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

Summary

Podcast Summary: The Journal – "One American Company Taking on China's Rare-Earth Dominance"

Episode Information:

• Title: One American Company Taking on China's Rare-Earth Dominance
• Release Date: July 21, 2025
• Hosts: Ryan Knutson and Jessica Mendoza
• Produced by: The Wall Street Journal & Spotify Studios

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Introduction and Context

In this episode of The Journal, host Jessica Mendoza delves into the critical issue of rare earth minerals and the United States' efforts to reduce its dependency on China. The discussion centers around MP Materials, the company revitalizing the Mountain Pass mine, the largest rare earth mine in the U.S., and its ambitious plans to challenge China's dominance in the rare earths market.

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The Mountain Pass Mine: A National Asset

The episode opens with reporter John Eamont providing a vivid description of the Mountain Pass mine:

John Eamont [00:06]: "So I'm standing in front of what's likely the second largest rare earth mine in the world."

Jessica Mendoza [00:12]: "That's our colleague John Eamont at a mine called Mountain Pass out in California's Mojave Desert."

John describes the mine's vast landscape:

John Eamont [00:18]: "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."

The Mountain Pass mine houses the U.S.'s largest underground reserve of rare earth minerals, essential for producing powerful rare earth magnets used in various high-tech and military applications.

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Understanding Rare Earth Magnets

Jessica asks John to elaborate on the significance of rare earth magnets:

John Eamont [00:52]: "Rare earth magnets are extremely powerful. They can attract objects hundreds of times their 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, you know, for audio devices. They have a lot of military uses. So they're needed in missile systems, they're needed in F35 fighter jets, they're needed in nuclear submarines. They're very important for a range of high technology applications."

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China's Dominance and US Response

Most rare earth magnets are currently sourced from China. With rising geopolitical tensions, the U.S. is intensifying efforts to reclaim its position in the rare earth industry:

Jessica Mendoza [01:21]: "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."

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MP Materials and James Latinsky's Leadership

MP Materials, under CEO James Latinsky, acquired the struggling Mountain Pass mine in 2017. Latinsky recognized the mine's potential:

James Latinsky [04:24]: "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 ore body in the world. We could turn this thing around."

However, revitalizing the mine required substantial investment, and initial investor confidence was low due to the complexities involved.

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Challenges in Refining Rare Earth Minerals

Extracting and refining rare earths is a complex, expensive process requiring sophisticated chemical techniques. John uses a metaphor to illustrate this:

John Eamont [05:36]: "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 and Ms. From the other M&Ms, and then developing a process to extract the cocoa from that blue M and M. So there's just a lot of separating and extracting to get the very particular parts that you need."

Currently, over 90% of rare earth refining occurs in China at a low cost, posing a significant barrier for U.S. companies like MP Materials.

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Strategic Investments and US Government Support

Determined to break free from Chinese dominance, MP Materials invested in domestic refining facilities:

James Latinsky [06:30]: "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."

The U.S. federal government responded by providing substantial financial support, including grants totaling approximately $100 million, to bolster MP Materials' initiatives.

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Escalation of the US-China Trade War

The trade tensions between the U.S. and China intensified, significantly impacting the rare earths market:

• Tariffs Imposed: In April, President Donald Trump announced "Liberation Day" tariffs, starting at 34% on a broad range of goods and escalating to as high as 145%.

• China's Retaliation: Chinese President Xi Jinping declared that China was "not afraid," leading to increased tariffs and strict export controls on rare earths.

John Eamont [09:36]: "Jinping himself, Xi saying that his nation is, quote, unafraid, the Chinese government fired back."

These measures forced U.S. manufacturers to seek alternative sources for rare earths, highlighting the critical need for domestic production.

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Impact on U.S. Manufacturing and Supply Chains

The restrictions reverberated through U.S. industries:

John Eamont [10:03]: "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."

Ford had to halt production temporarily, and other companies scrambled to secure alternative rare earth sources, underscoring the vulnerability of U.S. supply chains.

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US-China Diplomatic Engagements

In response to escalating tensions, senior officials from both nations engaged in negotiations:

John Eamont [11:15]: "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."

The talks led to a temporary truce in June, with China easing rare earth export restrictions in exchange for the U.S. relaxing certain technology sales regulations.

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MP Materials: Scaling Up Production

Amid these developments, MP Materials accelerated its expansion efforts:

• Increasing Output: MP Materials quintupled its output last year and secured significant contracts, including a $500 million deal with Apple for magnet supplies starting in 2027.

• Government Contracts: The U.S. Department of Defense committed to a groundbreaking agreement, pledging to invest hundreds of millions of dollars and guaranteeing purchase prices for MP's rare earth products.

John Eamont [12:55]: "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 rares you produce."

This partnership signifies a robust commitment from the U.S. government to secure a stable and independent supply of rare earths.

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Market Reaction and Future Prospects

The strategic moves by MP Materials have had a tangible impact on the market:

White House spokesman [14:01]: "Marks a major step in rebuilding America's domestic rare earth industry."

MP Materials' stock surged by approximately 50% on the announcement day and tripled within the year, reflecting investor confidence.

The company's collaboration with Apple and the Department of Defense positions it as a pivotal player in re-establishing the U.S. as a leader in the rare earths sector.

