Pentagon to Become Largest Shareholder in MP Materials

MP Materials Corp. announced on July 10 what it called a “transformational public-private partnership” with the Department of Defense (DOD) to build out the nation’s rare earth magnet supply chain and reduce U.S. dependency on China and other countries. According to the agreement, the Pentagon will become the largest shareholder in the rare earth mining company.

According to MP Materials and DOD officials, the multibillion-dollar investment package and long-term commitments will enable the Las Vegas-based rare earths miner to build a second comprehensive, end-to-end domestic magnet manufacturing plant, called “10X Facility,” at a location to be chosen soon, serving both defense and commercial markets.

As part of the deal, the DOD will get a 15 percent stake in the fast-growing Las Vegas mining company, along with $400 million of the company’s preferred stock.

In pre-market trading on the New York Stock Exchange, MP Materials (MP) share prices spiked by more than 54 percent to $46.25.

Once the new facility is completed, expected by 2028, the total U.S. rare earth magnet manufacturing capacity of MP Materials is projected to reach 10,000 metric tons.

The company also anticipates adding more heavy rare earth separation capabilities at its open-pit Mountain Pass mining and processing facility in southeastern California, reinforcing its position as a national strategic asset at which high-purity rare earth materials are extracted, separated, and refined all at one location.

“This initiative marks a decisive action by the Trump administration to accelerate American supply chain independence,” MP Materials Chairman and CEO James Litinsky said. “We are proud to enter into this transformational public-private partnership and are deeply grateful to President [Donald] Trump, our partners at the Pentagon, and our employees, customers, and stakeholders for their unwavering support and dedication.”

The announcement comes more than three months after China’s Ministry of Commerce and General Administration of Customs jointly announced export controls on seven rare earth elements and magnets used in the defense, energy, and automotive sectors, including light and heavy rare earths, as well as high-performance permanent magnets containing dysprosium or terbium.

That announcement was made in response to sweeping tariffs imposed by Trump, which at the time included a 35 percent levy on most goods imported from China.

The new DOD agreement includes a comprehensive, long-term package that features convertible preferred equity, warrants, loans, and price floor and offtake commitments, all extending over more than a decade. Additionally, the DOD will become the largest shareholder of the publicly traded rare earths mining company through a combination of convertible preferred stock and warrants, which together account for 15 percent of the company’s outstanding shares.

The historic public-private partnership includes a 10-year offtake commitment with a $140 million annual earnings before taxes guarantee—rising by 2 percent—starting in 2026.

The DOD has also entered into a 10-year agreement establishing a price floor commitment of $110 per kilogram for MP Materials’ neodymium-praseodymium products stockpiled or sold, reducing vulnerability to nonmarket forces and ensuring stable prices for the U.S.-produced rare earth materials.

Over the next decade, the DOD has agreed to ensure that all the magnets produced at the 10X Facility will be purchased by defense and commercial customers with shared upside. MP Materials has also obtained a commitment letter from Wall Street investment banking giants JPMorganChase and Goldman Sachs to provide $1 billion of financing for the cost of constructing and developing the 10X Facility.

“The 10-year window of this offtake gives us the cash flow, certainty, and runway needed to accelerate the build-out of our downstream business and realize the economy scale necessary to establish a competitive position in the global marketplace, with the start of commercial production at Independence [MP Materials’ Fort Worth, Texas, facility] serving as the foundation,” Ryan Corbett, MP Materials chief financial officer, said during a webcast announcing the DOD deal.

Within 30 days, the company expects to receive the proceeds of a $150 million loan from the DOD in connection with its plan to expand its heavy rare earth separation capabilities at Mountain Pass. Corbett said construction on the new 10X Facility will begin once all the financing is in place.

“The DOD role here isn’t just about meeting its own demand,” Corbett said. “It’s about catalyzing the build-out of U.S. manufacturing at scale to serve the broader U.S. economy. Rare earth magnets are essential inputs to manufactured goods at the heart of our industrial base, from cars and electronics to drones and robots.”

Correction: A previous version of this article misspelled the name of MP Materials Chief Financial Officer Ryan Corbett. The Epoch Times regrets the error.