You're comparing an apple to a car, one is the process of obtaining a resource whereas the other is a refining process, additionally one was essential at one point in history, has an industry backing it, and has the skills and base already to procure and complete all steps needed. You're comparing that to one which is centralised outside already which functions fully and due to the massive impact results in no reason (As we very clearly see) to move it away from said centralised location.

Can Europe and the US refine rare earth? yes, to imagine they couldn't would be rather idiotic. The main reason why this isn't done is due to ecological impactful reasons and thus remains the status quo.