(Reuters) -MP Materials, which owns the only U.S. rare earths mine, said on Thursday it has stopped shipping the critical minerals to China for processing after Beijing boosted import tariffs to 125% in response to U.S. levies, sending the company’s shares down nearly 5%.
The move essentially halts a major source of revenue for MP Materials, which has relied on Chinese partners for years to refine the rare earths while it ramps up processing in California.
Rare earths are a group of 17 metals used to make magnets that turn power into motion for electric vehicles, cell phones and other electronics. China has long been the world’s largest producer and earlier this month halted exports, although MP and others have been working to boost U.S. capacity.
“Selling our valuable critical materials under 125% tariffs is neither commercially rational nor aligned with America’s national interest,” Las Vegas-based MP said in a statement.
MP produces rare earths concentrate from rock that it extracts from its California mine. Most of that concentrate had been sold under a take-or-pay contract to China-based Shenghe Resources – MP’s fourth-largest shareholder – for processing.
Representatives for Shenghe were not immediately available to comment.
Last year MP derived more than 70% of its revenue from the sale of that concentrate. The company said on Thursday that nearly half of its rare earths concentrate is now being refined in California and sold outside China. MP is due to report quarterly earnings and provide more details on May 8.
MP’s move comes after U.S. President Donald Trump on Tuesday ordered a probe into potential new tariffs on all critical minerals imports, a move aimed in part at boosting U.S. minerals processing.
MP said it is “in close contact with federal leaders and encouraged by their determination to support American industry,” adding it will continue to produce and stockpile concentrate material while ramping up California processing.
The company is also developing a rare earths magnet facility in Texas.
Shares of MP’s rivals also fell on Thursday, with USA Rare Earth losing 10%, NioCorp losing 25% and Ucore losing 15%.
(Reporting by Ernest Scheyder in Houston and Pooja Menon in Bengaluru; editing by Maju Samuel, Anil D’Silva and Marguerita Choy)
