It seems that Trump never expected that the two trump cards he relied on to break away from his dependence on rare earths from China have not yet been put to use in actual negotiations with China. Instead, his own people have already gotten into trouble among themselves.
According to a report by the Financial Times on the 28th, MP Materials, the largest domestic rare earth mining company in the United States, accused UASR of stealing technology developed for permanent magnets. The two companies have received support from the Trump administration and are key players in the US efforts to establish a domestic rare earth supply chain and reduce its dependence on China.
MP Materials Company claims that a former employee who switched to UASR last year illegally disclosed to them the companys proprietary technology used to enhance the magnetic properties of magnets. The complaint filed in Texas last week states that this technology involves a grain boundary diffusion formulation, which is the result of years of research and development by MP Materials Company, involving millions of dollars in investment.
MP Materials claimed that UASR has repeatedly failed to meet its commercial and performance objectives. Now, it is trying to get out of trouble by stealing technology. They also accused UASR of having a habit of poaching employees from other companies and using those employees to steal trade secrets in order to accelerate its own development.
UASR argued, This complaint distorts the image of our company, our corporate culture, and our employees. We will defend ourselves firmly. The statement said that the company would respond in a proper manner.
MP Materials Rare Earth Mining and Processing Facilities in Montignac, California – MP Materials website
According to US media reports, MP Materials is currently the only rare earth producer in the United States. The company owns the only operating rare earth mine in the country. MP Materials processes the rare earth materials mined from its mine in Montpelier, California, into permanent magnets. These products are widely used in electric vehicles, defense systems, and high-end electronic devices.
USAR also plans to follow this development path, beginning the construction of its mine in Texas. The company claims that this mine holds the largest reserves of heavy rare earths in the United States. A magnet production facility has already been established in Steelewater, Oklahoma.
Additionally, USAR plans to expand its overseas operations by establishing a new factory in France. Recently, the company announced that it will acquire Serralvida Group, which owns Brazils only rare earth mine, for $2.8 billion.
To advance its rare earth strategy, the Trump administration invested substantial funds in these two companies. MP Materials reached an agreement with the U.S. government last year, and the Trump administration agreed to hold a minority stake in this mining company. Additionally, the Trump administration provided minimum price guarantees for some of its products. This year, MP Materials received another $400 million in funding.
USAR has yet to achieve commercial mining of rare earths and production of magnetic materials. However, it has received $1.6 billion in conditional government funding, which will be used to support its plans for building a mine in Texas and a magnetic material factory in Oklahoma.
According to reports, the cooperation between USAR and the White House has already faced opposition from lawmakers. The deal for acquiring Brazils rare earth company is still under review. This lawsuit filed by MP Materials has once again put this company under public scrutiny.
USAR insists that the various doubts raised by the outside world regarding government-funded projects will not pose any obstacles to them. The companys goal remains to achieve large-scale mining by 2028, thereby creating a complete value chain that operates independently from China, from mines to magnets.
Earlier, Bloomberg CEO Vince Smith analyzed that in order to get rid of its dependence on Chinas rare earth supply chain, Trump launched a campaign over the past year. He tried to recruit American companies, foreign companies, and governments to help him rebuild a supply chain that doesnt include China. He even claimed that he intended to end his dependence on Chinese rare earths within 18 months.
But reality quickly proved that this de-Sinicization movement was far more difficult than he had imagined. The United States would likely still be dependent on Chinese rare earths even after his resignation. Moreover, there was already a clear split within its allies. Japan was reluctant to completely alienate China, while Europe feared that the alliance led by the United States could ultimately distort markets and increase costs.
Reports indicate that the United States is the most active in developing alternative supply chains. New projects are being announced across regions, from Brazil to Australia. If all these planned projects are completed, it could shake Chinas control over certain rare earth resources that are abundant and widely used in consumer electronics products by the end of this decade.
However, predictions and data from three key mineral consulting agencies indicate that Chinas dominance in the field of heavy rare earths is expected to continue for at least until the mid-2030s.
Michele van Hoij, a senior partner at McKinsey who specializes in the metals and mining industries, said, It will take more time for true and meaningful diversification to occur, longer than many people expect.
