MP Materials has entered a multibillion-dollar public-private partnership with the U.S. Department of Defense to establish a domestic rare earth magnet supply chain and reduce reliance on foreign sources. Under the agreement, the DoD will purchase $400 million of convertible preferred stock, becoming MP Materials’ largest shareholder. This investment is part of a broader federal package of long-term strategic commitments. In premarket trading in New York, MP shares surged more than 53% to $46, and were last quoted at $47, giving the Nevada-based company a market capitalization of approximately $7.2 billion.
“This initiative marks a decisive action by the Trump administration to accelerate American supply chain independence,” MP Materials’ founder and chief executive James Litinsky said in a statement.
MP Materials, currently the only U.S. producer of rare earth elements used in smartphones, jet engines, electric vehicles and defense systems, plans to build a second magnet manufacturing plant—called the “10X Facility”—at an unannounced location. Scheduled to begin commissioning in 2028, the new plant is expected to boost annual magnet output to about 10,000 tonnes. The company also intends to upgrade its Mountain Pass mine in California with heavy rare earth separation capabilities, integrating extraction, separation and refining at the site.
As part of the strategic agreement, the DoD has secured a 10-year offtake contract with a price floor of $110 per kilogram for neodymium-praseodymium materials. Benchmark Mineral Intelligence analysts noted that the price floor will help stabilize revenue for MP Materials and could support the development of an ex-China rare earth price index. The contract guarantees that all magnets produced at the 10X Facility will be purchased for defense and commercial use for a decade after commissioning.
To finance the 10X Facility, MP Materials has arranged a $1 billion commitment from JPMorgan Chase and Goldman Sachs, plus a $150 million loan expected from the DoD. The DoD’s preferred stock purchase and attached warrant, exercisable at $30.03 per share, are set to close on July 11, 2025; upon full conversion and exercise, the DoD would hold about 15% of MP Materials’ common shares. Industry analysts view the partnership as a template for U.S. industrial policy and a step toward strengthening supply chain security for critical technologies.
Source: Mining.com
