Flynn: US billions for rare earths ‘missing the mark’

The US is channelling billions toward a handful of large rare earth producers while the junior miners, service providers and aging workforce that turn deposits into mines sit outside the effort, retired general Charles Flynn says.

Flynn, who commanded US Army Pacific and served as the army’s chief operating officer, wants the build-out run as a five- to 10-year industrial campaign. The gap he describes is wide: about 90% of the raw material the country mines still goes abroad for processing, and roughly half the mining workforce reaches retirement age by 2029.

Flynn compares the pattern to defence contracting, where capital concentrates on prime contractors such as Boeing, Lockheed Martin and Northrop Grumman while their subcontractors go unnoticed. 

He credits the Trump administration with bringing urgency to critical minerals, but says its money lands on the equivalent of the primes. A $200-million grant to a single company, with offtake five years away, leaves the next 18 months unanswered.

“The country needs to think in terms of industrial systems and not just a collection of announcements and grants,” Flynn said on The Northern Miner Podcast.

The pattern is already visible downstream. US-backed producers including MP Materials (NYSE: MP), Energy Fuels NYSE American: UUUU; TSX: EFR) and Phoenix Tailings continue to sell much of their output to buyers in Japan and South Korea because domestic magnet manufacturing has not expanded as quickly as upstream investment.

Three bottlenecks

Flynn identifies junior miners, service providers and the workforce as the constraints federal policy has yet to address.

Service providers run exploration, laboratory and chemistry work, pilot testing, land management and waste solutions — the work that takes a deposit to production. Flynn said their operators tell him the US looks open for business but offers no clear door to walk through. His firms, Flynn Advisors and Manifest Industries, position themselves as intermediaries between those companies and the government.

Mason jars

One factory visit illustrated the gap. At a magnet maker, Flynn was shown five mason jars, the fifth holding a finished magnet and the first four holding the materials at each stage behind it. He asked the chief executive at which jar his ownership of the material began. The answer was jar three; the contents of jars one and two were processed overseas.

“This is a magnet that goes in an F-22 or an F-35 or precision munition,” Flynn said.

The example illustrates how critical early-stage processing remains concentrated outside the US, even for products destined for advanced defence systems.

Mine forward

Flynn argues Washington should reverse how it finances critical minerals projects.

Rather than buying finished batteries, magnets or circuit boards for stockpiles, he proposes supporting projects at the deposit stage by signing letters of intent or leases with junior miners and releasing funding as projects advance from exploration through extraction and processing. In return, the government would receive a share of future production once operators prove themselves.

“The scale of funding matters less than the certainty of funding,” Flynn said. He recounted a service provider in the US southeast who told him he had no idea what he would do with a one-time cheque for $25 million or $50 million, but that $5 million or $6 million a year over five years would let him build a workforce and put mines into production inside 18 months.

Army land

Flynn also wants rare earth processing rebuilt on federal property already under government control.

He proposes modular processing plants that could be replicated across army bases and National Guard and reserve facilities in all 50 states, located near foreign trade zones to capture tax advantages while benefiting from the security and streamlined regulatory environment of military installations.

The long game

Behind the industrial argument sits a military one about staying power.

“Deterrence is not merely ships and aircraft and missiles and things that a nation possesses today,” Flynn said. “It’s really about the ability to replace losses, replenish your inventories, repair equipment, expand production, and basically sustain through a prolonged crisis.”

Flynn argues China deliberately built its rare earth dominance over more than a decade and now possesses leverage it has shown it is willing to use. He describes the US-China relationship as the defining strategic competition of the century.

He stops short of criticizing the companies receiving government backing. MP Materials and USA Rare Earth (Nasdaq: USAR) remain essential to rebuilding the supply chain, he said, but they represent only one part of an ecosystem that also depends on junior developers, suppliers and skilled workers.

“We should have started years ago, but we have to start now,” Flynn said. “And we’ve got to take a long-term view on this.”