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Conclusion: A Strategic Victory for U.S. Manufacturing

The episode underscores the critical importance of rare earth minerals in modern technology and national security. MP Materials' efforts, supported by substantial government investment, mark a significant stride toward reducing U.S. dependency on China. As the company scales its operations and secures major contracts, it exemplifies a strategic move to fortify America's position in the global rare earths market.

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Additional Contributors:

• Reporting by Gavin Baid, Rebecca Fung, and Hannah Meow

Closing Remarks: Thank you for listening to The Journal. Stay tuned for more insights into the stories shaping money, business, and power.

Transcript

[John Eamont]

So I'm standing in front of what's likely the second largest rare earth mine in the world.

[Jessica Mendoza]

That's our colleague John Eamont at a mine called Mountain Pass out in California's Mojave Desert.

[John Eamont]

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.

[Jessica Mendoza]

John visited the mine back in June, and he went to see it because it's the site of the US'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.

[John Eamont]

Rare earth magnets are extremely powerful. They can attract objects hundreds of times their 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, you know, for audio devices. They have a lot of military uses. So they're needed in missile systems, they're needed in F35 fighter jets, they're needed in nuclear submarines. They're very important for a range of high technology applications.

[Jessica Mendoza]

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 build up its rare earth capacity. And the issue has become increasingly urgent.

[John Eamont]

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 gonna build all this stuff.

[Jessica Mendoza]

Now the federal government is funneling billions of dollars into the company that owns the Mountain Pass mine, hoping its success can transform the US 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 company is taking on China's rare earth dominance.

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[Jessica Mendoza]

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.

[James Latinsky]

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 ore body in the world. We could turn this thing around.

[Jessica Mendoza]

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.

[John Eamont]

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.

[Jessica Mendoza]

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.

[John Eamont]

So this really complicated process to sort of unjumble all these different rare earths that are typically found in the earth together and have to be disconnected from each other. And it just, it's not easy. It's expensive. A lot can go wrong. It requires a lot of chemicals.

[Jessica Mendoza]

John says that people in the industry have a metaphor to explain how refining works.

[John Eamont]

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 and Ms. From the other M&Ms, and then developing a process to extract the cocoa from that blue M and M. So there's just a lot of separating and extracting to get the very particular parts that you need.

[Jessica Mendoza]

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 US as well. Here he is again.

[James Latinsky]

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.

[Jessica Mendoza]

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.

[John Eamont]

I'm in this giant room with these roughly 10 foot tall vats 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 that in each successive row it just gets a little pure.

[Jessica Mendoza]

After refining, the final step in the process is making the actual magnets. Much like with refining, the vast majority of magnet making is, 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 US 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 MP CEO Latinsky again.

[James Latinsky]

Clearly the right thing to do is to make sure that we're not reliant 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.

[Jessica Mendoza]

MP Materials was still small relative to China, but the company was gaining momentum. Then earlier this year, the escalating trade war between the US and China placed the company right at center stage. That's Next, 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.

[John Eamont]

104% tariff tariff rate on China to now 125% add up to 145%. Actually, hearing from the Chinese President Xi.

[Jessica Mendoza]

Jinping himself, Xi 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.

[John Eamont]

Well, meanwhile, China retaliating not just with tariffs of its own, but also by cutting off a supply of critical minerals.

[James Latinsky]

Beijing is restricting the export of rare.

[John Eamont]

Earths and magnets that are almost entirely refined by China.

[Jessica Mendoza]

Here's our colleague John Eamont again.

[John Eamont]

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.

[Jessica Mendoza]

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.

[John Eamont]

I mean, it's a 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 restricting your advances in artificial intelligence. Well, what's one easy way to strike back? Well, these little magnets.

[Jessica Mendoza]

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 US And China to come to the table.

[John Eamont]

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.

[Holiday Inn]

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.

[John Eamont]

In the meantime.

[Jessica Mendoza]

In June, the two countries struck a truce. China eased its restrictions on rare earth minerals, and it asked the US 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 US Needs it fast. Enter MP materials. What has this moment meant for MP Materials. Given that they're basically the only company in the US that has expertise on this whole rare earths process.

[John Eamont]

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, quickly as they can to start producing magnets.

[Jessica Mendoza]

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 US 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.

[John Eamont]

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 rares you produce. You build it, we will buy it. We will make sure that there's a buyer.

[Jessica Mendoza]

So the US Is basically guaranteeing that they will buy it. It's a pretty. That sounds like a pretty big bet.

[John Eamont]

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 the Department of Defense is just saying, do it, do it fast. And you don't have to worry really about the economics because we've got those guaranteed. As long as you're producing magnets, you are golden.

[Jessica Mendoza]

What does it say to you that the Department of Defense is willing to make this bet?

[John Eamont]

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.

[Jessica Mendoza]

A White House spokesman said the deal, quote, marks a major step in rebuilding America's domestic rare earth industry. NP 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. An MP said magnet shipments to Apple are expected to begin in 2027. So bringing manufacturing back into the US 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?

[John Eamont]

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. This company made in the U.S. yeah. I mean, I would think that this probably exactly how Trump wants us to go.

[Jessica Mendoza]

That's all for today. Monday, July 21. The Journal is a co production of Spotify and the Wall Street Journal. Additional reporting in today's episode by Gavin Baid, Rebecca Fung and Hannah Meow. Thanks for listening. See you tomorrow.