America’s Rare Earth Rivalry Moves From the Mine to the Courtroom

Highlights

• MP Materials filed a lawsuit in Texas accusing USA Rare Earth, a former employee, and FOM Technologies of stealing proprietary grain boundary diffusion magnet technology.
• The case centers on neodymium-iron-boron magnet manufacturing secrets allegedly transferred by ex-engineer Kevin Elkins after he joined rival USA Rare Earth.
• America's thin domestic rare earth talent pool means engineers circulate among a handful of companies, making trade secret disputes increasingly likely.
• Both MP Materials and USA Rare Earth are pursuing mine-to-magnet strategies, putting their competing visions on a direct collision course in court.
• The lawsuit reveals that rebuilding a U.S. rare earth supply chain is not just a financial or geological challenge but now a legal and competitive one.

For years, Washington’s rare earth anxiety focused almost entirely on China. American officials warned about Beijing’s grip on the minerals and magnets used in fighter jets, electric vehicles, missiles, robotics and advanced electronics. Congressional hearings framed rare earths as a national security emergency. Billions in subsidies, loans and industrial incentives followed. Now the conflict has taken a different turn. It is no longer simply America versus China. It is America versus itself.

In a sweeping lawsuit filed May 22 in Texas Business Court, MP Materials (opens in a new tab) accused USA Rare Earth (opens in a new tab), a rival domestic developer, along with former employee Kevin Elkins and FOM Technologies, of misappropriating proprietary magnet manufacturing trade secrets.

At the center of the dispute is a highly specialized process known as grain boundary diffusion, or GBD, used to improve the performance of neodymium-iron-boron magnets, the powerful permanent magnets essential to many advanced technologies.

MP Materials claims the technology was developed over years through extensive internal research and carefully protected as confidential intellectual property rather than patented publicly. The company alleges that Mr. Elkins, a former engineer who later joined USA Rare Earth, improperly transferred confidential formulations that eventually surfaced during a third-party presentation involving FOM Technologies.

The lawsuit seeks injunctive relief, damages and the return of allegedly misappropriated materials.

But beyond the legal claims, the case exposes a deeper structural problem inside the American rare earth sector.

The United States is attempting to rebuild an industrial ecosystem that largely disappeared decades ago. China today dominates not only mining, but also refining, metallization, alloying and magnet manufacturing capacity. America’s domestic bench, by contrast, remains extraordinarily thin. That scarcity extends to talent.

A relatively small group of engineers, metallurgists and magnet specialists now circulates among the handful of companies attempting to establish domestic supply chains. In industries built around advanced materials science, employee mobility can quickly blur into accusations of trade secret theft.

MP Materials has emerged as the country’s most commercially advanced rare earth company, operating the Mountain Pass mine in California while building downstream magnet manufacturing capacity in Texas. USA Rare Earth has pursued a parallel “mine-to-magnet” strategy centered on its Round Top project in Texas and a magnet facility in Oklahoma.

The lawsuit now places those competing visions on a collision course. Several outcomes remain possible. The parties could settle quietly. MP could secure injunctions that slow USA Rare Earth’s development efforts. Or USA Rare Earth could successfully challenge the allegations and argue the litigation is an attempt to suppress competition during a strategically sensitive rebuilding phase.

Whatever the legal outcome, the dispute reveals a difficult reality confronting American industrial policy.

Rebuilding a rare earth supply chain is not only a geological or financial challenge.

It is now becoming a legal and competitive one as well.