MP Materials (NYSE: MP) saw its stock price rocket more than 50% at the open after the U.S. Department of Defense announced a $400 million investment in the company. This move makes the Pentagon the largest shareholder in MP Materials and marks a significant step in the effort to secure a domestic supply of rare earth magnets, which are essential for both commercial technology and military hardware.
The Department of Defense is purchasing $400 million of newly created preferred stock in MP Materials. This investment is part of a broader public-private partnership aimed at building a U.S.-based supply chain for rare earth magnets. The deal also comes with a warrant for the Pentagon to buy additional common shares, potentially giving it a 15% stake in the company once exercised.
Shares of MP Materials soared to $48 on the open, reflecting investor optimism about the company’s future and the strategic value of its assets.
MP Materials owns and operates the Mountain Pass mine in California, the only operational rare earth mine in the United States. The mine is a strategic asset, supplying more than 10% of the world’s rare earth content and forming the backbone of MP’s vertically integrated operations.
Mountain Pass is not just a mine, it is a full processing facility that handles everything from extraction to separation and refining. The ore body is exceptionally high grade, and the site supports decades of production. In 2024, Mountain Pass delivered over 45,000 metric tons of rare earth oxides, setting a new record for U.S. output.
With the Pentagon’s backing, MP Materials will build a second magnet manufacturing facility in the United States, known as the 10X Facility. This plant is expected to begin commissioning in 2028 and will boost the company’s total magnet production capacity to about 10,000 metric tons per year.
The new facility is part of a larger plan to create a domestic mine-to-magnet supply chain. The Defense Department has also signed a 10-year off-take agreement that guarantees all magnets produced at the 10X Facility will be purchased for defense and commercial applications. There is a price floor of $110 per kilogram for neodymium-praseodymium (NdPr) materials, which are vital for high-performance magnets used in everything from electric vehicles to advanced weapons systems.
Rare earth elements are critical to the production of permanent magnets, which are used in a range of military systems. These include jet engines, missile guidance systems, radar, submarines, and unmanned aerial vehicles. For example, the F-35 fighter jet contains more than 900 pounds of rare earth materials, while a Virginia-class submarine uses about 9,200 pounds.
China currently dominates the global rare earth market, and recent export restrictions have highlighted the risks of relying on foreign sources for these strategic materials. The Pentagon’s investment in MP Materials is designed to reduce that dependence and strengthen the security of the U.S. supply chain.
To finance the construction of the 10X Facility, MP Materials has secured $1 billion in commitments from JPMorgan Chase and Goldman Sachs, in addition to a $150 million loan from the Defense Department to support the expansion of Mountain Pass. These moves signal a long-term commitment to building a resilient U.S. rare earth industry.
MP Materials has become a focal point in America’s push for supply chain independence in rare earths. With the Pentagon’s investment and support, the company is set to expand its role in both commercial and defense markets. Investors have taken notice, sending the stock sharply higher and underscoring the strategic importance of what was once a niche mining operation.
