By JOSH FUNK, Associated Press
MP Materials, which runs the only American rare earths mine, announced a new $500 million agreement with tech giant Apple on Tuesday to produce more of the powerful magnets used in iPhones as well as other high-tech products like electric vehicles.
This news comes on the heels of last week’s announcement that the U.S. Defense Department agreed to invest $400 million in shares of the Las Vegas-based company, establish a floor for the price of key elements and ensure that all of the magnets made at a new plant in the first 10 years are purchased.
That unusual direct investment in the company makes the government the largest shareholder in MP Materials.
“This is the kind of long-term commitment needed to reshape global rare earth supply chains,” Neha Mukherjee, a rare earths analyst with Benchmark Mineral Intelligence, said in a research note on the Pentagon deal.
Rare earths are a key concern in ongoing U.S. trade talks. China dominates the market and imposed new limits on exports after President Donald Trump announced his widespread tariffs. When shipments dried up, the two sides sat down in London.
Despite their name, the 17 rare earth elements aren’t actually rare, but it’s hard to find them in a high enough concentration to make a mine worth the investment. They are important ingredients in everything from smartphones and submarines to wind turbines and fighter jets.
The agreement with Apple will allow MP Materials to further expand its new factory in Texas to use recycled materials to produce magnets that make iPhones vibrate. The company expects to start producing magnets for GM’s electric vehicles later this year, and this agreement will let it start producing magnets for Apple in 2027.
The Apple deal represents a sliver of the company’s pledge to invest $500 billion domestically during the Trump administration. And although the deal will provide a significant boost for MP Materials, the agreement with the Defense Department is likely to be even more meaningful.
Mukherjee, the analyst, says the Pentagon’s 10-year promise to guarantee a minimum price for the key elements of neodymium and praseodymium will guarantee stable revenue for MP Minerals and protect it from potential price cuts by Chinese producers that are subsidized by their government.
The Apple deal to produce magnets from recycled materials will also help, she said, but it won’t provide enough magnets to satisfy demand, meaning more sources of these elements are still needed.
Steve Christensen, executive director of the Responsible Battery Coalition, an association representing battery makers, automakers and battery sellers, said he’s optimistic that these new investments in MP Materials might be part of a larger trend of increasing domestic production and processing of these key elements.
“Expanding extraction is great, and we need more of it and investments along the value chain,” Christensen said. “The metals produced from MP will lessen our dependence on China.”
That’s a priority for Trump, and his administration is both helping MP Materials and trying to encourage the development of new mines that would take years to come to fruition. China has agreed to issue some permits for rare earth exports but not for military uses, and much uncertainty remains about their supply.
The fear is that the trade war between the world’s two biggest economies could lead to a critical shortage that could disrupt production of a variety of products. MP Materials can’t satisfy all of the U.S. demand from its Mountain Pass mine in California’s Mojave Desert.
The deals by MP Materials come as Beijing and Washington have agreed to walk back on their non-tariff measures: China is to grant export permits for rare earth magnets to the U.S., and the U.S. is easing export controls on chip design software and jet engines. The truce is intended to ease tensions and prevent any catastrophic fall-off in bilateral relations, but is unlikely to address fundamental differences as both governments take steps to reduce dependency on each other.
Associated Press writers David Klepper and Didi Tang in Washington and Michael Liedtke in San Francisco contributed.
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