The United States federal government is increasingly stepping up their game. Unsurprisingly, their goal is to insure a stable, verified source of rare earth materials—critical components in a wide variety of manufacturing processes. In a surprising strategy, the U.S. will take the controlling stake in MP Materials. This company is the operator of the only rare earths mine currently in active operation across the country. The aim of this initiative is to increase domestic production. It aims to decrease our dependence on foreign suppliers, particularly from China, which has a stranglehold on the rare earths industry worldwide.
China controls the rare earth mining industry, responsible for approximately 70% of worldwide activity. The country holds approximately 90% of the global refining capacity for these critical minerals. This virtual monopoly has given China the power to distort global prices and drive rival firms out of the market. The U.S. government’s unprecedented new investment only begins to reflect this strategic shift in how to address these challenges.
To that end, MP Materials has announced that they plan to open a new separation facility in the U.S. This investment stimulates the development of profitable industrial products from virgin raw materials. This expansion will triple at a stroke the supply of rare earths on a rare-earth basis. These materials are the lifeblood of advanced industries such as technology and manufacturing.
The U.S. federal government is leading from behind to make this possible. They entered into a $110 per kilogram minimum price contract with MP Materials for all neodymium and praseodymium production sold to them over the next decade. Indeed, these two rare earth elements are among the most prized on the globe. Their applications in high strength magnets and other key technologies further increase their value.
China’s growing dominance of the rare earths sector—and the potent implications of that dominance—has raised red flags. These concerns go beyond the U.S. to include several international organizations. Indeed, the European Parliament’s urgent and decisive response has been to condemn China’s rare earth export controls as “unjustified” and “aimed at being coercive.” In response, China’s foreign minister has hailed such export restrictions as a “sovereign right” and a “common practice.”
The still-ongoing U.S.-China trade war has only made it more difficult to access rare earths. In retaliation, Beijing has placed a punishing 125% tariff on U.S. goods. This includes all products that employ rare earths; this has only increased tensions between the two countries. Notwithstanding these challenges, both countries have participated in trade negotiations focused on increasing access to these vital materials. Our recent convenings in London and Geneva have continued this important work, laying the groundwork to create more equitable trade practices around rare earths.
James Litinsky, the founder and chief executive of MP Materials, couldn’t stress enough how important this step was.
“This initiative marks a decisive action by the Trump administration to accelerate American supply chain independence,” – James Litinsky.
That’s because rare earths are of tremendous strategic importance. They are extremely important supply chains for other critical industries, including renewable energy, defense, and consumer electronics. These seventeen rare earth elements are key to building a clean, equitable global economy. This reality has made the search for dependable sources, especially domestic ones, more critical than ever.