U.S. backs domestic magnet supply with $400M investment
MP Materials announced a landmark agreement with the U.S. Department of Defense (DoD) on Thursday to significantly expand domestic production of rare earth minerals. The multibillion-dollar deal aims to reduce U.S. reliance on China, which currently dominates 90% of global processed rare earth supply essential to military tech, EVs, and wind turbines.
As part of the agreement, the DoD will become MP’s largest shareholder by purchasing $400 million in preferred stock and receiving additional warrants, raising its effective stake to 15%. MP’s stock soared nearly 50% on the news, reaching $43.26 — its highest price since April 2022. The shares had already doubled earlier this year before the announcement.
Guaranteed prices spark industry shift
The deal includes a guaranteed minimum price of $110 per kilogram for neodymium-praseodymium (NdPr), a key rare earth pair used in magnets. This is nearly double the current Chinese benchmark price of $60. The guaranteed floor aims to offset pricing pressure from Beijing that has long dissuaded Western investment in rare earth extraction and processing.
The price guarantee extends over a 10-year period and reflects growing U.S. concern over China’s tightening export controls. Rare earth magnet exports from China dropped 75% in June, prompting some automakers to suspend production due to shortages. MP Materials will stop shipping ore to China for processing and instead build out full domestic processing capacity.
New U.S. magnet factory to launch in 2028
MP will build its second magnet manufacturing plant, dubbed the ‘10X Facility’, at a location yet to be determined. Once operational in 2028, the new facility will bring MP’s annual magnet output to 10,000 metric tons. These super-strong magnets are crucial for electric vehicles, wind turbines, drones, and military equipment such as fighter jets.
The DoD will also provide a $150 million loan to expand heavy rare earth separation at MP’s Mountain Pass site in California, adding resilience to a domestic supply chain still under development. CEO James Litinsky emphasized the dual role of the project: addressing national security needs while preserving the company’s status as a public-market entity.
China’s grip loosens as U.S. escalates push
The U.S. has escalated its push to break China’s dominance in critical minerals. In March, President Trump invoked emergency powers to prioritize domestic sourcing. Previously, MP Materials sent most of its raw ore to China for processing. Chinese firm Shenghe Resources held an 8% stake in MP but will now be eclipsed by the DoD as the company’s top investor.
MP’s move aligns with Washington’s broader effort to decouple strategic supply chains from geopolitical rivals. By securing long-term pricing and ramping up capacity, the company is positioned to play a leading role in building a Western rare earths ecosystem from the ground up.
