The Pentagon announced Thursday that it will acquire a 15% stake in rare-earth mining company MP Materials as the United States seeks to avoid dependence on China for the critical elements of technology.
The multibillion-dollar agreement will enable MP Materials to drastically increase its output of lightweight magnets, critical components in the manufacturing of smartphones, jet engines, electric vehicles, and defense systems. The Nevada-based MP Materials is the only domestic producer of rare-earth minerals.
"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.
Litinsky added that the 10,000 metric tons of magnets the company will produce under the plan is "enough to meaningfully support U.S. defense and commercial needs."
Part of the deal established a floor price for neodymium-praseodymium (NdPr) materials at $110 per kilogram. Analysts at Benchmark Mineral Intelligence said locking in a floor keeps a steady stream of income for MP Materials for a decade.
"The price floor not only guarantees stable revenue for MP but also sends a strong price signal across the sector," they said.
MP Materials said the Defense Department will become its largest shareholder. Shares in MP Materials increased over 53% in premarket trading in New York after the announcement, to $46 each, and were last trading at $48, leaving the company with a market capitalization of nearly $7.2 billion.
"With prices outside China having surged three to five times since export controls were enacted, this move could help normalize bifurcated pricing and potentially enable the formation of an ex-China rare-earth price index," BMI rare earths research manager Neha Mukherjee told Mining.com.
Western companies have complained that China uses its dominance in the market by either restricting supplies via export policies or flooding the market to drop prices. MP Materials currently refines its metals at Fort Worth-based factory and the deal will enable the company to expand operations with an additional plant and allow expansion of the Texas facility.
"The MP–DOD deal isn't just a one-off. It's a template for industrial policy, a national security investment, and a clear signal: The West is finally serious about rare-earth resilience," Mukherjee added.
James Morley III ✉
James Morley III is a writer with more than two decades of experience in entertainment, travel, technology, and science and nature.
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