The Trump government plan to exploit rare earth minerals in the US and counteract China's monopoly

Workers carry rare earth bags in a truck on the Mountain Pass mine, in California — Photo foot, The rare earth mine of Mountain Pass, in California, is the only one of that type in operation in the United States.

- Author, Jonathan Josephs
- Author's title, Commerce reporter, BBC News
1 hour

The United States government aims to become the largest shareholder of the only rare earth mine in operation of that country.

It will also take a series of additional steps to support the future of the operation in Mountain Pass, California.

Rare earth minerals are essential for a large number of modern technologies, such as electric cars and wind turbines.

Access to these metals is one of the central factors of the commercial war between the US and China, with Beijing by controlling approximately 90% of the global production capacity.

MP Materials, owner of the mine in Mountain Pass, has reached an agreement with the US Department of Defense with a view to reducing the American dependence on rare earth imports.

The agreement establishes that during the next 10 years the US government will commit to pay MP Materials the minimum price of US $ 110 per kilo of its neodymium and proseodymium production.

Those are two of the minerals in greater demand for the 17 different key rare earths for the global economy, since they are crucial in the manufacture of permanent magnets, which are found in all types of devices, from smartphones to the scanner of IRM and electric motors.

The measure occurs in the midst of the concern that China is taking advantage of its almost total control of the industry to lower prices and force companies in other countries to bankruptcy.

A hand holds a brown sandy substance containing rare earths — Photo foot, There are 17 different rare earths and are fundamental in the manufacture of modern technologies.

According to the new agreement, MP Materials will build a new US installation to increase the amount of raw matter of the mine that can be transformed into usable products.

The place is still defined, but the company states that it will serve both defense and commercial customers.

Much of this project will be funded by the Department of Defense that will acquire US $ 400 million in recently created assets.

“This initiative marks a decisive action of the Trump government to accelerate US independence in the supply chain,” said the founder and executive director of MP Materials, James Litinsky.

Mine in the US with Chinese capitals

Until now, Shenghe Resources, a company that is partly owned by the Chinese government, has been one of the largest shareholders of MP Materials.

Shenghe has been the only customer of the production of the Californian mine, which meant that their rare earths were sent to China for refinement.

At the beginning of this year, MP Materials announced that it would stop doing that due to the huge 125% tariffs that China imposed on US assets, in response to 145% levies that President Trump imposed on Chinese imports.

The company added that tariffs meant that sending their product to China was not commercially viable nor was in line with the national US interests.

That position has not changed since the tariffs were reduced.

An official opens a container with neodymium in the neo -material factory Technologies Inc.'s Magnequench, in Tianjin, China — Photo foot, For years, the Chinese government supports the rare earth industry and dominates the market.

Rare earths have been one of the main factors of efforts to repair the commercial relationship between China and the United States, which has deteriorated since Donald Trump returned to the White House.

A rise in tariffs led Beijing to impose a new regime to license exports that severely limited the volume of material that reached American manufacturers.

An agreement to improve this access, in exchange for raising some of the export restrictions that the US imposed in other areas, was the central theme of commercial conversations in London and Geneva between the two largest economies in the world.

Despite that commitment, the US complained that it was not implemented quickly.

In the longer term, internal supplies offer the US the best probability of increasing access to rare earths that are crucial for manufacturing that is a fundamental part of Trump's economic vision for his country.

China's export controls have also been criticized in Europe, with the vote of a European Parliament resolution that described those “unjustified” and “coercive intention” pekin policies.

The resolution also urged the European Commission to accelerate the implementation of the act of critical raw materials, which entered into force last year with a view to reducing Europe's dependence on imports.

In a visit to Germany last week, China's Foreign Minister Wang Yi, fell importance to these issues, stating that it was the “sovereign right” of his country, as well as “a common practice” to control the export goods that have both commercial and military use.