Apple Inc. has struck a $500 million deal to buy rare-earth minerals from MP Materials Corp., the US producer that just last week secured backing from the Pentagon.
The two companies will build a factory in Texas, with neodymium magnet manufacturing lines tailored for Apple products, the iPhone maker said Tuesday in a statement. Apple said the spending on rare-earth minerals is part of its earlier pledge to invest more than $500 billion in the US over the next four years.
Shares of MP Materials gained 11% in pre-market trading. Apple’s stock was little changed. Fox News reported some details on the supply deal earlier on Tuesday.
The world’s dependence on China for rare-earth permanent magnets that are essential for consumer tech, cars, wind turbines and fighter aircrafts, has become a flashpoint in the Asian nation’s trade war with the US. After the Trump administration imposed 145% tariffs on China, boasting that it had the upper hand, Beijing turned the tables by essentially shutting down exports of the critical component. MP Materials operates the sole US rare-earth mine at Mountain Pass in California.
The increased production will support dozens of new manufacturing and R&D jobs, Apple said. The two companies will also work together to establish a rare earth recycling line in Mountain Pass, California, and develop novel magnet materials and innovative processing technologies to enhance magnet performance, according to the statement. That facility will allow MP Materials to take in recycled rare earth feedstock and use it in Apple products.
“Rare earth materials are essential for making advanced technology, and this partnership will help strengthen the supply of these vital materials here in the United States,” said Apple Chief Executive Officer Tim Cook in the statement.
China curbs reverberated across global supply chains: Ford Motor Co. and Suzuki Motor Corp. idled some production. Elon Musk said shortages were hurting his robotics business. And governments rushed to secure the few suppliers outside of China.
Signs have emerged in recent weeks that the US and China are beginning to deliver on promises made in trade talks held in Geneva and London in the past two months. China agreed to resume shipments of rare earths — with exports surging in June — while the Trump administration has reversed some restrictions on technology exports to China, including some semiconductors from Nvidia Corp. and Advanced Micro Devices Inc.
Still, in its biggest move yet to push back against China’s weaponization of rare earths, the Pentagon took a $400 million stake in MP last week to secure supplies of magnets critical for military and other applications. The deal came with $1 billion in financing from JPMorgan Chase & Co. and Goldman Sachs Group Inc. to fund a major new plant.
While the export halt boosted prices and sparked fears of shortages, over the longer run western producers like MP Materials and Australia’s Lynas Rare Earths Ltd. have struggled to turn a profit due to weak prices and oversupply.
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