The Only U.S. Rare Earth Mine May Win Big From Trump's China Tariffs

Forbes

21-04-2025

Since China retaliated against President Trump's tariffs by restricting exports of rare earth minerals — crucial to making the magnets that go into electric motors, used for cars, electronics, robots and wind turbines — MP Materials founder and CEO Jim Litinsky's phone has been ringing off the hook from companies desperate for new suppliers.
'The sense of urgency, I've never seen anything like it,' he told Forbes. 'It's pretty wild and exciting–and daunting.'
Litinsky runs the only U.S. rare earths mine, Mountain Pass in California's Mojave Desert, supplying elements like neodymium and praseodymium that industries like defense, automotive and electronics rely on to build efficient electric motors. Once Litinsky's staff of over 800 engineers, technicians and miners harvest the minerals from the earth, MP refines them, turning them into metals, which companies like General Motors need for EV motors. Starting this year, MP will also make high-powered magnets with those metals at a new plant in Texas, a market China currently dominates.
The Mountain Pass mine near the California-Nevada border.
MP Materials
Ninety percent of all rare earth metals are processed in China. The country produces nearly 95% of all rare earth magnets–prized for their strength and long-term retention of magnetic properties–and virtually all of the 7,000 tons the U.S. imports each year came from China — a clear vulnerability in American companies' supply chains that rely on them for their products. As Trump's tariff war escalated, China on April 4 announced it was restricting U.S.-bound exports of 'heavy' rare earths, shutting down imports of magnets made with them.
'The problem for almost every industry that uses a motor that requires magnets is that China has this massive strategic flex on rare earth minerals,' said a board member for a U.S.-based carmaker who asked not to be publicly named. 'The stuff China just put export controls on is a freaking big deal. We won't be able to make motors anymore or anything that has a spinning magnet in it. Game over.'
Suddenly, for companies that need a rare earth supplier not impacted by tariffs and trade restrictions, MP is 'the only game in town,' Ben Kallo, an equity analyst for Barid, said in a research note this month.
Because of the sudden spike in domestic demand and tariff-related headaches, Las Vegas-based MP is taking a gamble: It just halted shipments of rare earth concentrates, which are separated from mined ore, to China–the world's top buyer and MP's biggest customer, responsible for 90% of its revenue. The company reported $144.4 million of such sales last year, out of total revenue of $203.9 million, so it's a risky move. Instead, Litinsky is ramping up sales of refined materials to new customers in the U.S., Japan and South Korea.
'Selling our valuable critical materials under 125% tariffs is neither commercially rational nor aligned with America's national interest,' the company said. 'We have been preparing for this moment since day one.'
If MP can weather the shorter-term financial hit and the trade war chaos, there's clear upside: a stable domestic critical minerals supply that could mint MP as one of the few winners from the Trump tariffs that have spooked financial markets with concerns of higher inflation and the risk of recession. MP's shares are up 69% this year through Friday.
MP's rare earth magnet factory in For Worth, Texas.
MP Materials
The reliance on China for rare earth magnets has long been a concern, as it gives a primary U.S. rival an unusually high degree of control over the supply chain for military hardware like missiles, jets and drones. MP also has the opportunity for a leadership role as it ramps up production.
'Rare earths have taken a larger position on the geopolitical stage than perhaps ever before, and we believe there may be an opportunity for MP to advise the U.S. government in its strategy for development,' analyst Kallo wrote on April 7, before MP announced its withdrawal from the Chinese market.
MP has been on an eight-year path to get ready for the current tariff-fueled rare earth turmoil. Its open pit mine, located 53 miles from Las Vegas just off U.S. 15, originally opened as a gold mine in 1936. Rare earth deposits were discovered there in 1949 and a company called Molybdenum Corp. began commercial extraction of them in 1952. Production expanded and it was next acquired by Union Oil, later a division of Chevron, in 2005. Extraction of rare earths at the mine stopped and it closed in 2002, due to price competition from Chinese companies and a toxic waste spill.
