VINACHEM

China’s weaponization of rare earths in its trade war with the US will spark a much greater focus on American supply security for critical minerals, according to MP Materials Corp., the only US miner of the key materials used in smartphones and defense applications.

“Regardless of how trade negotiations evolve from here, the system as it existed is broken, and the rare-earth Humpty Dumpty, so to speak, is not getting put back together,” the miner’s chief executive officer, Jim Litinsky, said on an earnings call last Friday.

China, which dominates global supply, put export restrictions on seven types of rare earths last month, widely viewed as a response to President Donald Trump’s trade assault. Companies including Ford Motor Co. have warned of shortages, and US negotiators had hoped to address rare earths in their Geneva appointment with Chinese officials, according to people familiar with the matter.

The teams emerged from two days of talks touting “substantial progress” toward resolving trade differences, leaving markets waiting for more details due to be outlined later on Monday.

Litinsky used the company’s earnings call — before the meetings in Switzerland — to argue that China’s measures were a decisive break with the past by exposing the vulnerability of key industries. MP Materials began mining rare earths in California in 2017, started refining in 2023, and plans to sell rare-earth magnets to General Motors Co. by the end of 2025.

“This idea that there was a threat that has now been utilized has really changed psychology, I think, from everybody across the board,” Litinsky said. “My impression from conversations with the Department of Defense is that there is a full-on recognition that we can’t be reliant on Chinese magnetics for national security purposes.”

China’s previous use of rare earths as a trade weapon — against Tokyo more than a decade ago — mobilized Japanese industry to significantly reduce its reliance on Chinese supplies. The US and other western nations had already begun moves to mitigate China’s grip on critical minerals, but the curbs on rare earths and other niche commodities has prompted greater urgency.

“For years, we have warned that the global rare-earths supply chain was built on a single point of failure,” Litinsky said. “With China’s sweeping tariffs and export restrictions, that geopolitical fault line has now become a commercial reality.”