Today’s briefing:
— Why is the Pentagon buying miners?
— You can’t say that in Cuba
— Our next vacation destination
Good morning {{first_name | Intriguer}}. If you’re anything like me, you’ll likely have skipped over the recent headlines about MP Materials (a mining firm) making moves.
Not only has it entered a deal with Apple to develop a multi-million dollar rare earths recycling facility, but they’ve also inked another huge deal with the US Department of Defense to try and disrupt China’s dominance in rare earths.
For years now, Intrigue’s annual ‘predictions’ editions have prophesied something big in the rare earths space — maybe that moment has finally come...? Let’s dive in.
Number of the day
50%
That’s Canada’s new tariff on imported steel beyond certain thresholds, as Prime Minister Carney moves to shield domestic producers from the impacts of US tariffs.
Let’s talk about rare earths
Almost a decade ago, James Litinsky took over a bankrupt mine in the Nevada desert for a cool $20.5M. Buying Mountain Pass (MP), the mine saddled with $1.7B debt, seemed a bold move given the last guy went out of business due to low rare earth prices. But Litinsky’s gamble might’ve now paid off because the Pentagon just pledged to buy…
A $400M equity stake in his company (MP Materials), AND
His mine’s output for 10 years… at double the current market price.
And as if Litinsky’s week wasn’t already a cracker, it somehow got better: Apple entered centre stage with a $500M cheque to buy the firm’s (future) rare earth magnets, so Tim Cook can keep making that beloved iPhone you’re reading us on.
So that’s an obscure $5B miner getting some serious love from the $900B Pentagon and $3 trillion Apple.
But where’s the Intrigue?
It’s in the rare earths, which a) aren’t actually rare though can be tricky to refine, and b) are a key input across tech, renewable energy, EVs, defence, medicine, and beyond.
But it’s really the c) that’s the kicker here: China controls ~90% of the world’s rare earths processing, or closer to 100% if you get into certain heavy rare earths.
And that dominance wasn’t accidental. Rather, it was the product of decades of subsidies, lax rules, and below-cost pricing, which some claim was a strategy to dissuade capitals from developing their own sources, leaving Beijing in the driver seat. Why do that?
The world first got a hint in 2010, when a long-running Japan-China maritime border dispute flared up, and Beijing flexed its ‘ceps by cutting Tokyo’s access to rare earths! Japan backed down, but the whole world sat up and paid attention.
By the time Beijing pulled a similar flex against the US in 2023, Western capitals were already scrambling to diversify their supplies.
And that’s where the ol’ debt-ridden Mountain Pass comes in. But first, two fun facts:
Guess another of its top investors? Yep, a semi-state-owned firm in China.
And guess where it sent its rare earths for processing? Yep, to China.
So, after years of investment, MP Materials announced in January it’s now America’s first producer of neodymium and praseodymium (NdPr). And that timing was brilliant: within weeks, President Trump was upending trade as we knew it, with China firing back even tighter rules around its rare earths. By last month, its rare earth exports had dropped 75%!
So what now?
The largest investor in MP Materials is now the Pentagon. And the firm’s top priority is now to build a new factory for rare earth magnets, hoping to 10x its output by 2028.
We say ‘hoping’ because this vertical integration — way beyond the firm’s traditional mining roots — is a massive lift both in terms of operations, but also tech: eg, its heavy rare earths separation tech is still a work in progress, so it’s apparently developed (with Apple) some very niche recycling tech to fill the gap.
Anyway, the race is on.
Intrigue’s Take
This is a big deal leading to so many big questions. Here are three:
Why was a US rival’s state-owned firm ever allowed to become a top investor in America’s only source of rare earths? There’s an argument US investors were wary of the reputational risk around this kind of mining (it can get toxic). But while ESG has lost momentum, the Pentagon still felt the need to step in, which takes us to…
Does this now make MP Materials a state-owned firm? Its CEO gave an interesting non-answer, noting, “we in the West with free market capitalism can take on mercantilism, but doing so in a way that is along with our value system.” Ie, if it’s pursuing Western values, and tackling a market failure, then who cares?
And so… is the US getting more mercantilist? Everyone is. Capitals are pooling whatever strengths they have, and they’re fusing the old military-civilian divide to do so. This deal is one heck of an example, built on so much equity, a generous price floor, and big offtake promises. Why? Because failure isn’t an option.
Sound even smarter:
The Mountain Pass mine seems to have most of the 17 rare earth minerals, though its heavy rare earths are apparently less abundant.
The West’s only commercial producer of separated heavy rare earth oxides is now Australia’s Lynas, which is currently scaling up its facilities in Malaysia.
MP Materials has seen its share price double since this deal broke last week.
Meanwhile, elsewhere…
🇸🇾 SYRIA - Not now, neighbour.
