Caught between Trump and its biggest market, America’s sole rare earths mine is an unusual victim in the US-China trade war

MP Materials, which runs the sole operating rare earths mine in the United States, is an unusual victim in the year-long tit-for-tat trade war between the two largest economies on the planet, as the conflict looks set to open up a new battlefront over technology.

The operator of the Mountain Pass mine in California said it will kick-start its own processing operation by the end of 2020, after China last week more than doubled an import duty on concentrates to 25 per cent effective June 1. MP exports pellets – ground-up ores that contain oxides of rare earth elements – to China for processing into neodymium, cerium and other elements used in magnets, electric vehicles, smartphones and a myriad of industrial applications and electronic products.

“A 25 per cent tariff is likely to make domestic sources of rare earth ores in China more competitive, although importing ore still circumvents the mining quota and associated environmental legislation,” said David Merriman, a London-based analyst at Roskill Information Services.

US President Donald Trump, who ordered his administration to more than double US duties on US$200 billion worth of Chinese products to 25 per cent, had wanted to slap a 10 per cent tariff on Chinese rare earths in July, but dropped it from a long list last September.