Pentagon Takes Major Step To Counter China’s Chokehold On Critical Minerals

The Pentagon is poised to become the largest shareholder of MP Minerals, America’s only rare earth mineral company with an operational mine, the corporation announced Thursday.

The Department of Defense (DOD) will purchase $400 million of stock in MP Minerals, which operates the only U.S.-based rare earth minerals mine in Mountain Pass, California, according to the company’s announcement. The purchase is intended to reduce U.S. dependence on foreign imports for the critical minerals used in advanced manufacturing, with China being by far the largest global producer and exporter of the minerals.

“This initiative marks a decisive action by the Trump administration to accelerate American supply chain independence,” James Litinsky, founder and CEO of MP Materials, said in the announcement. “We are proud to enter into this transformational public-private partnership and are deeply grateful to President Trump, our partners at the Pentagon, and our employees, customers and stakeholders for their unwavering support and dedication.”

Many in the U.S. government have sounded the alarm that China could weaponize its stranglehold on rare earth minerals, especially if China makes a move to capture Taiwan, a long-time U.S. ally. China has used its market dominance to bully other nations before, halting rare earth shipments to Japan due to a sovereignty dispute over the Senkaku Islands, long held by Japan.

MP Minerals will build a second manufacturing plant at an undecided location to support the production of rare earth magnets, according to the announcement. The DOD will receive all of the magnets produced at the new facility for ten years after its construction.

The Pentagon will also provide MP Minerals with a $150 million loan to offset the cost of expanding mining operations at the Mountain Pass mine, according to the announcement.

The U.S. imports 80% of its rare earth minerals, mostly from China, according to the U.S. Department of the Interior. Rare earth metals are vital in the construction of weapons that use advanced computers or high-strength metal alloys, examples including the F-35 Lightning II multi-role fighter, Columbia-class submarines and various Unmanned Aerial Vehicles (UAVs).

Litinsky told CNBC that the Pentagon’s move does not amount to nationalization, and that the company will remain independent despite the DOD’s majority ownership.

“We remain a thriving public company. We now have a great new partner in our economically largest shareholder, DoD, but we still control our company. We control our destiny. We’re shareholder driven,” Litinsky told CNBC.

The DOD and MP Minerals did not immediately respond to the Daily Caller News Foundation’s request for comment.