In a major move to reduce America’s dependence on foreign sources of critical minerals, the US government has announced a $400 million equity investment in MP Materials, the operator of the country’s only operational rare earths mine, located in Mountain Pass, California.
The deal will make the Department of Defense (DoD) the company’s largest shareholder, holding a 15% stake.
Rare earth elements are essential for a wide range of technologies — from electric vehicles and wind turbines to smartphones and military equipment, including fighter jets and submarines. Currently, China controls about 70% of rare earth mining and 90% of refining capacity, a reality that has fueled longstanding concerns in Washington.
The deal with MP Materials aims to strengthen the US rare earths supply chain, which remains highly vulnerable due to global trade tensions and pricing competition. It also reflects a broader effort by the Trump administration to revive domestic manufacturing and bolster national security through industrial policy.
Key Terms of the Deal
The Pentagon’s $400 million investment comes in the form of newly created preferred shares, which are convertible into common stock. The DoD will also receive a warrant to buy additional shares at a fixed price for 10 years.
MP Materials will use the funding to expand its magnet manufacturing capacity, including building a second facility — the 10X Facility — at a location yet to be determined.
The Pentagon will purchase 100% of the magnets produced at the new plant for 10 years once it becomes operational, a step expected by 2028.
The DoD has also committed to a minimum price of $110/kg for neodymium-praseodymium oxide (NdPr), two of the most valuable rare earths used in permanent magnets. If market prices fall below that level, the government will cover the difference.
In addition to the Pentagon’s stake, JPMorgan Chase and Goldman Sachs have committed $1 billion in financing to help fund construction and development of the new plant. MP Materials is also set to receive a $150 million loan from the DoD to enhance rare earth separation capabilities at Mountain Pass.
CEO James Litinsky described the initiative as a “public-private partnership” with national security implications.
“This is ultimately on behalf of the taxpayers,” Litinsky said. “The Pentagon negotiated a very tough deal — the taxpayers are going to make a lot of money.”
Rare earths have been a flashpoint in US-China trade tensions. In recent years, China has reportedly used its dominant position to manipulate prices and disrupt supply to foreign competitors. In response, the US imposed tariffs on Chinese imports, prompting China to introduce new export licensing regimes.
Previously, much of the output from Mountain Pass was shipped to Shenghe Resources, a Chinese firm and former MP shareholder, for refining. This arrangement was abandoned earlier this year after reciprocal tariffs made it commercially unviable and politically sensitive.
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