| Published July 11, 2025
In a bold move to reclaim control over one of the world’s most strategically vital supply chains, the Pentagon has taken a direct financial stake in MP Materials—the sole operator of the United States’ only rare-earth mine. With China dominating over 90% of the global rare-earth magnet market, this investment marks a turning point in the escalating geopolitical race for critical minerals. Backed by nearly $1.6 billion in combined public and private funding, the partnership aims to build a full-scale domestic supply chain for rare-earth magnets—crucial components in everything from fighter jets and guided missiles to electric vehicles and wind turbines. As Washington doubles down on reshoring essential industries, this high-stakes alliance is more than just an economic play—it’s a national security imperative.
🇺🇸 1. Pentagon takes a 15 % equity stake in MP Materials
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The U.S. Department of Defense is investing $400 million in newly created preferred shares (convertible, with warrants) of MP Materials, becoming the company’s largest shareholder .
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This strategic equity investment gives the Pentagon influence in steering U.S. rare‑earth supply chains.
2. Ensuring a secure magnet supply chain
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The funding guarantees a firm offtake and 10‑year price floor (minimum ~$110/kg for neodymium/praseodymium), protecting against market volatility from China .
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Every magnet produced at MP’s upcoming “10X” facility will be purchased by government or commercial customers under a long-term deal .
3. CapEx boost: New 10X magnet plant by 2028
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MP will build a second domestic rare-earth magnet factory, dubbed the 10X Facility, boosting U.S. annual production to 10,000 metric tons by 2028 .
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The deal also expands heavy rare-earth separation capacity at Mountain Pass, California .
4. Private investment augments federal support
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Backing includes $1 billion from JPMorgan Chase & Goldman Sachs for the 10X plant and a $150 million DoD loan .
5. Market reaction: Stock soars 50–60 %, hitting multi‑year highs
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MP’s stock jumped ~50–60 % intraday—reaching ~$48—reflecting investor confidence .
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Meanwhile, some analysts remain cautious, citing still uncertain commercial demand .
🧩 Why it matters
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Strategic independence: MP Materials operates the only U.S. rare‑earth mine and processor at Mountain Pass, supplying critical materials (e.g., NdPr for permanent magnets) for defense (F‑35 jets, submarines, missiles) and clean energy industries .
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China’s dominance: China accounts for ~70 % of global rare-earth mining and ~90 % of processing. This move is a bold countermeasure to break that grip .
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‘Mine‑to‑magnet’ vision: This completes a U.S.-based supply chain—from extraction to rare-earth oxide, metal alloys, and finished magnets domestically .
Resulting Effects
🔧 Revival of U.S. Rare-Earth Industry
The Pentagon’s direct investment breathes new life into America’s rare-earth sector. MP Materials is no longer just a miner—it’s set to become a fully integrated “mine-to-magnet” supplier. This means the U.S. can soon refine, process, and manufacture rare-earth magnets entirely on domestic soil, reducing dependency on Chinese exports.
💼 Massive Job Creation and Industrial Expansion
The construction of the new “10X” magnet plant, along with expanded operations at the Mountain Pass facility, is expected to generate hundreds of skilled jobs, spur U.S.-based manufacturing, and attract further investment from the private sector. This sets the stage for a modern industrial boom in high-tech materials.
For example, the F-35 requires an estimated 900 lbs of REEs for its manufacturing, while a Virginia-class submarine needs more than 9,000 lbs. According to FairObserver, even with the mining operation of MP Materials, the U.S. is still dependent on China for processing the ore extracted in Mountain Pass.
According to a March 2024 release, the Pentagon’s Manufacturing Capability Expansion and Investment Prioritization (MCEIP) previously invested $45 million into MP Materials prior to this stock purchase.
📈 Stock Market Surge and Investor Confidence
MP Materials’ stock surged by over 50% in a single day, reaching multi-year highs. Investors responded with enthusiasm to the government’s show of confidence and the promise of long-term price floors, signaling a new era of stable, strategic public–private partnerships.
🛡️ Boost to National Security and Defense Readiness
Rare-earth magnets are essential in advanced U.S. weapons systems—from F-35 fighter jets to missile guidance and submarine propulsion. By securing domestic production, the Pentagon reduces the threat of supply chain disruption during geopolitical tensions, enhancing military readiness.
🌐 Shift in Global Supply Chain Dynamics
This move directly challenges China’s near-monopoly on rare-earth processing. With America stepping up, allies such as Japan, Australia, and the EU may follow suit, fostering a multipolar rare-earth market and disrupting Beijing’s leverage over critical technologies.
Bottom Line:
The Pentagon’s unprecedented stake in MP Materials is more than a business deal—it’s a clear signal that the U.S. is done playing catch-up in the race for critical minerals. For too long, Washington watched as China cornered the market on rare-earth elements, the backbone of both cutting-edge defense and clean energy technologies. Now, with billions in government and private capital flowing into domestic production, the U.S. is finally building a secure, independent supply chain.
Whether this marks the beginning of a true industrial resurgence or simply a strategic hedge remains to be seen. But one thing is certain: America is no longer just talking about supply chain resilience—it’s investing in it.
