Apple inks $500m deal for rare earth magnets with US mining firm

The Guardian

a day ago

Apple has signed a $500m deal with a US firm for rare earth magnets, essential for manufacturing electronics, after China curbed exports of the scarce, vital materials.
The backing from one of the world's most valuable companies comes after MP Materials, which operates the only US rare earths mine, last week agreed to a multibillion-dollar deal with the US Department of Defense that will see the Pentagon become its largest shareholder. Both deals are aimed at mitigating supply chain risks after China limited the outgoing supply of rare earths earlier this year in response to Donald Trump's sweeping tariffs.
The deal, announced on Tuesday, guarantees Apple a steady flow of rare earth magnets free from China – by far the world's largest producer. For Apple, the cost to support US magnet production pales in comparison to the long-term risk that it could lose access entirely to the critical components, analysts said.
'We're in an era where executives are willing to pay a significant premium for a reliable supply chain. They don't want stoppage,' said Gracelin Baskaran, director of the critical minerals security program at the Center for Strategic and International Studies.
Rare earths are a group of 17 metals used to make magnets that turn power into motion, including the devices that make cellphones vibrate. They are also used in weapons, electric vehicles and many other electronics.
China placed export restrictions on rare earths in April in response to Trump's tariffs. Though the US and China reached a deal in June that has resolved much of the rare earths dispute, broader trade tensions continue to underscore demand for a non-Chinese supply.
As part of the agreement, Apple will prepay MP $200m for a supply of magnets slated to begin in 2027. The companies did not disclose the length of the deal nor the volumes of magnets to be provided.
The agreement calls for magnets produced from recycled material, in keeping with Apple's longstanding goal of ending its reliance on the mining industry. They will be produced at MP's Fort Worth, Texas, facility using magnets recycled at MP's Mountain Pass, California, mining complex.
'Rare earth materials are essential for making advanced technology, and this partnership will help strengthen the supply of these vital materials here in the United States,' Apple's CEO, Tim Cook, said in a statement.
Las Vegas-based MP Materials' stock price has nearly doubled since the government deal was announced. It has had remarkable turnaround since last year, when it contemplated merging with an Australian rival as profits plunged in what its CEO, Jim Litinsky, called a 'very frustrating' pricing environment for rare earths.
Bob O'Donnell, president at market research firm TECHnalysis Research, said Tuesday's move 'makes complete sense' given that Apple requires significant amounts of rare earth magnets for its devices.
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'Plus, by focusing on a US-based supplier, it does help position Apple more positively in Washington,' he said.
Apple, which said the deal is part of its $500bn four-year investment commitment to the US, has faced threats from Trump over iPhones not made in the US. But many analysts have said making the iPhone in the US is not possible, given labor costs and the existing smartphone supply chain.
Apple did not disclose which devices in which it will use the magnets. MP said the deal will supply magnets for hundreds of millions of devices, which would constitute a significant share of any of Apple's product lines.
MP produces mined and processed rare earths and has said it expects to start commercial magnet production in its Texas facility by the end of this year.