Not since the first world war, when America’s government nationalised the railroad system, has it made the kind of investment it announced on July 10th. For $400m, the Department of Defence acquired a 15% stake in MP Materials, making it the largest shareholder in the country’s sole producer of rare-earth metals. The money will allow the business, with operations including a mine in California and a factory in Texas, to dramatically increase production of the magnets needed for fighter jets, electric vehicles, smartphones and more. On July 15th Apple, the iPhone-maker, joined in with a $500m deal to buy magnets from the company and help build a rare-earth recycling facility.

America relies on China for around four-fifths of its rare-earth products, giving its rival a worrying chokehold over various industries. China has used this to its advantage in the current trade spat, slapping export controls on the products in April seemingly to force Donald Trump to ease tariffs.

To reduce this dependence, America is betting on MP Materials. Mountain Pass, the mine that gives the firm its name, was closed in 2002 owing to competition from cheap Chinese imports, wastewater issues and the cost of complying with environmental rules (separating rare-earth oxides from ore is a dirty business). It was bought in 2008 and restarted in 2012; three years later its owner went bankrupt. A pair of financiers took control in 2017, founding MP Materials. Production began at its Texas factory in January this year. Around 8% of the company’s shares are owned by Shenghe, a Chinese rare-earth miner that helped it get off the ground and, until recently, was its biggest customer (MP Materials ceased shipments to China in April, though it has said its commercial arrangement with Shenghe remains “in effect”).

Will the government’s strategy work? Environmental rules pose a challenge, and may need to be loosened if rare-earth refining is to expand. Picking winners, moreover, is risky—as investors in Northvolt, Europe’s failed battery champion, know well. The story of Mountain Pass is not over yet. ■

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