Efforts to reduce dependence on China for rare earth minerals hits a snag

April 22, 2020

As the United States continues to look for ways to reduce its reliance on China for rare earth minerals, the issue of breaking away from China’s influence has become an issue.

Reuters reported that the U.S. Department of Energy (DOE) has told government scientists not to collaborate with MP Materials which owns the Mountain Pass Mine, the lone operating rare earths mine in the United States.

According to the report, the decision is based on the fact that MP Materials is almost a tenth-owned by a Chinese investor and relies heavily on Chinese sales and technical know-how, according to the company.

“Clearly, the MP Materials ownership structure is an issue,” Tom Lograsso, interim director DOE’s Critical Materials Institute, the focal point of the U.S. government's rare earths research and a facility that typically works closely with private industry.

“We’re going to allow the people in Washington to figure this out.”

The DOE instruction, which has not been previously reported, illustrates the competing pressures facing officials looking to resurrect the U.S. commercial rare earths industry.

Reviving domestic rare earths production has become a priority in Washington as relations with China, which dominates global supplies, have become increasingly frayed and U.S. lawmakers warn of the dangers of relying on a competitor for critical defense components.

Even as the DOE has blacklisted MP Materials, the company is a candidate to receive up to $40 million in funding from the Pentagon, according to two sources familiar with the matter.

The Pentagon has yet to announce its decision on funding, which could go to more than one project, after delaying the decision from March due to the coronavirus crisis.

MP Materials is by far the most advanced player in the U.S. rare earths industry, given no rival project has even broken ground. As such, Mountain Pass is widely seen by industry analysts as the front-runner for Pentagon funding.

The Pentagon is working closely with "the president, Congress, allies, partners and the industrial base to mitigate U.S. reliance on China for rare earth minerals," said spokesman Lt Col Mike Andrews. The department did not respond to requests for comment on whether it might fund Mountain Pass or potential conflicts with DOE policy.

MP Materials, which bought the mine in 2017, describes itself as an American-controlled company with a predominantly U.S. workforce. The privately held firm is 9.9 percent-owned by China's Shenghe Resources Holding Co. though, and Chinese customers account for all its annual revenue of about $100 million.

The COVID-19 pandemic has further driven home the global nature of supply chains and how heavily Western countries rely on manufacturing powerhouse China for a host of key products, including drug ingredients.

Photo: The Mountain Pass Mine in California
 

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