Executives and elected officials gathered north of Fort Worth to mark a patriotic occasion Thursday.
MP Materials construction crews broke ground on a first-of-its-kind factory that will employ as many as 150 workers from the region and produce high-strength magnets and alloys for sustainable tech products like electric vehicle motors, wind turbines and products for the defense industry.
The Las Vegas-based company plans to domesticate a key piece of the supply chain for high-tech products, and it will do so at Ross Perot Jr.’s AllianceTexas site. The plant will be near the intersection of Independence Parkway and State Highway 170.
The globalization of supply chains for products like vehicles and computer chips has had a detrimental impact on the U.S. economy in recent years, with the Biden administration labeling a lack of domestic production for certain materials a major contributor to inflation.
Automakers, in particular, have struggled to source enough computer chips and metals to meet the demand for new cars, sending prices skyrocketing.
Currently, China controls the vast majority of rare earth deposits on the planet, forcing companies to turn to suppliers overseas that have seen significant disruptions during the pandemic.
“I am very proud that we will be making magnets again in America here in Fort Worth,” MP Materials founder, chairman and CEO James Litinsky said.
Already, General Motors has struck an agreement with MP Materials to purchase rare earth materials, alloy and magnets for use in a dozen of its electric vehicles, including the Cadillac Lyriq and the fully electric GMC Hummer. GM is expected to begin purchasing alloy from the company in late 2023.
“Right now in places like China and Russia they’re scared because of what you’re doing,” Fort Worth Mayor Mattie Parker told the crowd of executives and family members gathered at the site of the future factory.
The plant will be capable of producing half a million EV motors annually when it’s up and running next year. Perot, also in attendance, said he hopes construction can be completed even earlier so that MP Materials “can get to work.”
“We will never have energy independence or a true renewables industry until it is sourced in the United States,” Perot said.
Outside of China, there are very few sites harvesting rare earth materials needed for magnets engine components. MP Materials’ open pit rare earth mine in California is called Mountain Pass, and the new AllianceTexas facility allows the company to process the minerals it mines.
The company acquired Mountain Pass in 2017 after the previous owner declared bankruptcy, and it has restarted production at the site. MP Materials has been awarded millions in federal grants from the Department of Energy and Department of Defense over the last two years to support its restoration of Mountain Pass in San Bernardino.
Chinese interest and investor ire
Even as the company celebrates the groundbreaking, it’s simultaneously drawing the ire of investors who allege in a class-action suit that its executives violated U.S. securities law when MP Materials went public via a special purpose acquisition company in 2020.
The firm representing investors, Robbins Geller Rudman & Dowd LLP, is known for winning the largest award in a U.S. securities fraud case ever — a $7.2 billion award in the case against Enron in 2008.
Investors in the suit allege that executives didn’t perform due diligence when acquiring the bankrupt previous owner of Mountain Pass, ignored red flags about the mine’s profitability and artificially inflated profits with partially state-owned Chinese firm Shenghe Resources, which owns a 7.7% stake in the company. The suit also claims the ore at Mountain Pass is not “economically viable” to harvest.
At least one other owner of a rare earth mining site in the U.S. has called Shenghe’s involvement with MP Materials a vulnerability for the country.
Litinsky called the lawsuit “opportunistic” and “nonsense” on Thursday, pointing to MP Materials’ profitability. The publicly traded company posted pre-tax profit of $220 million last year.
“It’s a fraud on the public to even make that statement when you’re looking at a prior entity’s financials from a decade ago and saying an existing public company that’s profitable is somehow not economically viable. … look at the numbers,” Litinsky said.