MP Materials sues USA Rare Earth over alleged magnet technology theft

MP Materials, the largest U.S. rare-earth miner, filed the lawsuit in Texas accusing USA Rare Earth of stealing the grain boundary diffusion technique. MP said it spent years developing the method at a small industrial space it called “The Garage” — also referred to as “Bobcat” — and chose not to patent the technology to avoid public disclosures. MP Chief Executive James Litinsky described the effort as “sort of a private-market Manhattan Project.”

The lawsuit centers on Kevin Elkins, a materials science and engineering Ph.D. who worked at MP from 2022 to 2024 as a senior engineer in its magnetics division. After leaving MP, Elkins joined USA Rare Earth’s magnetics operations as an associate director and was later promoted to director, according to his LinkedIn profile. MP is seeking at least $5 million in damages and alleges that Elkins took sensitive information about the grain boundary diffusion formula.

Elkins denies the allegations. USA Rare Earth, in a rebuttal filed in Texas court last week, said the technology is “readily ascertainable via independent development, reverse engineering, and/or other proper means.” A spokeswoman for the company described MP’s claims as “baseless.”

MP said that during a meeting with an industrial machinery company involved in magnet making, the machine maker briefed an MP executive on a grain-boundary-diffusion technique that precisely matched MP’s own, down to specific formula components. The machine maker said it had worked with an Oklahoma-based magnet maker on the technique. Because USA Rare Earth is based in Stillwater, Oklahoma, MP said it believes the episode demonstrates that the competitor and Elkins had come into possession of MP’s technology.

A spokesman for MP said: “Competition is good but blatant theft is unacceptable.”

USA Rare Earth said in a statement that it believes “this lawsuit amounts to nothing more than an attempt by MP to slow USAR’s bold vision and significant momentum,” referring to itself by its Nasdaq ticker symbol.

The battle between the two companies unfolds as the urgency to establish a domestic rare-earth supply chain has intensified. China controls about 90% of the world’s rare-earth magnet supplies and cut off exports to the U.S. last year during a trade fight. The move disrupted U.S. car factories and drove defense manufacturers to search globally for alternative supplies.

In response, the U.S. government and private investors have poured billions into MP Materials and USA Rare Earth. MP struck a multibillion-dollar deal with the Pentagon last year and operates one of the world’s largest rare-earth mines in California. USA Rare Earth announced $1.6 billion in federal backing in January and is bringing online a large magnet facility in Stillwater, with a prospective mine in Texas expected to begin production in 2028. The company has also acquired Less Common Metals, a U.K.-based rare-earth-metal maker, and Serra Verde, which owns a Brazilian mine that produces heavy rare earths.

David Abraham, who runs the critical-mineral advisory firm Materium Strata, said, “Having the two leading U.S. names in dispute risks distracting the sector at the moment Washington says it wants a domestic industry built.”

China last week announced new export restrictions targeting MP and USA Rare Earth and other U.S. companies. MP described USA Rare Earth as a “want-to-be competitor” in the lawsuit and said the company has “a well-established pattern of announcing and then failing to achieve its plans.” USA Rare Earth countered that it is “making significant strides in furthering America’s strategic interests.”