American quandary: how to secure weapons-grade minerals without China
Located in southern California, this is the only mine in the U.S. devoted to rare earths, elements used to build everything from iPhones to weapons.
The mine is owned by MP materials, which is aiming to be the first American company to refine rare earths since 2015, when the former owner went bankrupt.
James Litinsky is CEO of JHL Capital, a hedge fund and MP's majority owner.
(SOUNDBITE) (English) JAMES LITINSKY, CHIEF EXECUTIVE OFFICER OF JHL CAPITAL GROUP LLC, SAYING:
"The materials that we make power trillions of downstream GDP so whether it's electric vehicles, wind turbines, robots, drones, all the advance in-motion industries of tomorrow require our material and we believe it's really important that there is a Western supply chain of these materials so that we can compete all the way downstream.
The U.S. relies heavily on Beijing for the materials, as China is the largest processor and producer of the 17 minerals.
Yet as Washington tries to change that, California's Mountain Pass Mine is still deeply dependent on Chinese sales and technical help to process rare earths.
A Chinese company also owns about 10 percent of MP Materials. And because of that, U.S. Department of Energy scientists are not collaborating with the mine’s owners.
The situation is expected to come to a head in coming weeks as White House and Pentagon officials decide whether to fund MP Materials.
Litinsky says their progress couldn't have been made without Beijing's help.
(SOUNDBITE) (English) JAMES LITINSKY, CHIEF EXECUTIVE OFFICER OF JHL CAPITAL GROUP LLC, SAYING:
"Had we not had a Chinese technical partner helping us do this relaunch, there's no way this could have been done. But for Shenghe (Resources Holding Co., Ltd), which is our Chinese technical partner that owns 9.9 percent of non-voting shares, does not sit on the board, has no decision making authority, cannot control product, you know, they have no power as far as that's concerned, so this is one hundred percent voting controlled by American investment firms."
MP currently ships more than 50,000 tonnes per year of concentrated rare earths to China for processing.
But by the end of 2020, it's aiming to restart its processing equipment with the goal of producing, without China's help, 5,000 tonnes per year of the two most-common rare earth metals, more than enough for U.S. military needs.
This comes as Washington moves to make domestic rare earths production a priority as relations with China have become increasingly frayed.
Even though the Department of Energy has blacklisted MP, the company is still a candidate to receive up to $40 million in funding from the Pentagon, according to sources.
And because it's the only player that has broken ground, Mountain Pass is widely seen by industry analysts as the front-runner for the funding.
