Apple Seals $500 Mn US Rare Earth Deal Amid China Curbs to Boost Local Production

Apple has signed a $500 million deal with MP Materials, for procuring rare earth magnets as the iPhone maker is facing pressure from President Donald Trump to produce its popular smartphones locally and eliminate dependency on China, according to CNN.

Apple will also partner with the company to develop a new recycling line in California, which will repurpose recycled rare earth materials to use in Apple products. This move comes after MP, which operates the only US rare earths mine, last week agreed to a multibillion-dollar deal with the USs Department of Defense that will see the Pentagon become its largest shareholder after agreeing to purchase $400 million of preferred stock, the firm announced on July 10, reported CNBC.

Apple's stock price has nearly doubled since the government deal was announced, according to Reuters. The company has bounced back since last year when it contemplated merging, with an Australian rival as profits fell in what CEO Jim Litinsky called a “very frustrating” market for rare earths.

With the help of this new deal, Apple intends to have a steady flow of rare earth magnets free from China - the world's largest producer.

Analysts said that Apple sees supporting US magnet production as a small price to pay compared to the long-term risk of losing access to these critical components.

"We're in an era where executives are willing to pay a significant premium for a reliable supply chain. They don't want stoppage," said Gracelin Baskaran, director of the critical minerals security program at the Center for Strategic and International Studies.

According to reports, China imposed export restrictions on rare earths in April in response to US President Donald Trump's tariffs. Although US and China reached a deal in June that has resolved much of the rare earth dispute, broader trade tensions continue to underscore demand for non-Chinese supply.

As part of the agreement, Apple will prepay MP $200 million for a supply of magnets, with deliveries scheduled to begin in 2027.

China Ban Spurs Diversification

Beyond mitigating China’s export restrictions, this deal also helps build US national security. According to the 2024 US Government Accountability Office (GAO) report, the critical importance of rare earth magnets in defense systems like radar, satellites, and precision-guided munitions.

“Rare earths and other critical materials are important to Department of Defense (DOD) because they have unique properties relative to other materials used to produce weapon systems,” stated the GAO report.

It warned that continued reliance on Chinese sources poses a “significant risks” to military supply chains and calls for efforts such as investing in extra capacity, expanding domestic production, diversifying its supplier base and engaging allied countries.