MP Materials Forms Partnership with the US Department Of Defense
A Strategic Leap Toward Rare Earth Independence
Rare-earth miner, MP Materials, announced a public-private partnership with the US Department of Defense (DoD), which involves a multibillion-dollar investment intended to alter the rare earth magnet supply chain and strengthen US industrial capacity.
This alliance is described by MP Materials as a significant milestone and reflects ongoing efforts to reduce dependency on foreign sources for critical materials, particularly given China's substantial role in rare earth production and recent export limitations.
The arrangement establishes MP Materials as a leading entity in the US rare earth sector and aligns with government initiatives aimed at increasing domestic supply chain independence.
Key Elements of the Agreement: Construction of the “10X Facility”
Central to the partnership is the planned construction of MP Materials’ second US-based magnet manufacturing facility, designated as the “10X Facility.” Commissioning is expected to begin in 2028. This facility, whose location has not yet been disclosed, will expand MP’s US rare earth magnet production capacity to an estimated 10,000 tonnes annually. This increase in capacity is intended to help meet both defense and commercial requirements, including electric vehicles, robotics, and military systems.
As part of the deal, the DoD will purchase $400 million in convertible preferred stock and receive a warrant to acquire additional common shares at $30.03 per share. Upon conversion, the DoD could become the largest shareholder, potentially holding about 15% of MP’s outstanding shares. The agreement also includes a 10-year price floor of $110 per kilogram for neodymium-praseodymium (NdPr) magnets, designed to reduce price volatility and support consistent cash flows. NdPr is an essential rare earth component for high-performance neodymium-iron-boron (NdFeB) magnets used in various advanced technologies.
A 10-year off-take agreement guarantees all magnets produced at the 10X facility will be sold to defense and commercial customers, supporting project economics. The US may further adjust tariffs to manage supplies from China and potentially allied nations, depending on their sourcing decisions.
MP Materials also intends to expand heavy rare earth separation capacity at its Mountain Pass mine in California, supported by a forthcoming $150 million DoD loan. Financing for the 10X facility is backed by a $1 billion commitment from JPMorgan Chase and Goldman Sachs.
Strategic Context: Addressing Global Rare Earth Supply Concerns
This partnership occurs against the backdrop of China controlling about 90% of global rare earth magnet supply. In April 2025, export restrictions introduced by China led to a sharp decline in overseas magnet shipments, highlighting vulnerabilities in US supply chains. Rare earth elements are important for many applications, from defense technology to consumer electronics and renewable energy. The DoD’s investment is part of a larger US policy response to these challenges, including recent actions by the government to stimulate domestic critical mineral production and address national security risks.
MP Materials operates the world’s second-largest rare earth mine at Mountain Pass, about 60 miles outside Las Vegas. Since resuming mining operations in 2017 and beginning refining activities in 2023, the company has developed a supply chain encompassing extraction, separation, metal production, and magnet manufacturing. Its Texas facility, scheduled to supply magnets to General Motors, complements the anticipated output from the 10X facility. Plans for additional heavy rare earth processing at Mountain Pass aim to further broaden domestic capabilities.
Market and Economic Considerations
The DoD’s commitments regarding price floors and off-take arrangements are expected to reduce financial uncertainty for MP Materials. Projected growth in demand for rare earth magnets through 2030, driven by sectors such as electric vehicles and robotics, positions MP to potentially gain a larger share of the US market. Analysts have compared the scale of DoD backing to other major government programs and suggest it may help address regulatory and market challenges. The arrangement may result in higher prices, prompting some end-users to seek alternatives, but it could also help prioritize supply for industries deemed critical, including defense and aerospace.
Summary
MP Materials’ collaboration with the DoD represents an effort to increase domestic rare earth magnet production and decrease reliance on imports. By 2028, the 10X Facility may establish MP as one of the leading vertically integrated magnet producers globally. The agreement is a development for investors, policymakers, and industry participants interested in the future of the US rare earth supply chain, with potential economic and strategic implications.