The Journal. - One American Company Taking on China's Rare-Earth Dominance

Episode Date: July 21, 2025

Tiny rare-earth magnets are used for building phones, electric cars, and submarines, but nearly all of them are mined and made in China. One U.S. company is trying to change that. WSJ’s Jon Emont spoke with MP Materials’ CEO about his goals for the mine, which has now made deals with the Pentagon, General Motors, and Apple. Can this industry come back the U.S.? Jessica Mendoza hosts.  Further Listening: -Why Trump Wants Ukrainian Minerals  -Greenland Has Tons of Minerals. So Where Are All the Miners?  Sign up for WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

So I'm standing in front of what's likely the second largest rare earth mine in the world. That's our colleague John Eamon at a mine called Mountain Pass out in California's Mojave Desert. It looks like the Grand Canyon. It's this giant crater that's been dug for decades now. And you just see these ridges of red and gray stone and… John visited the mine back in June. And he went to see it because it's the site of the

U.S.'s largest underground reserve of rare earth minerals. These minerals are used to make special magnets that are crucial for all kinds of things. I asked John to explain them. Rare-earth magnets are extremely powerful. They can attract objects hundreds of times. They're weight, and they're very useful in things like electric motors, which are used in automobiles, including electric vehicles. They're used in headphones and for audio devices.

They have a lot of military uses. So they're needed in missile systems. They're needed in F-35 fighter jets. They're needed in nuclear submarines. They're very important for a range of high technology applications. Most of the rare earth magnets that are used today come from China.

And as geopolitical and economic tensions between the US and China grow, the US is trying to get back in the game. The mine John visited is at the center of the country's effort to build up its rare earth capacity. And the issue has become increasingly urgent. The United States has a huge problem on its hands. There are just a lot of industries that have been totally eroded in the United States. And few listeners here would have thought much about rare earth magnets until maybe

a couple months ago. But I mean, it's dire. The United States needs to think really seriously about how it's going to build all this stuff back. Now, the federal government is funneling billions of dollars into the company that owns the Mountain Pass mine, hoping its success can transform the U.S. rare earth industry. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Monday, July 21st.

Coming up on the show, how one American company is taking on China's rare earth dominance. The Mountain Pass mine sits on a significant trove of rare earth minerals. But getting them out and processing them for use has been difficult. So difficult that the company that previously owned the mine went bankrupt. Then, in 2017, a new player came in. A company called MP Materials. Its CEO, James Latinsky, saw a huge opportunity in the rare earth industry, and specifically in the Mountain Pass mine.

Here he is. I couldn't believe that no one was going to show up to buy this. It's a world-class asset. It's obviously really important for electrification and certainly national security. It's really arguably the best rare earth orbity in the world. We could turn this thing around. But turning the mine around was an uphill climb.

For one thing, the company needed cash to get things up and running. Here's John again. It wasn't clear where that money was going to come from. Investors were quite reasonably wary of throwing money at this mine, which could easily have become a money pit. As it was starting out, MP Materials found a source of revenue, a Chinese company that would take their raw minerals and refine them. Refining is the next step in the magnet making process, and it's really difficult and expensive.

Rare earths come out of the ground all mixed up, and they have to be separated to be useful. So there's a really complicated process to sort of unjumble all these different rare earths that are typically found on the earth together and have to be disconnected from each other. And it's just not easy, it's expensive, a lot can go wrong, it requires a lot of chemicals. John says that people in the industry have a metaphor to explain how refining works. It's sort of like how if you have a bag of M&Ms, you sort of like developing a chemical process to first extract the blue M&Ms from the other M&Ms,

and then developing a process to extract the cocoa from that blue M&M. So there's just a lot of separating and extracting to get the very particular parts that you need. China has gotten really good at doing all of this. These days, more than 90% of rare earth refining happens there. And China does it at a very low cost. MP Materials did eventually get the Mountain Pass mine up and running.

But Latinsky, the MP Materials CEO, wasn't satisfied with just mining the ore. He wanted to decouple his industry from China as much as possible, which meant bringing refining back to the U.S. as well. Here he is again. We've been screaming from the rooftops about this as a supply chain risk. We could have all the rarest in the world in America today, and we'd still be sending it to China to get magnets, right? And so I felt like the challenge wasn't just Mountain Pass.

The challenge was the supply chain problem. So MP started investing in refining minerals stateside. It built out a processing facility in California. Our colleague John went to visit that facility, and it was filled with humming machinery. I'm in this giant room with these roughly 10-foot tall bats called mixer settlers. It's like the terracotta warriors, I'm telling you. It's just as far as kind of the eye can see, just these rows of vats.

And in each successive row, it just gets a little purer. After refining, the final step in the process is making the actual magnets. Much like with refining, the vast majority of magnet making is done in China. So MP Materials has also spent the last few years developing a third facility, a magnet factory in Texas. Along the way, the US government started taking notice

of what MP was doing. It chipped in grants to support the company's efforts. Grants that added up to about $100 million. By 2021, MP had scored a major U.S. customer, General Motors. GM agreed to a long-term contract to buy magnets made by MP, which will be used to power EV motors. In a joint statement, the companies called the deal a quote, strategic collaboration to develop a fully integrated US supply chain

for rare earth magnets. Here's MPCEO Latinsky again. Clearly, the right thing to do is to make sure that we're not relying on the Chinese for this supply chain. And so I think that although it looks a little harder in the short term, by taking on this enormous amount of risk and investment, that we have positioned ourselves to be the national champion in leading this supply chain solution years and billions ahead of many others.

