Pentagon Takes 15% Stake in MP Materials Corp
The U.S. Department of Defense invested $400 million in MP Materials Corp to secure a domestic rare earth magnet supply chain and reduce reliance on China.
The United States Department of Defense acquired an approximately 15% stake in MP Materials Corp on July 10, 2025, becoming the company's largest shareholder. The deal includes a $400 million investment in convertible preferred stock and warrants, alongside a $150 million loan to expand heavy rare earth separation at the Mountain Pass facility in California. This strategic partnership follows an executive order by President Donald Trump to reduce U.S. dependence on Chinese rare earth imports, which are critical for F-35s, drones, and submarines.
To ensure financial stability, the Pentagon established a 10-year price floor of $110 per kilogram for neodymium-praseodymium, significantly above the current spot price of roughly $63. The government also committed to purchasing 100% of the magnets produced at the company's planned 10X Facility, a second manufacturing plant targeted for commissioning by 2028 with an annual output of 10,000 metric tons. MP Materials Corp secured an additional $1 billion in financing from JPMorgan Chase and Goldman Sachs to support this expansion.
The initiative responds to escalating trade tensions and a 75% reduction in rare earth magnet exports from China. Following the announcement, MP Materials Corp shares surged over 50%, reaching a 52-week high of $48.01. The move shifts the company away from its previous reliance on the Chinese government-linked Shenghe Resources as its primary shareholder and sole customer.
