But the dispute has been a lucrative one for Lynas Corp, Mount Weld's Australian owner. The mine boasts one of the world's richest deposits of rare earths, crucial components of everything from iPhones to weapons systems.
Hints this year by China that it could cut off rare earths exports to the United States as a trade war raged between the two countries sparked a U.S. scramble for new supplies – and sent Lynas shares soaring.
As the only non-Chinese company thriving in the rare earths sector, Lynas shares have gained 53% this year. The shares jumped 19 percent last week on news that the company may submit a tender for a U.S. plan to build rare earths processing facilities in the United States.
CHINA 'DID US A FAVOUR'
Rare earths are crucial for producing electric vehicles, and are found in the magnets that run motors for wind turbines, as well as in computers and other consumer products. Some are essential in military equipment such as jet engines, missile guidance systems, satellites and lasers.
Lynas' rare earths bonanza this year has been driven by U.S. fears over Chinese control over the sector. But the foundations for that boom were established almost a decade ago, when another country - Japan - experienced its own rare-earths shock.
GRAPHIC: China's dominance in rare earths - https://fingfx.thomsonreuters.com/gfx/editorcharts/USA-TRADE-CHINA-RAREEARTH/0H001PGB36J0/eikon.png
In 2010, China restricted export quotas of rare earths to Japan following a territorial dispute between the two countries, although Beijing said the curbs were based on environmental concerns.
Fearing that its high-tech industries were vulnerable, Japan decided to invest in Mount Weld - which Lynas acquired from Rio Tinto in 2001 - in order to secure supplies.
Backed by funding from Japan's government, a Japanese trading company, Sojitz, signed a $250 million supply deal for rare earths mined at the site.
"The Chinese government did us a favour," said Nick Curtis, who was executive chairman at Lynas at the time.
The deal also helped fund the building of a processing plant that Lynas was planning in Kuantan, Malaysia.
Those investments helped Japan cut its rare earths reliance on China by a third, according to Michio Daito, who oversees rare earths and other mineral resources at Japan's Ministry of Economy, Trade and Industry.
The deals also set the foundations for Lynas' business. The investments allowed Lynas to develop its mine and get a processing facility in Malaysia with water and power supplies that were in short supply at Mount Weld. The arrangement has been lucrative for Lynas.
At Mount Weld, ore is concentrated into a rare earth oxide that is sent to Malaysia for separating into various rare earths. The remainder then goes to China, for further processing.
Mount Weld's deposits have "underpinned the company's ability to raise both equity and debt funding," Amanda Lacaze, the company's chief executive, said in an email to Reuters. "Lynas' business model is to add value to the Mount Weld resource at its processing plant in Malaysia."
Andrew White, an analyst at Curran & Co in Sydney, cited "the strategic nature of Lynas being the only producer of rare earths outside of China" with refining capacity for his 'buy' rating on the company. "It's the refining capacity that makes the big difference."
TARGETTING THE U.S.
Lynas in May signed an agreement with privately held Blue Line Corp in Texas to develop a processing plant which would extract rare earths from material sent from Malaysia. Blue Line and Lynas executives declined to give details about cost and capacity.
Lynas on Friday said it would submit a tender in response to a U.S. Department of Defense call for proposals to build a processing plant in the United States. Winning the bid would give Lynas a boost to develop the existing plant at the Texas site into a separating facility for heavy rare earths.
James Stewart, a resources analyst with Ausbil Investment Management Ltd in Sydney, said he anticipated that the Texas processing plant could add 10-15 percent to earnings annually.
Lynas was in pole position for the tender, he said, given that it could easily send material processed in Malaysia to the United States, and convert the Texas plant relatively cheaply, something that other companies would struggle to replicate.
"If the U.S. was thinking about where best to allocate capital," he said, "Lynas is well and truly ahead."
Challenges remain, however. China, by far the leading producer of rare earths, has stepped up production in recent months, while declining global demand from electric vehicle makers has also driven prices down.
GRAPHIC: Rare earths historical production - https://fingfx.thomsonreuters.com/gfx/ce/7/75/75/Rare%20Earths%20Production%20Historical.png
That will put pressure on Lynas' bottom line and test the U.S. resolve to spend to develop alternative sources.
The Malaysia plant has also been the site of frequent protests by environmental groups concerned about the disposal of low level-radioactive debris.
Lynas, backed by the International Atomic Energy Agency, says the plant and its waste disposal are environmentally sound.
The company is also tied to an operating licence that expires on March 2, although it is widely expected to be extended. But the possibility that more stringent licence conditions could be enacted by Malaysia has deterred many institutional investors.
Highlighting those concerns, on Tuesday, Lynas shares fell 3.2 percent after the company said an application to increase production at the plant failed to get approval from Malaysia.
Still, Lynas says it sees great long-term potential for the niche it has carved out.
"We will continue to be the supplier of choice to non-Chinese customers," Lacaze told the company's annual general meeting last month.
(Additional reporting Liz Lee in Kuala Lumpur, Kevin Buckland in Tokyo and Tom Daly in Beijing; Editing by Philip McClellan)
By Melanie Burton, Yuka Obayashi and Aaron Sheldrick