MP Materials was still small relative to China, but the company was gaining momentum. Then, earlier this year, the escalating trade war between the U.S. and China placed the company right at center stage. That's next. Are you crushing your bills? Defeating your monthly payments. Sounds like you're at the top of your financial game. Rise to it with the BMO Eclipse Rise Visa Card.

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in sparkling, frozen, or lemonade. Order yours on the Tim's app today at participating restaurants in Canada for a limited time. in Canada for a limited time. In April, President Donald Trump announced his Liberation Day tariffs. And China got some of the highest rates. 34% tariffs across the board. And even higher duties on particular sectors. And those numbers kept rising.

An extra 50% tariff on China. A 104% tariff. Tariff rate on China to now 125%. Add up to 145%. Actually hearing from the Chinese president Xi Jinping himself, Xi's saying that his nation is quote unquote not afraid. The Chinese government fired back. It hiked up its own tariffs.

And it also went after rare earth exports. Well, meanwhile, China are retaliating not just with tariffs of its own, but also by cutting off a supply of critical minerals. Beijing is restricting the export of rare earths and magnets that are almost entirely refined by China. Here's our colleague John Emont again. China announced that it was going to place new export controls on certain types of rare earths and rare earth magnets.

And pretty quickly automakers and electronics companies and everyone who relies on rare earth magnets learned that this was different. The Chinese government began to strictly regulate Chinese suppliers, requiring them to get permission from Beijing before selling magnets to foreign companies. The government also put together a list of China's rare earth scientists to make sure they don't share their knowledge abroad. Beijing has said measures to regulate rare earth exports are to uphold national security. I mean, it's pretty obvious play if you were China and you don't like these tariffs and the United States also has other export controls and things like semiconductors that you don't

like that are, you know, restricting your advances in artificial intelligence. Well, what's one easy way to strike back? Well, these little magnets. The impact on US manufacturing was immediate. Ford had to temporarily pause production at at least one of its factories. Others scrambled to look for alternative sources of rare earths outside of China. All of these escalations forced the U.S. and China to come to the table. Senior Trump administration officials met with their Chinese counterparts in London today

in an effort to strike a deal between the world's two largest economies. Mr. Trump said it was a good conversation, and the Chinese leader said he hoped it could lead to a win-win solution for the United States and China. In June, the two countries struck a truce. China eased its restrictions on rare earth minerals, and it asked the U.S. to loosen restrictions on the sale of technologies like computer chips.

But the trade war supercharged the need for more domestic refining and production of rare earth magnets. And the U.S. needs it fast. Enter MP materials. What has this moment meant for MP materials, given that they're basically the only company in the U.S. that has expertise on this whole rare earths process. As you can imagine, lots of companies were knocking on the door being like, help us. But you can't just snap your fingers and make this stuff go.

So there's so many different processes, right? They still were only producing magnets at a pilot scale at this point. So they didn't have their big magnet production facility set up yet. So what they did was they forged ahead with their plans. They moved ahead with plans to build out their magnet facility as quickly as they can to start producing magnets.

MP's output increased more than five times last year, and the company needs to keep growing. Earlier this month, it made a deal with the U.S. government. The goal, according to the Department of Defense, is for MP to increase its rare earth mineral production by 10 times its current planned output. The Department of Defense just made a really unprecedented deal and said, okay, we're going to invest hundreds of millions of dollars in your company and we are going to guarantee a price for for the rarest you produce.

You build it, we will buy it. We will make sure that there's a buyer. So the US is basically guaranteeing that they will buy it. It's a pretty, that sounds like a pretty big bet. Yes, huge. I mean, it's huge because what MP is doing is it's going to triple the size of the facility in Fort Worth that I visited and then it's going to build another magnet facility in a location to be determined that's going to be more than twice as big as that.

And I mean, this is for a company that Is still not commercially producing magnets and and in the you know Department of Defense is just saying Do it do it fast and you don't have to worry really about the economics as we've got those guaranteed as long as you're producing Magnets you are you are golden. What does it say to you that the Department of Defense is willing to make this bet? It just tells you the utter desperation of the Defense is willing to make this bet? It just tells you the utter desperation of the United States to solve this problem. And at a time when there's so much tension between the United States and China and both sides are looking for different weapons to use against each other, it shows you that the Department

of Defense really wants to take this issue off the table and as much as possible wants to make sure that United States industry cannot be held hostage by China in the future. A White House spokesman said the deal, quote, marks a major step in rebuilding America's domestic rare earth industry. MP materials stock jumped around 50% on the day of the announcement and has tripled this year. And last week, the company announced another major deal, a $500 million contract with Apple.

Apple uses these magnets to do things like make the iPhone buzz and vibrate. The tech company described it as a multi-year deal, and MP said magnet shipments to Apple are expected to begin in 2027. So bringing manufacturing back into the U.S. is a huge part of the Trump administration's agenda. Would it be fair to say that all of this is a step in that direction? Yeah, I mean, I think the Trump administration would likely see this as a win, right? You know, the week after they announced that they were making a big investment in an American

mining and manufacturing company, right? Mining and manufacturing being two industries that they're trying to really reassure that Apple is committing to buy magnets from this company made in the U.S. Yeah, I mean, I think that that's probably exactly how Trump wants us to go. That's all for today, Monday, July 21st. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in today's episode by Gavin Bade, Rebecca Fung, and Hannah Miao. Thanks for listening. See you tomorrow.