Rare earth miner MP Materials Corp. has filed a lawsuit against rival USA Rare Earth Inc., accusing it of stealing proprietary rare earth magnet technology. The lawsuit, filed on May 22, 2026, in the Business Court of Texas, Eighth Division, alleges that a former MP Materials engineer, Kevin Elkins, shared confidential “grain boundary diffusion” formulations with USA Rare Earth, which then disclosed the information to a third-party company, FOM Technologies Inc. This technology is crucial for producing high-performance magnets used in electric vehicles, defense systems, and advanced electronics. MP Materials is seeking injunctive relief, damages, and attorneys' fees under Texas trade secrets law.
USA Rare Earth has vehemently denied the allegations, stating that the complaint “has misrepresented our company, our culture, and our people,” and has vowed to defend itself. The company emphasized that this dispute is a distraction from the broader goal of reducing China's dominance in the global rare earth supply chain. This legal battle occurs as both companies are central to a significant federal initiative, with the US government having invested billions in the domestic rare earth sector to build a mine-to-magnet supply chain. MP Materials has a market capitalization of approximately $10 billion, while USA Rare Earth's market capitalization is around $4 billion.
The lawsuit highlights the intense competition and high stakes in the US rare earth industry, which is striving to lessen its dependence on China. Both MP Materials and USA Rare Earth have received substantial government support; for instance, MP Materials secured a $400 million preferred equity investment from the U.S. Department of Defense in July 2025, and USA Rare Earth has a $1.6 billion agreement with the government. The complaint also suggests a pattern where USA Rare Earth allegedly recruits employees from competitors to accelerate its technology development. The legal proceedings are unfolding at a time when China has imposed export controls against both MP Materials and USA Rare Earth, further complicating the geopolitical landscape for critical minerals.