Syria’s leader (al-Sharaa) has withdrawn his troops from sectarian violence in the south, after Israel hit his Damascus defence ministry citing claims his forces have been targeting the Druze minority. Al-Sharaa is accusing Israel of trying to keep Syria weak, as word emerges of a possible sectarian ceasefire in the area. (CNN)
🇸🇿 ESWATINI - Short stay.
The tiny African kingdom of Eswatini has announced it’s sending five US deportees to their home countries (Vietnam, Jamaica, Laos, Yemen, and Cuba), in what’s America’s first third-country deportation since the Supreme Court’s green-light. (NYT)
Comment: The idea is to get the deportees (all felons in this instance) to self-deport to their countries of origin, which otherwise refuse to accept them involuntarily. But we’re curious what the US has offered Eswatini to play middle man — the deal is classified, but we’re guessing it’s a mix of economic incentives plus political support (the ruling family has no shortage of critics at home and abroad).
🇰🇷 SOUTH KOREA - Dead spy chief on trial.
A court has kicked off the retrial of former spy chief Kim Jae-gyu, who was executed in 1980 after shooting then-autocrat Park Chung-hee dead in 1979. The assassin’s family wants him remembered not as a power-hungry traitor, but a hero. (Yonhap)
🇺🇦 UKRAINE - Everyday I’m (re)shufflin’.
President Zelensky has appointed 39-year-old Yuliia Svyrydenko as his new prime minister, promoting her from deputy PM after she played a key role in closing the minerals deal with the US and getting bilateral ties back on track. (AP)
Comment: This broader shuffle potentially solves other problems, with word his defence minister might now replace Ukraine’s current ambassador to the US, who’s been unpopular with Trump’s team since arranging last year’s Zelensky visit to the electoral battleground state of Pennsylvania.
🇦🇺 AUSTRALIA - Don’t put words in my mouth.
Responding to state media reporting on his meeting with Xi Jinping, Australia’s Anthony Albanese has clarified that Australia seeks no change to the status quo on Taiwan. Meanwhile, China’s outlets seem to have glossed over what Albanese did say, like raising concerns about China’s recent live fire drills off Australia’s coast, and the plight of a long-detained Australian. (SBS)
Comment: Governments traditionally work together on a joint press release for high-level meetings, but it’s tricky with China given there are topics it doesn’t want its own people to know about (like the ones Albanese raised with Xi). So the reality of a meeting with China these days is both sides often race to get their own version of the discussion out first, hoping to shape public discourse in their own favour.
🇿🇼 ZIMBABWE - Lithium fever.
Zimbabwe’s state-owned miner is planning a new $250M lithium processing plant in partnership with two unnamed China-based companies. (BI Africa)
Comment: This is the kind of deal Zimbabwe had in mind when it first banned the export of raw lithium in 2022. A tighter ban on semi-processed concentrate is due to kick in from 2027, but the country is setting its sights even higher up the supply chain: it just announced successful testing of its own lithium battery.
🇨🇺 CUBA - You can’t say that.
The island’s labour minister has resigned after claiming there were no beggars in Cuba, only people “pretending to be beggars to make easy money”. Her comments sparked outrage in a nation still facing an economic crisis. (BBC)
Extra Intrigue
Meanwhile, in other worlds…
Finance: The world’s biggest investment firm (BlackRock) just copped a $52B withdrawal from a single Asia-based client — but don’t shed too many tears, because the fund still hit a record $12.5 trillion under management.
Environment: Athens is reviving a 2000-year-old Ancient Roman aqueduct to fight water scarcity in the city.
Tech: Former OpenAI CTO Mira Murati has secured $2B in fresh capital for her artificial intelligence startup, Thinking Machines Lab.
UNESCO site of the day
Credits: Gola Rainforest National Park.
If you’re having trouble picking your next destination, the folks at UNESCO helpfully just dropped their latest edition of the World Heritage List. The 26 new locations include:
Sierra Leone’s primate-famous Gola Rainforest National Park (above)
Germany’s Neuschwanstein Castle (thought to have inspired Disney’s logo), and
Australia’s Murujuga rock art site, estimated at up to 50,000 years old.
Today’s poll
Do you think this Pentagon / MP Materials partnership will work?
Yesterday’s poll: Do you think CEOs are the 21st Century equivalent of rockstars?
🤘 Yes, they're cultural icons now (21%)
🙅 Nah, they don't resonate (75%)
✍️ Other (write in!) (4%)
Your two cents:
🙅 A.C: “Unlike rockstars, I believe most people hold negative opinions on CEOs, and the uber wealth they have accumulated while gaming the system.”
🤘 R.C.O: “With 62% of American adults in the stock market, CEOs matter. I'd argue that CEOs have always been rock stars - look at the public perception of Rockefeller, Morgan, and Carnegie. What's different now is the ease that CEO actions are publicized.”
✍️ A.C.C: “The veneration of CEOs as celebrities further polarizes our pop culture landscape. CEOs are either idolized or vilified, and this extreme dichotomy creates sociopolitical division!”