Two rare-earth companies central to US ambitions to boost its domestic supply chain are locked in a legal battle. China has blacklisted both.
President Donald Trump's administration is pouring billions of dollars into a public-private push to loosen China's grip on global supply chains for the materials that power electric vehicles, defence munitions and other advanced technologies.
The legal tension focuses on two such US-backed companies.
MP Materials, which has a joint venture with Saudi mining company Maaden through its partnership with the Department of Defence, operates the Mountain Pass project in California. It is the only operating US rare-earth site.
The government also plans to take a minority stake in Oklahoma-based USA Rare Earth, which is producing a large magnet facility in Stillwater and developing the Round Top Mountain deposit in Texas.
MP Materials filed a lawsuit in May against USA Rare Earth, alleging the mining company stole its proprietary technology through a former employee, Bloomberg reported at the time. The lawsuit, seeking $5 million in damages, alleges a former MP Materials engineer shared “grain boundary diffusion” formulations with USA Rare Earth.
"USA Rare Earth believes that the lawsuit is completely without merit and was filed for an improper purpose. We have denied the claims in court and will respond more thoroughly through the legal process," a company representative said in a statement.
MP did not respond to The National's request for comment.
The legal dispute highlights the growing pains within the US rare-earth industry and Mr Trump's public-private push to counter Beijing's dominance. China accounts for about 90 per cent of the world's rare-earth magnet supplies.
“There's a lot of money, there's a lot of intent, there's a lot of ambition but there are speed bumps along the way,” said Rachel Ziemba, founder of geopolitical risk firm Ziemba Insights.
“If anything, it highlights some of the intellectual property concerns that might be at play, not only within the US, but also in partnerships with other countries, including those in the Gulf.”
The legal tension between MP Materials and USA Rare Earth highlights the growing pains within the industry at a time when new export restrictions from Beijing threaten to drag Washington into a new trade row.
China last week listed the two companies alongside eight others it said are linked to aiding the US military. The move was an apparent retaliation for Washington placing several Chinese companies, including BYD and Alibaba, under restrictions in June.
“I think all of these different tensions make it difficult to see the US-China truce moving from a truce to some sort of greater grand bargain, with more trade and investment between the two countries, as it was envisioned,” Ms Ziemba said.
The latest restrictions are likely to test a truce between Washington and Beijing after last year's trade skirmish in which the two global powers imposed tit-for-tat tariffs on each other. US tariffs on Chinese goods at one point climbed to 145 per cent, while China at one point placed a 125 per cent charge on US imports.
Mr Trump sought to maintain the trade truce when he visited Chinese President Xi Jinping in Beijing in May.
A White House readout following the meeting highlighted ways to expand the US-China economic relationship, including through expanding access for American business into China and increasing Chinese investment in US industries.
