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IperionX (IPX) Titan project in Tennessee projects $813M NPV and 39.4% IRR, yet single projects can’t replace China’s multi-decade processing ecosystem.
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The Pentagon’s FY2027 budget commits $48.8 billion to close the rare earth processing gap China built over decades of institutional know-how.
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America’s rare earths problem is often framed as a mining problem. Dan Dreyfus, founder of Borneite Capital, argues that’s the wrong way to look at it because the United States has access to plenty of rare earth deposits. The real challenge is processing them. Speaking on a recent All-In Podcast episode, Dreyfus explained that China dominates the specialized refining and separation capabilities needed to turn raw materials into usable products, creating a critical bottleneck that cannot be solved by simply opening new mines.
The Myth of Scarcity
Dreyfus made a counterintuitive point early in the episode: “Rare earths are everywhere, and the technology to extract rare earths is going to allow us to have a huge abundance of them. But the problem is processing them.” Despite the name, “rare earth” deposits are widely distributed, and extraction technology continues to improve.
The real question with rare earth metals is what needs to be done to improve our processes with the ore once it leaves the ground. Federal data underscores the broader industrial challenge: U.S. mining value added contracted to $370.9 billion, just 1.2% of GDP, in the fourth quarter of 2025, with growth at -2.2%. It’s challenging to build a larger processing base when the underlying extractive sector is shrinking.
Processing Know-How Becomes the Real Chokepoint
According to Dreyfus, “The Chinese have all the technological know-how to convert what you take out of the ground and convert it into something that we can use.” Rare earth separation and refining is a complex, capital-intensive, environmentally demanding industrial capability built over decades. He argues that you can permit a mine faster than you can replicate that institutional knowledge.
The Pentagon’s FY 2027 budget request reflects how seriously Washington is taking that gap, with $48.8 billion targeted at critical mineral vulnerabilities and a 5-year “mine-to-magnet” rare earth investment strategy running through Defense Production Act Title III and the National Defense Stockpile. The budget explicitly calls out rare earth element metallization, permanent magnet production, and processing of critical materials waste and recycling streams as priority gaps.
