In a retaliatory move against the United States, the Chinese government imposed additional tariffs on various rare earth materials, prompting the largest rare earth metal producer in the US to announce a halt to exports to China.
Rare earth elements are essential raw materials for national defense and technological manufacturing.
On Thursday, April 17, MP Materials, a rare earth company operating mines and processing facilities in Mountain Pass, California, stated their decision to cease sales of rare earth elements to China and expedite the “reindustrialization” of the US domestic rare earth supply chain.
As the only large-scale rare earth producer in the US, MP Materials is expanding their downstream manufacturing operations with the goal of providing an integrated supply chain solution from raw materials to magnets.
Rare earth elements are utilized in wind turbines, jet engine coatings, optical lasers, radar equipment, and high-power magnets for various advanced technologies.
The refining facility of MP Materials can only process about half of their mineral production, with the remaining rare earth elements being exported overseas. Typically, minerals are shipped to China for processing, with Japan, South Korea, and US companies then purchasing the processed materials.
In a statement, the company expressed, “Selling our precious critical materials under a 125% tariff is neither commercially rational nor in the interest of the United States. Today, manufacturers in critical industries are urgently seeking secure and resilient materials and magnet sources. We have a unique advantage to meet this demand.”
Since President Trump took office, both the US and China have imposed multiple rounds of tariffs. Currently, the US imposes a 145% tariff on most Chinese goods, while China levies a 125% tariff on US goods, with rare earth elements being one of the targets of Chinese tariffs on the US.
Additionally, China has taken actions to retaliate against US companies, including imposing export controls on various rare earth elements, conducting antitrust investigations on American companies in China, and listing US companies on an unreliable entity list.
MP Materials has invested nearly $1 billion in reshaping the complete rare earth supply chain in the US. They stated they will continue producing and stockpiling concentrated ore, while advancing downstream operations such as increasing oxide production, enhancing heavy rare earth separation capacity, and producing magnets in Texas.
The statement mentioned that manufacturers in critical industries are currently seeking more secure and reliable sources of rare earth materials and magnets within the US.
“We have a unique advantage to meet this demand. … We are working together with customers and the US government to accelerate various stages of the strategy to achieve the reindustrialization of the rare earth supply chain within the US,” the statement read.
On Tuesday, the White House issued an executive order to investigate under Section 232 the processing of critical minerals and their derivative products to ensure national security and economic resilience.
Mountain Pass, California, is the only rare earth mine in the US, with the Department of Defense participating in investments there to lessen the US reliance on China for rare earth minerals.
The US was once the most significant rare earth producer in history; however, China gradually gained control over the production and processing of these strategic materials as Western mining dwindled over the years.
US analysts believe that Chinese tariff policies and export bans will raise market prices while encouraging Western rare earth companies to increase supply of smelting facilities.