The critical national security battle the media isn’t telling you about

John Moody,

A fascinating battle is shaping up between two American entrepreneurs for control of a desert mine in California that could be the key to reviving domestic production of rare earths, the metals and materials that are critical to our national security.

But there’s a catch: one entrepreneur is linked to a Russian billionaire. The other is relying on a technology company – from China.

Mountain Pass is an unsightly hole in the earth once owned by a company called Molycorp that produced more critical metals than any facility in the world. Molycorp went bankrupt in 2015 because it could not compete with Chinese rare earth producers, who don’t have the same environmental regulations that govern U.S. mining.

China now produces 95 percent of the world’s rare earths – metals that are needed for U.S. fighter jet engines, satellite guided rockets, missiles like the Tomahawk Cruise that was used to attack Syria last month, and consumer products ranging from computers to iPhones to GPS systems and microwave ovens.

China now produces 95 percent of the world’s rare earths – metals that are needed for U.S. fighter jet engines, satellite guided rockets, missiles like the Tomahawk Cruise that was used to attack Syria last month, and consumer products ranging from computers to iPhones to GPS systems and microwave ovens.

Bellwether has argued that our complete mineral reliance on China – which could cut off exports any time, for any reason – threatens our national security. Now, two entrepreneurs who share that concern are offering different visions of how to revive our domestic production.

Tom Clarke, who has turned abandoned coal mines into more environmentally friendly operations, wants to do something similar with Mountain Pass, though he admits he has no background in critical minerals. He hopes to get financing from Vladimir Iorich, a Russian-born investor who made a fortune producing cheap steel – that kind that has reduced American production to a fraction of its former output. Clarke’s biggest stumbling block: his nemesis owns some of the mineral rights to Mountain Pass.

“Our plan is no different from what we’ve done in Appalachia,” says Clarke. “We are going to put people back to work.” Clarke acknowledges that not having any Mountain Pass mineral rights makes it more difficult for his plan to succeed, and is considering importing foreign ores and processing them in California.

The other contender, hedge fund manager James Litinsky, says he’ll put Mountain Pass back to work using the most advanced technology available. His problem: that technology comes from Shenghe Resources, a Chinese company that would be unlikely to do anything against its government’s wishes.

Both men say their partners will not have control of a revived Mountain Pass. But neither can guarantee that promise. Further complicating the situation, any attempt to bring foreigners into an American business would have to be reviewed by the Committee on Foreign Investment in the United States (CFIUS), an arm of the Treasury Department.

Litinsky says that his plan has cleared financial and operational hurdles and, once approved, could result in hundreds of jobs for American workers at an environmentally friendly facility.

There’s no guarantee that either Litinsky or Clarke will succeed in putting Mountain Pass back to work when their bids are considered by a bankruptcy judge in June. But either plan would be a welcome first step in restoring American mining, even if there are some foreign fingers in the pie.