Chevron sold the mine to Molycorp Minerals in 2008, which restarted production there in 2012. Despite considerable fundraising and a 2010 IPO, however, Molycorp wasn't able to successfully scale up operations at Mountain Pass and filed for bankruptcy in 2015. Litinsky, 47, bought control of it soon after while leading JHL Capital Group, a hedge fund he'd founded, for the chance to build it into a successful business.
'I'm not a miner by trade,' he said. 'At the time, I expected others to figure this out and turn it around. What happened was when it went bankrupt, it went into total free fall, not a single financial or strategic buyer stepped up. There was an expectation that it was uneconomic.'
'As I dug in, I realized there were some mistakes made in the process flow [at the mine], but that this is a world-class site. It's arguably the best rare earth ore body in the world and there are a lot of great assets built out there.'
His acquisition was aided with funds from Shenghe Resources, China's leading rare earth mining and refining company in the form of a $50 million presale order for concentrate from Mountain Pass in 2017. That early money gave Shenghe, which is partially controlled by the Chinese government, an 8% stake in MP.
However, Shenghe has no operational control of the company and doesn't have a board seat. It has been a consistent buyer of MP's rare earth concentrate since mining resumed there in 2017, though that's ending with the company's shift in China-related exports.
MP is so unique in the U.S. not only because that the mine has rare earths, but also that it has refining capacity.
'Important to note that what matters is the ability to refine rare earth elements (which are NOT actually meaningfully rare) and manufacture magnets for use in electric motors,' Elon Musk posted on X, referencing China's new export restrictions.
And that's exactly what MP is doing. Along with refining rare earth ores from Mountain Pass, in January the company started commercial production in Fort Worth of NdPr metal–made of neodymium and praseodymium–that's used to make magnets. Pilot production of the latter has begun at the new plant, with the first commercial production of MP's batteries to start late this year.
In its first phase, the plant will be able to produce 1,000 tons of rare earth metal and magnets annually. But Litinsky seeks to triple that to 3,000 tons. Over time, he sees even greater opportunity. 'From there, we have the potential to expand significantly, really in all aspects of our business.'
MP may have the only active rare earth mine, but it's hardly the only U.S. firm angling to offset at-risk Chinese supplies.
Noveon Magnetics, based in San Marcos, Texas, has also opened a factory to eventually make up to 2,000 tons of rare earth magnets, relying on a combination of scrap material, minerals imported from Australia and Southeast Asia and some recycled metals from recovered motors. USA Rare Earth is building a magnet plant in Stillwater, Oklahoma, that it hopes will one day produce up to 5,000 tons of magnets a year.
Meanwhile, Niron, a startup in Minneapolis, is trying to get rid of rare earths entirely by developing powerful magnets that use iron nitride, made with readily available and cheap raw materials.
For the moment, however, MP has an early lead. It will start shipping magnets to GM this year, Litinsky says, and it also has new supply contracts with two other automakers which it's not yet naming but 'are among the world's five biggest.' Given that the company is exporting its NdPr metal to Japan and South Korea, those customers are likely Toyota and Hyundai (the carmakers declined to comment; Ford and Tesla, the country's largest EV maker, also declined to comment on the impact of the rare earth restrictions).
In addition to cutting off rare earth magnet shipments, China explicitly identified 'heavy' rare earths that would be restricted, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium. Trace amounts of those minerals are used for magnets but are also needed for a range of products including medical devices, lighting and military hardware.
MP's mine has those minerals as well and it has 'begun stockpiling concentrates of those ores,' said spokesman Matt Sloustcher.
It's incredible timing for Litinksy.
'That's really been the vision of the company from the beginning, that a single point of failure in a supply chain is a major risk–and particularly a single point of failure that is a geopolitical adversary. It's a national security risk,' he said. 'This is exactly what we've been screaming from the rooftops about for a number of years.'