High-performance magnet producers in the US are calling on the government to unite federal agencies in tackling a perceived looming rare earth metals "supply crisis".

This follows the decision by Arnold Magnetics to sell one of its Chinese businesses to invest in rare earth production in a venture with Chevron oil offshoot, Molycorp Minerals, in the US. Arnold also plans to increase magnet production in Europe.

The US Magnet Materials Association (USMMA), founded in 2006, has submitted a proposal directed at the federal departments of Commerce, Energy, State and Defence, as well as trade and scientific departments.

Government financing guarantees and investments in the supply chain could be more effective than a physical stockpile in ensuring US access to rare earths, according to Molycorp Mineral's CEO, Mark Smith. "China, Japan, (South) Korea are all stockpiling" strategic metals and minerals such as rare earths, he said.

He noted, however, that there are challenges to building a traditional stockpile of rare earths due to their relatively small quantities and the fact that they can be subject to big price swings, which makes long-term planning difficult.

Supply of rare earths, which include elements such as lanthanum, cerium and neodymium that are used in magnets, metal alloys and batteries, is currently dominated by China.