The Defense Department on Tuesday awarded MP Materials Corp. [MP] a $35 million contract to support construction of a commercial scale processing facility for heavy rare earth elements (HREE) used in the manufacture of high-performance permanent magnets, part of the company’s plan to bring back a domestic supply chain for U.S. magnetics.
“The primary applications for HREEs include permanent magnets used in products ranging from electric motors in electric vehicles, to the energy generators within wind turbines,” Deborah Rosenblum, acting assistant secretary of defense for industrial base policy, said in a statement. “Without rare earths, these products would not be possible.”
The contract, coupled with a $700 million investment by MP Materials in a number of projects across its operations in California and Texas, will result in the first HREE processing and separation facility of its kind and will support defense and commercial applications, DoD said. The facility will be built in Mountain Pass, Calif.
The DoD contract also requires MP Materials to find ways to lower HREE production costs to be level with the international market within five years of the first production batch.
MP Materials is also constructing a magnetics facility in Fort Worth, Texas that will transform the materials the company processes at Mountain Pass into metal, allowing eventually finished magnets.
MP Materials is working to integrate HREE production into the defense industrial base to support magnet production in Fort Worth, which is expected around 2025, a company spokesman told Defense Daily.
The government’s investment is part of the Biden administration’s push to bolster America’s supply chain resiliency and reduce dependence on foreign sources, in particular from adversarial nations. Last June, the administration released a report on America’s supply chain vulnerabilities that said China controls about 55 percent of global rare earth mining capacity and 85 percent of rare earth refining.
The White House said in a fact sheet on Tuesday that China controls 87 percent of the global permanent magnet market.
The June 2021 report called for the U.S. to invest domestically in critical materials, minerals and semiconductors to better ensure the reliability of its supply chains for national and economic security.
“The ability to mine, process, and refine rare earths at Mountain Pass is foundational to a national effort to secure the U.S. rare earth supply chain,” James Litinsky, chairman and CEO of MP Materials, said in a statement.
In January, Sens. Tom Cotton (R-Ark.) and Mark Kelly (D-Ariz.) introduced the Restoring Essential Energy and Security Holdings Onshore for Rare Earths bill that among other things would prohibit DoD from using rare earth metals from China in sensitive systems by 2026, require DoD and the Department of Interior to create a strategic reserve of rare earth elements and products by 2025, and require defense contractors to track and disclose the origins of rare earth magnets used in systems provided to the U.S. military.
Also on Tuesday, the U.S. Geological Survey released an updated list of mineral commodities critical to U.S. economic and national security, adding 15 minerals to the list, which was first published in 2018.