The US government is investing in rare earths production, becoming the biggest shareholder in California’s only operational mine. This move aims to reduce America’s dependency on Chinese imports and boost domestic supplies.
Rare earths are crucial for modern technology, including electric cars and wind turbines. China controls about 90% of global processing capacity, leading to a trade war with the US. To address this, MP Materials, which owns the mine, has entered an agreement with the US Department of Defense that guarantees a minimum price of $110 per kg for its neodymium and praseodymium output.
These rare earths are essential for making permanent magnets used in smartphones, MRI scanners, and electric motors. The deal also involves building a new US facility to increase production, funded by the Department of Defense buying $400m of newly created shares.
The move is part of efforts to repair the strained US-China trade relationship. Increased tariffs led China to impose export controls, limiting access to rare earths for American manufacturers. An agreement was reached to improve access, but the US remains concerned that it has not been implemented quickly enough.
Domestic supplies are seen as the best bet for increasing access to rare earths, crucial for Trump’s economic vision. Europe also criticizes China’s export controls, urging the European Commission to speed up implementation of the Critical Raw Materials Act.
China’s foreign minister Wang Yi downplayed concerns, saying it’s a sovereign right and common practice to control exports of goods with both commercial and military uses.
Source: https://www.bbc.com/news/articles/c3r91rngq2do