Pentagon gives $35 million to subsidize MP Materials's rare earth mineral production
The White House on Tuesday featured a mining company partially owned by a Chinese mining conglomerate at an event dedicated to strengthening the domestic supply chain.
President Joe Biden announced at the event that the Pentagon would award $35 million to the Las Vegas-based MP Materials in an effort to boost U.S. rare mineral production. But MP Materials has arguably allowed China to tighten its grip on the world’s rare earth minerals supply chain. Shenghe Resources Holding, which is partially owned by the Chinese government, owns 8 percent of the company. Shenge spearheaded the deal in 2017 to help MP Materials purchase a mine at Mountain Pass, Calif., out of bankruptcy. The Chinese company is also MP Materials’s largest customer, accounting for nearly all of its $100 million annual revenue.
MP Materials’s links to China have long concerned American officials. The Department of Energy warned its scientists in 2020 not to collaborate with MP Materials executives because of China’s links to the company, Reuters reported.
“Clearly, the MP Materials ownership structure is an issue,” Tom Lograsso, an official with the Department of Energy’s Critical Materials Institute, told Reuters.
The Pentagon award will subsidize MP Materials’s production of heavy rare earth minerals at its mine at Mountain Pass. The minerals are used to produce high-powered magnets used in electric vehicle motors, wind turbines, and defense systems.
James Kennedy, a consultant in the rare earth minerals industry, has raised concerns about other Pentagon grants to MP Materials. Kennedy called Shenghe’s investment in MP Materials a “geopolitical ruse” that helps China maintain a monopoly on the rare earth minerals market.
Those concerns have not deterred the White House. MP Materials chairman James Litinsky spoke at the virtual White House event alongside Biden, Gov. Gavin Newsom (D., Calif.), White House infrastructure czar Mitch Landrieu, and Energy Secretary Jennifer Granholm.
Litinsky said MP Materials was “committed to bringing the supply chain home” to the United States but made no mention of his company’s links to Shenghe Resources Holding. He said MP Materials has partnered with General Motors to produce magnets for 500,000 electric vehicle motors.
It is unclear whether the Pentagon has placed any restrictions on MP Materials’s dealings with Shenghe going forward.
Shenghe’s investment in MP Materials is part of an ambitious plan to stabilize China’s supply of rare earth minerals. The company has also partnered with companies in Greenland and Australia to mine rare minerals, Quartz reported. One goal is to “consolidate the achievements of overseas cooperation projects.”
MP Materials did not respond to a request for comment.