On Tuesday, Joe Biden used a White House event dedicated to promoting America’s domestic supply chain to showcase a mining company owned in part by a Chinese conglomerate.
Biden announced a Pentagon government contract worth $35 million to MP Materials as part of the Administration’s move to increase American production of rare earth minerals. MP Materials is based in Las Vegas but has been centrally involved in helping the Chinese dominate the global supply chain for rare earth minerals.
MP Materials is 8 percent owned by Shenghe Resources Holding, a firm partially owned by the Communist Chinese government. Shenghe took a lead role in a 2017 deal in which MP Materials purchased a mine located in Mountain Pass, California, out of bankruptcy protection. Shenghe is also the largest customer of MP Materials, producing almost all its reported annual income of $100 million.
During the Trump Administration in 2020, the Department of Energy warned government scientists not to collaborate with MP Materials personnel because of the connections between the company and the Chinese government.
The new Pentagon contract will help pay for MP Materials’s production of rare earth minerals at its California mine. The minerals are crucial to producing magnets used in electric vehicle batteries, motors, and various defense systems.
James Kennedy is a consultant and rare earth minerals industry expert who has previously raised concerns about US government funding of MP Materials. Kennedy described the Chinese investment in MP Materials as a “geopolitical ruse” that helps China control a virtual monopoly on the US rare earth minerals market.
Despite the litany of recent concerns about MP Materials and its Chinese connections, the White House had Chairman James Litinsky appear at Tuesday’s event with Biden, California Democratic Governor Gavin Newsom, and Energy Secretary Jennifer Granholm.
The MP Materials chairman said that his company was working to bring America’s supply chain “home” but did not mention any of the firm’s connections with China. No public reporting has revealed whether the new Pentagon contract restricts MP Materials’ ties with Shenghe.
Shenghe has strengthened China’s grip on the global supply of rare earth minerals by partnering with mining firms in Greenland, Australia, and the United States.