WASHINGTON-A remote mountain mine in the California desert is poised to get a boost from the Pentagon, which sees the metals it extracts there as vital for national defense-but vulnerable to Chinese dominance over the supply chain.
The Mountain Pass mine is the only domestic source for rare-earth minerals, which are needed for electronics, lasers, magnets and other applications used in weapons systems. The minerals require special processing after extraction, which is now done in China because the U.S. doesn’t have any facilities to do so.
To eliminate that dependence, the Defense Department is helping to pay for developing a processing facility at the Mountain Pass mine, which is controlled by the Chicago hedge fund JHL Capital Group.
The fund’s head, James Litinsky, first invested in Mountain Pass as a bet that growing rivalry between the world’s two largest economies would make its rare earths increasingly valuable. He said the Pentagon’s grant and growing U.S. government interest in his business validates that investment.
“These supply-chain issues are now front and center,” Mr. Litinsky said. While the U.S. is now grappling with the coronavirus pandemic, “the industrial policy is just as much of a long-term crisis,” he said.
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