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The recovery of a rare earth mine that was bankrupt for about 10 years and partially submerged put the United States at the center of a strategic race to reduce dependence on China in a decisive sector for vehicles, drones, robots, and military equipment
The Mountain Pass mine in California has returned to the center of the United States’ strategy to reduce dependence on China in the rare earth sector after a decade of crisis, bankruptcy, and shutdown. Under the leadership of MP Materials, the former decommissioned and partially submerged operation has taken on a decisive role in a dispute involving industry, technology, and national security.
About ten years after acquiring the struggling mine, CEO James Litinsky transformed the company into an asset considered strategic for the country. The shift gained momentum in light of the restrictions imposed by China on the supply of certain rare earth elements and magnets to the United States, in response to the tariff plans announced by Donald Trump in April 2025.
According to Litinsky, the situation exposed a critical vulnerability for Americans in both civilian and military sectors. For him, relying on the approval of the Chinese government to manufacture equipment and products is not an acceptable condition.
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The weight of rare earths in modern industry
Despite the name, rare earths are not actually rare in nature, but rather difficult to find in high enough concentrations and in accessible locations that make their extraction economically viable. In total, there are 17 metallic elements in the periodic table, used in highly specific and high-value industrial applications.
Among these elements are europium, which helped enhance the red color in early televisions, and neodymium, essential for producing smaller and more powerful magnets. These so-called rare earth permanent magnets are found in products such as smartphones, robots, high-speed trains, electric vehicles, fighter jets, drones, and in the small motors that make iPhones vibrate.
Professor Julie Klinger from the University of Wisconsin-Madison stated that the differentiating factor of these elements lies in their magnetic, conductive, and optical properties. According to her, small amounts of a rare earth can make a magnet both very small and very powerful.
Mountain Pass was identified by geologists in 1949 and, by the 1960s, was already operating with the extraction, separation, and industrial use of these materials. For decades, the mine was considered the world’s leading operation in this segment.
How China came to dominate the supply chain
Over time, the processing of rare earths migrated abroad, especially to China, which was able to operate at lower costs. Julie Klinger described the sector as a dirty, risky business that is difficult even to recoup the investment made.
In the 1990s, the Mountain Pass mine also faced environmental regulatory issues after low levels of water and radioactive waste leaked into the Mojave Desert. The operation remained inactive for a decade until Molycorp attempted to reactivate it to compete with China, but failed and declared bankruptcy in 2015.
Today, according to Interior Secretary Doug Burgum, China maintains almost a monopoly on the strategic metals used in rare earth permanent magnets. For him, the country not only monopolized this market but also uses it as a pressure tool.
Burgum stated that whenever a competitor in the free world tries to start mining and refining, China reacts by flooding the market with large volumes of that mineral, driving prices down. As a result, profitable companies become unviable, including American companies.
James Litinsky said that well over 90% of the world’s rare earth magnets are currently manufactured in China. This dominance became even more evident after Trump presented his global tariff plan in April 2025 on what he called Liberation Day.
The Chinese response had an immediate effect on the American industry, with a temporary disruption of rare earth supplies to the United States. Without a reliable source of magnets, Ford Motor Company even suspended production of the Explorer SUVs.
After trade truces, China resumed shipments but with certain restrictions. Nevertheless, the vulnerability remained, and the current trade truce between the two countries is set to expire in eight months, keeping the supply subject to new short-term risks.
The recovery of Mountain Pass and the bet of MP Materials
Litinsky’s entry into this market began about a decade ago when he was still managing a hedge fund in Chicago. After watching a report on rare earths and Chinese dominance, he began to monitor the situation at Mountain Pass and, upon learning of Molycorp’s crisis, decided to invest in the asset.
Litinsky ended up taking over the mine and the refinery and called on Michael Rosenthal, a friend of his also from the hedge fund sector, to help him rebuild the business. When the two took control in 2017, the situation was critical on several fronts.
In addition to the financial collapse, the operation was literally compromised by 30 million gallons of groundwater accumulated at the bottom of the mine, forcing its closure. This occurred even after Molycorp had invested $2 billion in modernizing the unit and in measures to make it more sustainable.
At that moment, the newly formed MP Materials had only eight employees. Today, the Mountain Pass unit employs over 700 people.
Rosenthal summarizes the difficulty of the sector by saying that mining is the easy part of the process. The more complex part, according to him, is separating the rare earths from the rock and then separating each element individually.
In 2023, the company reached an important milestone by managing to refine neodymium and praseodymium with 99.9% purity. For this, MP Materials invested nearly $1 billion more at the site.
From mine to magnet and the advance supported by Washington
Even with mining and refining capacity, MP Materials lacked a crucial link to circumvent dependence on China: the manufacturing of the final product. In Fort Worth, Texas, the company built a facility where the purified rare earth oxide from Mountain Pass is melted, cooled, compressed, cut, and turned into magnets.
With this structure, the company began to control the entire supply chain of rare earth magnets, from the mine to the final product. According to the company, this made it the only one in the world to fully integrate this process, representing independence from Beijing.
MP Materials claims it expects to soon produce one million magnets per day as it scales up. According to Litinsky, General Motors, the company’s first customer, will begin using its rare earth magnets in vehicles later this year.
Last spring, however, the situation was still one of intense pressure. With the Chinese restrictions following Trump’s tariff announcement, Litinsky and Rosenthal, owners of the only American company with integrated mining, refining, and manufacturing in the sector, were called to the Pentagon.
According to Litinsky, the military wanted a project akin to the Manhattan Project to accelerate the entire domestic supply chain of rare earth magnetic materials. From there, the executives were tasked with speeding up the process as quickly as possible.
The agreement reached was unusual and gave new momentum to the company. The Pentagon agreed to invest $400 million in MP Materials, along with an additional $150 million for the development of a refinery focused on so-called heavy rare earths, while the U.S. government acquired a 15% stake in the company.
The arrangement also established a guaranteed minimum price of $110,000 per kilogram for MP’s rare earth oxide for ten years. If the market price falls below this level, the government will compensate the difference; if it rises above it, profits will be shared.
In practice, the measure protects the company from a new Chinese attempt to flood the market and drive prices down. At the same time, the government mandated that MP Materials increase its production of rare earth magnets tenfold.
To meet this goal, Litinsky is building an even larger factory in Northvale, Texas. Named 10X, the unit is expected to be completed by 2028 and, according to the company, will have the capacity to meet the country’s most essential needs in this sector.
Doug Burgum publicly defended the agreement, even acknowledging that it deviates from stricter principles of market capitalism. For the secretary, it is pragmatism in the face of an adversary that controls a monopoly and influences prices in a strategic sector.
Article written based on a report from CBS NEWS.
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