MP Minerals Deal Proves that Western Governments Are Finally Awake to the China Rare Earths Threat: Northern Miner

“The price floor not only guarantees stable revenue for MP but also sends a strong price signal across the sector,” Benchmark Mineral Intelligence said.

BY COLIN MCLELLAND, THE NORTHERN MINER

Link: https://www.northernminer.com/editorial/editorial-nato-and-trump-to-the-ree-rescue/1003880349/

Today’s huge Pentagon deal for MP Materials, the sole producer of rare earth elements (REEs) in the United States, continues the ratcheting up of developments in this formerly obscure sector. Washington is taking a 15% stake in the company that runs the Mountain Pass mine in California, backing multi-billion dollar plans for expansion.

Beijing’s recent clampdown on REE exports has jolted Western governments and industries. In April, China imposed new export licences on seven key rare earths – including heavy elements like dysprosium and terbium – plus related magnets, in apparent retaliation against U.S. trade measures.

While not an outright ban, the licensing system effectively upended the supply chains for automakers, aerospace firms, semiconductor makers and defence contractors worldwide. Western officials are scrambling, declaring how the West must slash its dependence on the Asian giant.

China produces about 90% of global rare earths and until recently accounted for 99% of heavy rare earth processing – elements vital to high-performance magnets in EVs, wind turbines and defence hardware. Outside China, refining capacity is minimal, giving Beijing significant leverage.

Western plans

In response, Western governments are rolling out funding and industrial strategies to rebuild rare earth supply chains outside China.

In Canada, the Saskatchewan Research Council became the first North American facility to produce separated rare earth metals, backed by $101 million in federal and provincial funding. It’s targeting 400 tonnes of neodymium-praseodymium (NdPr) alloy annually – enough for 500,000 electric vehicles.

Canada also holds promising deposits. The Nechalacho project in the Northwest Territories, rich in rare earths needed for permanent magnets, saw limited production through Australia’s Vital Metals. Full-scale development of the deeper Basal zone, delineated by Avalon Advanced Materials, would require major investment and technical work.

Another junior, Defense Metals, is in line for a $340-million loan from Export Development Canada to help the company develop its main Wicheeda rare earth project in British Columbia. The $1.4-billion capex project has reserves for a 15-year mine life to produce nearly 32,000 tonnes a year of total rare earth oxide in concentrate.

Export Development Canada is also supporting privately-held Torngat Metals with $165 million for pre-construction work at its Strange Lake rare earth project straddling northern Quebec and Labrador. The $2-bil- lion capex project aims to produce roughly 15,000 tonnes per year of rare earth oxides.

Financing hurdles

Ottawa’s critical minerals strategy explicitly identifies rare earth elements as a priority. The challenge, as always, will be progressing these projects past the permitting and financing hurdles that have long stalled North American rare earth ventures.

In the U.S., Energy Fuels’ White Mesa plant, one of the largest REE processing facilities outside China, achieved commercial production a year ago. It began with on-spec NdPr, a light rare earth used in magnets. The plant’s first stage has the capacity to produce 850 to 1,000 tonnes of NdPr per year. A stage two expansion would increase its processing capacity to 60,000 tonnes, outputting roughly 6,000 tonnes of NdPr.

MP Materials resumed refining at Mountain Pass, producing 1,300 tonnes of NdPr oxide in 2024. Its planned Texas magnet factory will yield 1,000 tonnes of finished magnets by 2025 – though it’s still less than 1% of China’s output.

Now it plans to build a second magnet manufacturing plant for startup in 2028 to increase the company’s total annual magnet output capacity to 10,000 tonnes.

Meanwhile, USA Rare Earth and Texas Mineral Resources are developing the Round Top deposit in West Texas, which contains all 17 rare earth elements. In January, they produced a lab-scale sample of 99% pure dysprosium oxide – a U.S. first for heavy rare earths – and sintered their first batch of magnets at a pilot plant in Oklahoma.

Scaling to commercial production, however, remains a major challenge. Round Top’s Texas separation plant alone is expected to cost over $100 million. No U.S. facility currently separates heavy REEs at scale – a capability China has spent decades mastering.

Fragile truce

In June, a surprise diplomatic shift brought a temporary reprieve. Washington and Beijing agreed to a tentative trade truce covering rare earths. U.S. President Donald Trump announced that China would lift export restrictions on rare earths and magnets. In return, the U.S. would ease cer- tain tariffs (retaining a 55% baseline on Chinese imports) and allow Chi- nese students to return to American universities.

While the truce eased immediate supply fears, its durability remains uncertain. Any shift in leadership or tensions over Taiwan could unravel the deal and return the West to square one.

For Canada and its allies, the lesson is clear: a long-term strategy is needed, one not reliant on the goodwill of a rival superpower. Even if Chinese rare earth exports resume to normal levels for now, rebuilding domestic and allied supply chains is imperative.

That gap won’t be closed in a year or two. It will take sustained investment, continued R&D in processing technology, and consistent policy support that survives beyond election cycles.

Nato leaders just pledged 5% of their economies to defence spending by 2035. That amounts to $150 billion a year for Canada, and nearly a third of that – $43 billion – can be used for infrastructure including support for critical minerals projects.

Western governments and companies are finally heeding the wake-up call on rare earth security. Our industry stands to benefit, but it remains to be seen if voters will back the commitment.

This editorial has been updated from the July print edition of The Northern Miner.