Executives from critical mineral companies that have received investment from the Trump administration told House lawmakers that partnerships with the United States government are essential in a market they describe as anything but free.
The House Select Committee on China held a hearing on Wednesday, with testimony from the chief executive officer at Lithium Americas, Jonathan Evans, and the executive vice president of corporate affairs at MP Materials, Matthew Sloustcher.
As part of the Trump administration’s approach to building the domestic minerals supply chain, it has partnered with both Lithium Americas and MP Materials, an unusual level of direct federal intervention in the market.
In the summer, the administration took a direct stake in MP Materials to build a rare-earth magnet supply chain by constructing the company’s second U.S. magnet facility. The federal government also acquired a 5% stake in Lithium Americas, a Canadian company developing a lithium mine and processing plant in Nevada.
The hearing comes a week after a report released by the committee found that China has engaged in anti-competitive behavior, such as overproduction, dumping, and government subsidies, in its critical mineral industry. Rep. Dusty Johnson (R-SD) noted that the government needs to push back against China’s dominance in the market, but raised concerns about the government taking a stake in private companies, warning that it could harm free-market capitalism.
“The U.S. government has taken an equity stake, Mr. Sloustcher and Mr. Evans, in your companies, that’s not normally the first place where my mind goes to what our government should do,” Dusty said.
Evans and Sloustcher told lawmakers that the partnerships between the government and its companies are necessary to compete with Chinese mineral companies due to the companies not operating in a free market.
“Free-market capitalism is the engine of our economy … but the reality is that we are not operating in a free market,” Sloustcher said. “China is both a monopoly and non-market economy.”
He added the most important features of MP Materials’ agreement with the Department of Defense is it establishes a price floor commitment of $110 per kilogram for Neodymium-Praseodymium (NdPr) metal and oxide products necessary to produce permanent magnets.
Evans of Lithium America said, “one of the difficult parts for an industry like ours is the upfront capital cost because again we are not in a level playing field.”
He said that the deal signals that the industry is important. He noted that his company has attracted partners like General Motors. Evans said that, without the partnership with the government, they would not be receiving the private capital.
“I am open to the idea that this bold approach that is unique to your industry … I just hope it is not an example across other industries,” Johnson said.
The Trump administration has said it would seek to make similar deals across industries they believe are essential to the economy.
The top Democrat on the committee, Rep. Raja Krishnamoorthi (D-IL), emphasized that China has been engaging in a price-fixing approach, harming the U.S. critical mineral sector. Krishnamoorthi listed several products where minerals are needed to manufacture applications, bringing out a blender as an example.
“Now that China dominates rare earths and magnets, they have the power to not only unplug this blender but our entire economy,” Krishnamoorthi said.
“I think it is time for a Manhattan Project like effort to end our rare earth dependency on China,” he said. “But if we just increase production and not the tools and the talent we won’t solve the problem.”
The Trump administration has been exploring ways to reduce the United States’s reliance on China’s critical minerals amid concerns about national security risks. China has leveraged its dominance in the market against the United States by halting exports of Chinese minerals as part of trade negotiations. These minerals are used in energy and defense applications.
HOUSE VOTES TO CANCEL BIDEN DRILLING AND MINING RESTRICTIONS IN ALASKA AND WYOMING
China and the United States reached a truce last month over Beijing’s most recent export restrictions on an additional five rare earths. China agreed to suspend the restrictions for one year.
According to the U.S. Geological Survey, between 2020 and 2023, the U.S. imported nearly 56% of its rare earth compounds and metals from China.
But while the U.S. and China reached an agreement over the latest export controls, it does not address restrictions put in place by China earlier in the year. In April, China suspended exports of seven types of rare-earth metals and magnets, requiring companies to obtain a license from the ministry for any exports.
