MP Materials has sued USA Rare Earth, alleging a former employee stole proprietary technology for permanent magnets used in electric vehicles and defense systems. The lawsuit marks a clash between two US rare earth producers that have secured Trump administration backing for domestic supply chain development. MP claims USA Rare Earth "repeatedly failed to meet its commercial targets" and resorted to theft.

USA Rare Earth secured $1.6bn in conditional funding this year while MP received a government deal with price guarantees. Both companies represent Washington's effort to break China's dominance in rare earth minerals. MP uses a proprietary technology to improve magnets' coercivity, a product of "millions of dollars" of investment, according to the Texas lawsuit filed last week.

The rare earths sector has seen accelerated dealmaking as western companies race to develop independent supply chains. MP has signed an agreement with General Motors, while USA Rare Earth targets commercial-scale mining by 2028. The legal battle highlights tensions in the critical minerals race.