US Funds MP Materials to Break China Rare-Earth Monopoly

The United States government is funding the development of domestic rare-earth magnet production to eliminate strategic reliance on China, which controls up to 99% of certain rare-earth materials. To secure the supply chain, the Department of Defense established a public-private partnership with MP Materials, providing $1 billion in financing, a $150 million loan, and a $400 million stock investment.

As part of the agreement, the government committed to a 10-year price floor and a 10-year purchase agreement for magnets produced at the company's 10X facility. This federal backing encouraged Apple to sign a $500 million long-term supply agreement for recycled rare-earth magnets manufactured at the MP Materials facility in Fort Worth, Texas. General Motors Company also serves as a foundational customer for the company's commercial deliveries.

Beyond the partnership with MP Materials, the U.S. government entered into a supportive deal with USA Rare Earth to further the reshoring of manufacturing. William Steele, CFO of USA Rare Earth, noted that China dominates well in excess of 90% of the market, necessitating a bifurcated supply chain.