MP Materials lands $400M deal with Pentagon

[Ben Graham]

MP Materials (NYSE: MP) has entered a major public-private partnership with the US Department of Defense (DoD) to build a domestic supply chain for rare earth magnets, reducing America’s reliance on foreign sources.

The deal will make the DoD the largest shareholder in MP Materials, after acquiring $400 million worth of preferred stock. The investment is part of a broader multi-billion-dollar package and long-term strategic commitments from the federal government, the company said on Thursday.

Shares in the Nevada-based firm surged over 53% in premarket trading in New York following the news, to $46 each.

“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, the only domestic producer of rare earth elements — vital for smartphones, jet engines, electric vehicles and defense systems — plans to build a second magnet manufacturing plant at a yet-to-be-named site. The plant, dubbed the “10X Facility”, is expected to begin commissioning in 2028 and will increase the company’s total magnet production capacity to an estimated 10,000 tonnes annually.

Infographic: Who controls rare earth processing?

As part of the expansion, the company also plans to upgrade its Mountain Pass mine in California with heavy rare earth separation capabilities, further cementing it as a national strategic asset. The operation already houses extraction, separation and refining operations in one integrated location.

The strategic agreement comes amid heightened urgency to build a US-based mine-to-magnet supply chain. China’s decision in April to restrict exports of rare earths highlighted American vulnerabilities and intensified calls in Washington for a more resilient industrial base.

MP said the partnership aims to accelerate domestic production, strengthen supply chain security, and support dual-use technologies spanning both defence and commercial markets.

Break down

The agreement includes several key commitments. The DoD has signed a 10-year off-take deal that establishes a price floor of $110 per kilogram for neodymium-praseodymium (NdPr) materials. It also guarantees that 100% of magnets produced at the new 10X Facility will be purchased for defence and commercial use for a decade following commissioning.

To finance the construction of the 10X Facility, MP has secured a $1 billion commitment from JPMorgan Chase and Goldman Sachs, subject to customary terms. Additionally, the company expects to receive a $150 million loan from the DoD within 30 days to support the Mountain Pass expansion.

The DoD has also committed to buy a newly created series of convertible preferred stock, along with a warrant to buy additional common shares at an initial price of $30.03 per share. The transaction is expected to close on July 11, 2025. Upon conversion and exercise, the DoD would own about 15% of MP Materials’ outstanding common shares.

MP Materials currently operates the world’s second-largest rare earth mine at Mountain Pass, which began operations in 2017. Refining started in 2023, and the company plans to begin supplying rare-earth magnets to General Motors by year-end. It is also commissioning a new magnetics plant in Texas, named Independence, to anchor its downstream operations.