Mining company executives and former US officials have criticised the US administration's "highly unusual" deal with MP Materials, the country's only private company engaged in the extraction and processing of rare earth metals, the Financial Times (FT) newspaper reported, citing sources.
According to them, the Pentagon's direct investment in the company of $400 million, as well as the provision of price guarantees almost twice as high as market prices, give it an advantage over others, undermine competitiveness and distort the market. One of the executives of a competing company, who requested anonymity, called the deal a "expensive“ operation that, in his opinion, resembles the “Chinese model” of government support for the industry.
As the publication explains, the deal was “part of the White House's strategy to eliminate China's dominance in the field of critical minerals and its domestic supply chain“. The US Department of Defense also concluded an agreement with MP Materials to produce rare-earth magnets - the most powerful among permanent magnets - to reduce America's dependence on foreign supplies.
With the commissioning of the plant, the construction of which is expected to begin in 2028, the US will be able to produce almost 10,000 tons of rare-earth magnets per year. Currently, the United States buys them mainly from abroad.
The 10-year agreement between the Pentagon and MP Materials also provides for a loan of 150 million. USD from the US Department of Defense from the company.