US-made rare earths to skip China in supply deal with Japan

America’s only rare-earths producer has agreed a deal to ship output from its new processing plant to Japan, part of a broader move by the US and allies to reduce China’s role in their critical supply chains.

MP Materials Corp., owner of the Mountain Pass mine in California, will sell material from its separation unit direct to trading giant Sumitomo Corp. for distribution in Japan. The mine’s output has typically gone to China for processing, with Japanese companies purchasing from there.

The agreement will “stabilize, diversify, and strengthen a supply chain of critical importance to Japan’s manufacturing sector,” the US and Japanese companies said in a joint statement. The companies gave no details about volumes or timing.

Mountain Pass has emerged as a flagship operation for the US push to reshape flows of critical minerals. It accounted for about 15% of the world’s mined rare earths supply in 2021, and President Joe Biden last year signed off on $35 million in extra funding for its push beyond just mining. 

The US is spearheading a drive to reduce China’s stranglehold over flows of minerals deemed to be of strategic importance. In rare earths, China hosts some 85% of global refining capacity, according to the White House.

As well as the separation plant, MP Materials is also planning a factory in Texas to make rare-earth magnets, which are vital in everything from smartphones to electric vehicles and military hardware.

The US government is exploring narrowly-focused trade pacts on critical minerals with Japan and the UK, in addition to talks with the European Union, the latest salvo in its push to counter Chinese influence in key sectors, Bloomberg reported on Feb. 11.