Washington, D.C. The US government has announced a strategic investment to become the largest shareholder in the country’s only operational rare earths mine, Mountain Pass, California, marking a significant shift in efforts to secure domestic supply of these critical materials essential to modern technology and national security.
US Department of Defense Secures Rare Earths Supply with $400 Million Investment
MP Materials, the owner and operator of the Mountain Pass mine, has entered into a comprehensive agreement with the US Department of Defense (DoD) to reduce America’s heavy dependence on Chinese imports of rare earth elements (REEs). As part of the deal, the DoD will purchase $400 million in newly issued shares from MP Materials, making it the mine’s largest shareholder.
The agreement guarantees MP Materials a minimum price of $110 per kilogram for its neodymium and praseodymium output two of the most critical rare earth elements used globally in the production of high-strength permanent magnets. These magnets are integral components in electric vehicles, wind turbines, military radar systems, and medical devices such as MRI scanners.
James Litinsky, founder and CEO of MP Materials, called the initiative “a decisive action by the [Trump] administration to accelerate American supply chain independence,” emphasizing the strategic importance of reshoring the US rare earths industry.
Addressing China’s Dominance in the Global Rare Earths Market
China currently dominates the rare earth sector, controlling roughly 70% of global rare earth mining and about 90% of refining capacity, a position achieved over decades through substantial government support and industrial policy. This concentrated control has been instrumental in fueling geopolitical tensions, particularly in US-China trade relations.
“The overwhelming reliance on China for rare earth processing has posed substantial strategic risks to the US,” said Dr. Lisa Murray, a senior analyst at the Center for Strategic and International Studies. “The Mountain Pass investment is a critical step towards mitigating supply chain vulnerabilities.”
Historically, MP Materials’ output was mainly sold to Shenghe Resources, a Chinese government-linked entity, which refined the rare earth concentrates in China. However, escalating tariffs amid the US-China trade war disrupted this arrangement. China imposed 125% tariffs on US goods in retaliation to President Trump’s 145% tariffs on Chinese imports, making the export of rare earth materials from Mountain Pass to China commercially untenable.
In response, MP Materials ceased shipments to China earlier this year, citing not only economic impracticality but also national security concerns.
Building Domestic Refining Capacity: A Key Move
A pivotal component of the new agreement requires MP Materials to construct a processing facility on US soil to convert raw rare earth concentrates into usable materials. The precise location remains under review, but it will cater to both defense and commercial sectors. This vertical integration aims to establish a fully domestic rare earth supply chain from extraction to refinement reducing reliance on foreign intermediaries and vulnerabilities to supply disruptions.
“This expansion will help the US regain control over an essential segment of the rare earth value chain that China currently monopolizes,” explained Helen Jiang, a materials scientist at the National Renewable Energy Laboratory. “Developing domestic refining capacity is vital for ensuring the security of supply for critical industries.”
Strategic and Economic Implications
Rare earth elements are indispensable for modern technological innovation, powering everything from smartphones and electric motors to advanced military systems. America’s dependence on imports—primarily from China—has long been a strategic liability.
The trade war catalyzed changes in global rare earths dynamics. Beijing’s introduction of an export licensing regime directly limited the flow of these materials to US manufacturers, prompting Washington to seek diversified sources and domestic production.
The $400 million DoD investment signals a continued commitment to securing supply chains aligned with the broader strategic vision of making the US economy more resilient and self-reliant, particularly in sectors critical to national security.
Dr. Steven Rogers, an expert in supply chain economics at Georgetown University, notes, “Beyond defense, this initiative has profound implications for the US industrial base, particularly with the ongoing transition to clean energy and electric transportation, both of which are heavily reliant on rare earths.”
International Reactions and Broader Context
Beijing’s near-monopoly on rare earths has drawn ire not only from Washington but also from European policymakers. The European Parliament recently passed a resolution condemning China’s export controls as “unjustified” and “coercive,” urging the European Commission to expedite implementation of the Critical Raw Materials Act. This legislation seeks to enhance Europe’s independent access to critical raw materials like rare earths.
During a recent visit to Germany, China’s Foreign Minister Wang Yi defended the export controls as China’s “sovereign right” and a “common practice” for countries managing dual-use goods with both commercial and military applications.
Future Outlook: Towards Strategic Autonomy
The US initiative to bolster its rare earth supply chain via MP Materials is part of a broader trend to recalibrate global supply dependencies. Experts expect the move to catalyze further investments in mining, processing, and recycling sectors domestically.
“We’re witnessing the start of a new chapter in critical minerals security,” said Maria Lopez, policy director at the Minerals Security Partnership. “Ensuring stable, diversified supply chains is vital not just for economic competitiveness but for geopolitical stability.”
The new facility under development by MP Materials sets a precedent for public-private partnerships in addressing strategic resource vulnerabilities. Over the next decade, US policy experts anticipate increasing federal involvement in critical mineral supply chains through investment, regulation, and research support.
Background: Rare Earths and the US-China Trade War
Rare earth elements encompass 17 chemically similar metals vital for high-tech manufacturing and clean energy technologies. Despite their name, these elements are relatively abundant in the earth’s crust but are challenging to mine and refine economically.
The US once led global production but saw its industry decline amid environmental concerns and Chinese competition. By the 1990s, nearly all US rare earth supply had been supplanted by imports from China.
The ensuing geopolitical implications gained prominence during the Trump administration’s trade measures, which aimed to counter China’s strategic use of economic instruments. Securing rare earths domestically is seen as crucial to mitigating risks of supply disruptions in potential future conflicts or diplomatic standoffs.
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