The The Trump administration The push to secure U.S. supply chains of rare earth minerals amid trade tensions with China includes a public-private partnership with a domestic producer that now has the Pentagon as its largest shareholder.
In July, the War Department announced a multibillion-dollar deal that included investments and long-term purchase commitments to buy materials from MP Materials, which is involved in mining. rare earth minerals and processing and refining the metals and manufacturing magnets.
The Department of War has made a $400 million investment in MP Materials preferred stock, which the company is using to expand its rare earth separation and processing capabilities as well as its magnet manufacturing capacity to better meet the demands of defense and commercial customers.
TRUMP, AUSTRALIAN PM SIGN $8.5B CRITICAL MINERALS DEAL TO COUNTER CHINA DOMINANCE IN RARE EARTHS
Rare earth metals are used in a range of applications and are a crucial part of many high-tech products, ranging from consumer-oriented devices such as smartphones and electric vehicles to military equipment such as radars and cruise missiles.
China is the largest producer in the world of rare earths and has the largest reserves, according to a report by the US Geological Survey (USGS), and has threatened to use its power to limit US supplies amid trade and geopolitical tensions.
CHINA RESPONDS TO US-AUSTRALIA RARE EARTH DEAL
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| MP | MP MATERIALS CORP | 57.54 | -2.18 |
-3.65% |
The Chinese government has taken steps to implement export controls on rare earth metals, and while it has agreed to suspend some of those restrictions, it reportedly plans to prevent U.S. military contractors from obtaining shipments beyond that, the Chinese government said. The Wall Street Journal.
“The Chinese recognize that they have taken over a handful of industries. They wanted to grow their economy as well as strengthen their military and ultimately gain a dominant position on the world stage. And we let them in, we let them in. That was smart of them, but we are learning quickly in this country, and now we know we have to solve this problem,” Litinsky said.
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MP Materials is tripling capacity at its Fort Worth plant to process magnets for GM and Apple, while also building a new factory to meet the needs of the Pentagon.
The company previously said the new facility is expected to be operational in 2028, at which point MP Materials estimates production capacity for rare earth magnets is estimated to reach 10,000 tons.
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MP Materials also plans to expand its heavy rare earth separation capabilities at its facility in India Mountain Pass, Californiawhere rare earth metals are extracted, separated and refined.
