If that stops, it affects every household.

This is the same shape as the rare earth story told in different currency. Nobody panicked over a number that started at 6 million. It did not look like an emergency in year one, year five, or year fifteen. It only becomes visible at the crisis once it is already compounded past the point of easy reversal. This is precisely how the Magnequench transaction and broader rare earth dependency went unnoticed. We are going to focus on the Magnequench transaction in the second program. We had a rare earth mineral processing company in the United States that was a leading company in the world, and that was sold to China in 1995, ten years after we began to have a trade deficit with China.

We have to notice this trajectory. It was not because any single year shift was alarming, but because no one was tracking the trajectory itself, only the year-over-year snapshot. Each administration comes in with new staff who look at the numbers for that year and think it is nothing compared to the total GDP, not thinking about going all the way back to 1985 to see how fast it is growing. A minimal-looking number left unmonitored and compounding for 40 years is how a country ends up depending on a rival for both its guided missiles and a very large share of its manufactured goods.

We are going over what we are doing right now to prevent that. Before, a lot of us did not know what was going on. Today, we are more informed. Rather than only leaders understanding what is happening, our public needs to be educated. It might be a boring subject, but we have to be engaged in it. We start with what is not an option anymore because Congress has already written hard deadlines into law, and those deadlines do not depend on who wins the next election. Under the provision passed as part of the 2021 National Defense Authorization Act, American weapons systems will be legally barred starting in 2027 from using magnets containing any material mined, refined, separated, or melted by China.

That is not a suggestion or a goal; it is a binding requirement already on the books, forcing the entire American defense industry to rebuild the supply chain it let disappear 30 years ago. The clock cannot pause; it is accelerating. New provisions in Section 1411 of the 2024 Defense Authorization Act set the longer horizon for complete American independence from adversary nations' rare earth sources by 2035. Underneath both those dates sit technical rules most people will never hear about, but they close the exact loophole this whole story turns on: the Defense Federal Acquisition Regulation Supplement, which is being rolled out in two phases.

The first phase already restricts finished Chinese-origin magnets in American weapons. The second phase, arriving in 2027 alongside the main deadline, extends that restriction all the way back to the raw material itself so a magnet cannot simply be relabeled or lightly processed somewhere else to quietly launder its Chinese origin. The watchdog has woken up and is checking all the sources to be accountable so we do not repeat the same mistake. We are turning. These deadlines exist because members of Congress from both parties looked at the history this series is about to tell you and decided in writing that this could not be allowed to happen again unchallenged. The law already reflects the lesson. What is still an open question is whether the country builds fast enough to actually meet the deadline.

The good news is that the government is already building and we are responding to the crisis. Everybody was happy with the direction things were going with cheaper items and globalism, but then the crisis happened and we realized that was not the narrative we wanted. Laws only matter if something is actually being built underneath them. In July 2025, the Department of Defense took a 400 million dollar equity stake in MP Materials, the company that reopened the Mountain Pass mine, making the US government its largest shareholder. Attached to that investment is a ten-year price floor of 110 dollars per kilogram for the key magnet materials, specifically designed to protect the company from the exact tactics China has used before.

China flooded the market with cheap supply the moment a Western competitor got close to being viable, which is the same tactic that helped bankrupt Molycorp in 2015. The Pentagon backed that floor with a further 150 million dollar loan to expand heavy rare earth separation at the same site and committed to buying up to 100 percent of the new magnet output from the planned second facility for its first ten years of operation. The direction is set and we are heading toward being independent. In February 2026, the White House announced Project Vault, a 12 billion dollar initiative to build the actual US strategic critical minerals reserve. This is the same basic concept as the strategic petroleum reserve created after the 1970 oil shock.

This time, it is applied to the material China has learned to weaponize instead of oil. China said a long time ago that while the Middle East has oil, China has rare earth minerals. They already set that tone. During that same period, we saw a 500 million dollar loan to Phoenix Tailings for a new domestic processing facility and a 150 million dollar equity stake in Atlantic Alumina to build the country's first large-scale gallium production line. There was also a series of Defense Logistics Agency contracts totaling nearly 26 million dollars awarded to two American companies: Noveon Magnetics in Texas and E-Vac Magnetics in South Carolina, to supply finished magnets to every branch of the US military.

This is good news and represents the direction we are in right now moving from dependency to independence. In the second program, I am going to talk about how the Magnequench GM-related company was sold in 1995. It will wake us up to how these transactions can go through without the public knowing. It affects not just a company that might benefit out of it, but the rest of us suffer. Those same tactics and directions need to be watched by us as citizens. Before, we trusted the government to do all the work for us, but over the years we realized that when it affects our personal lives, something is not working. I think everyone is feeling that we were going in the wrong direction and we have now woken up. This should not just be a moment of waking up; it has to be a permanent direction for national security reasons.

None of this is happening in isolation. In October 2025, the US signed the critical minerals framework with Australia, backed by an 8.5 billion dollar joint investment package giving both governments ownership stakes in new mining and processing projects. Japan has become a key financing partner for the rare earth supply chain across the Indo-Pacific, including a March 2026 agreement on deep-sea mineral research. Washington has opened parallel conversations with Brazil, Ukraine, and other source-rich nations so the country isn't simply trading one single point of failure in Beijing for another single point of failure somewhere else.

Taken together, defense officials have described deploying more than 4.5 billion dollars in capital commitment in just five months to close deals meant to help free the United States from market manipulation. That is a genuinely different scale of response than anything attempted in the decades after Magnequench closed its doors. Executive action can move fast, but it can also be undone fast by whoever holds office next. That is exactly why the legislation moving through Congress right now matters as much as anything the Pentagon has already spent, because a law, once passed, is far harder to quietly unwind than an executive program.

We see a similar thing happening in South Korea with the previous President Yoon trying to bring up national security issues, but he could not pass the law because he was surrounded by opposition that was more pro-China and pro-North Korea. He felt it was really urgent but he could not go anywhere, and unfortunately, martial law happened and a new, much more pro-China president is currently in power, creating many problems. We are at a similar position right now where one administration is trying to protect our national security by passing a law, but there is intervention by other groups of people who do not care about national security. That is something all citizens have to watch out for. It is not about a party issue or an election; it is about security.

Right now, the Secure Minerals Act would create a 2.5 billion dollar strategic resilience reserve run by an independent board rather than any single administration's executive model. That is happening. The Rare Earth Magnet Security Act is another one that would create a direct production tax credit of 20 dollars per kilogram, rising to 30 dollars for a fully domestic supply chain for American-made high-performance magnets. Those are important. The third bill is the Critical Minerals Security Act from Senator Angus King, which would require the government to formally map global critical mineral ownership every two years so the country is never again surprised by dependency it did not see coming the way it was blindsided by rare earth before that and by medical supplies during COVID. This is exciting news that is happening. Next week, I will talk about the history of how we got here so it makes sense. Thank you for listening to Yesterday, Today, Tomorrow. We will be back next week. Thank you.