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JHL Capital Group may fail because of a trade war with China

JHL Capital Group may fail because of a trade war with China

American company JHL Capital Group owns a 65% stake in Mountain Pass. This is the California mine, where the mining of rare earth metals. Such a venture is only in the USA. Because of the trade war with China the company can go bankrupt. Consumers of rare earth metals in many high-tech industries. This includes the defense industry, alternative energy and automobile production. The supply of these metals is mainly engaged in the China. Chinese production accounts for 80% of the U.S. market.

In 2015, the Mountain Pass mine was abandoned by the company Molycorp. The previous owner went bankrupt. In 2017 it was bought by a consortium, the head of which was made by JHL Capital. Then was resumed the operation of the mine. But he has to make deliveries of concentrate in China. There be further refining. In September 2018 the U.S. government has imposed duties. They touched on a number of products from China. Rare earth metals have been excluded from this list. But China in response has set its own tariffs on US products. This list of rare earth metals has already been enabled.

The size of China’s duty is 10%. From January 1, 2019 it will equal 25%. Thus, the products of Mountain Pass will be simply uncompetitive. This move by China is quite understandable. The government has decided to remove from the strategic market one of the major competitors. This is the answer to such gross actions of the current American President. Before China had imposed restrictions on exports of rare earth metals. Then they canceled. This was the result of a long process in the WTO. Then the part of the plaintiff played the United States and several other countries.

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