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MP Materials, operator of the Mountain Pass mine in California’s Mojave Desert, is ramping up supplies of the critical ingredients and magnets used in autos, electronics and military hardware as China tightens exports.
In light of recent trade tensions, MP Materials is rapidly increasing its output of rare earth minerals, vital for the production of electric motors found in electric vehicles (EVs), gadgets, and defense machinery. Jim Litinsky, founder and CEO of MP Materials, is experiencing an unprecedented surge of demand as businesses seek alternative suppliers following China’s restrictions on exports of these essential minerals.
“The urgency is unlike anything I’ve encountered,” Litinsky stated in an interview. “It’s an exhilarating yet challenging time for us.”
Operating the only rare earth mine in the United States, located at Mountain Pass, California, Litinsky’s company supplies crucial materials such as neodymium and praseodymium. These elements are fundamental in creating powerful electric motors, integral to the automotive, electronics, and defense sectors. MP Materials employs a workforce of over 800 to extract and refine these minerals, enabling companies like General Motors to produce EV motors. Looking ahead, the company plans to manufacture high-performance magnets at a new facility in Texas, positioning itself in a market predominantly controlled by China.
The Mountain Pass mine located near California’s border with Nevada.
MP Materials
Currently, the overwhelming majority—90%—of rare earth metals are processed in China. The nation accounts for nearly 95% of all rare earth magnets, which are highly valued for their strength and stability, and the United States imports approximately 7,000 tons annually, almost entirely from China. This reliance raises significant concerns regarding supply chain vulnerabilities for American industries. Amid escalating trade tensions, China announced new restrictions on exports of certain rare earth minerals, stopping shipments critical for manufacturing magnets.
“The challenge for various industries dependent on motors is China’s significant influence over rare earth minerals,” pointed out a board member from a U.S.-based automotive manufacturer who preferred to remain anonymous. “The recent export restrictions are a major concern; it jeopardizes our ability to produce motors and other products reliant on magnetic components. It’s a dire situation.”
Given these circumstances, MP Materials has become the go-to supplier for those requiring rare earth materials not affected by trade barriers. Equity analyst Ben Kallo noted in a recent report that MP is “the sole player in the market” for this newfound demand.
Amid surging domestic demand and the challenges posed by tariffs, MP Materials has made a strategic decision to cease shipments of rare earth concentrates to China, historically its largest customer, which constituted 90% of its revenue. The company recorded $144.4 million in such sales last year, highlighting the financial risk involved. Instead, Litinsky aims to increase sales to buyers in the United States, Japan, and South Korea.
“Selling our critical materials under excessive tariffs isn’t sustainable or aligned with U.S. interests,” Litinsky stated. “We have been preparing for this pivotal moment since the company’s inception.”
Should MP navigate the immediate financial challenges while adapting to the tumultuous trade environment, it could emerge in a strengthened position, establishing a robust domestic supply chain for critical minerals. Furthermore, MP’s stock has surged by 69% this year.
MP Materials’ rare earth magnet factory in Fort Worth, Texas.
MP Materials
The reliance on China for rare earth magnets has raised concerns for national security, particularly regarding military supplies, which rely on these materials for products like missiles and drones. As MP enhances its production capabilities, it may assume a pivotal role in reshaping this critical supply chain.
“The importance of rare earths has ascended significantly in geopolitical discussions, and MP could play an advising role for the U.S. government in developing strategic plans moving forward,” Kallo remarked in early April, before the company’s exit from the Chinese market was publicly confirmed.
Former Gold Mine
MP Materials has been on a strategic journey over the past eight years to transform itself in the wake of earlier challenges. The Mountain Pass mine, which initially opened as a gold mine in 1936, saw the discovery of rare earth deposits in 1949. Commercial extraction began in the early 1950s, but the mine faced operational challenges over the years, leading to its closure in 2002 as competition from cheaper Chinese exports increased.
The mine was sold to Molycorp Minerals in 2008, which resumed production in 2012 but ultimately failed to maintain operations and declared bankruptcy in 2015. Shortly thereafter, Litinsky seized the opportunity to control the mine, believing he could turn it into a profitable venture.
“I’m not a miner by trade,” Litinsky acknowledged. “Initially, I anticipated someone else would find a solution. However, when it went bankrupt, nobody stepped in, which led to a significant decline in operations, raising doubts about its viability.”
After a thorough evaluation, Litinsky recognized the mine’s substantial potential despite previous shortcomings in its operational processes, suggesting it had one of the best rare earth ore bodies globally.
His acquisition was facilitated by funding from Shenghe Resources, a leading Chinese rare earth mining company, which provided a $50 million presale order for concentrates from Mountain Pass in 2017. Though Shenghe holds an 8% stake in MP, it does not have operational control or board representation, positioning MP to act independently as it withdraws from the Chinese market.
MP Materials
Mining, Refining, Metal, Magnets
MP Materials stands out in the U.S. not just for its rare earth mining capabilities but also for its refining operations.
“What is crucial here is the ability to refine rare earth elements and manufacture magnets for electric motors,” noted a recent statement from Elon Musk, which acknowledged the implications of China’s new export regulations.
MP is taking steps in this direction; earlier this year, it began commercial production of neodymium and praseodymium metal in Fort Worth, necessary for producing magnets. The firm has initiated pilot production at its new plant, with plans for the first commercial output of batteries slated for late this year.
In its initial phase, the new facility will produce up to 1,000 tons per year of rare earth metals and magnets, with ambitions to increase this capacity to 3,000 tons. Litinsky envisions expansive opportunities ahead: “Our potential for growth is significant across all areas of our operations.”
Startup Rivals
While MP Materials is currently the only operational rare earth mine, it is not the sole U.S. entity attempting to mitigate reliance on Chinese supplies.
Noveon Magnetics, located in San Marcos, Texas, is pursuing plans to establish a facility capable of producing up to 2,000 tons of magnets, utilizing a mix of scrap, materials sourced from Australia and Southeast Asia, and recycled metals. Meanwhile, USA Rare Earth is constructing a magnet plant in Stillwater, Oklahoma, aiming for a future output of up to 5,000 tons annually.
Additionally, the Minneapolis-based startup Niron is innovating to eliminate the need for rare earth elements altogether by developing alternative magnets made from iron nitride, which utilize more readily available and cost-effective raw materials.
Despite the emergence of competitors, MP holds a significant advantage with upcoming contracts to supply magnets to General Motors and new agreements with two other major automakers, likely placing them in the ranks of the world’s five largest manufacturers. The firm is also exporting its NdPr metal to customers in Japan and South Korea, potentially linking them with automotive giants Toyota and Hyundai.
In conjunction with halting rare earth magnet exports, China has explicitly listed certain “heavy” rare earths—essential minerals like samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium—as restricted exports. Although only trace amounts of these minerals are needed for magnets, they are also crucial in various products, including military hardware and medical devices.
MP Materials possesses abundant supplies of these rare minerals and has begun stockpiling them in anticipation of future demands, as stated by company spokesperson Matt Sloustcher.
This fortuitous timing aligns with Litinsky’s broader vision. He asserted, “Our mission from the start has been to address the risks associated with a single point of failure in the supply chain, especially when that point is tied to a geopolitical adversary. This has the potential to become a significant national security concern, and we’ve been vocal about these issues for several years.”
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