America just made its boldest move yet to break China's stranglehold on magnetic rare earths (REE) materials, with the Pentagon purchasing US$400 million of MP Materials stock to become the miner's largest shareholder.
The public-private partnership with the Department of Defense (DoD) represents a seismic shift in how the U.S. approaches critical mineral security.
That's because MP Materials owns Mountain Pass - the only operational REE mine in the U.S. - ~60 miles outside Las Vegas and the sole domestic producer of materials essential for everything from F-35 fighter jets to EV motors.
The deal creates a strategic alliance that MP Materials CEO James Litinsky describes as “decisive action by the Trump administration to accelerate American supply chain independence”.
The timing couldn't be more critical for American and Western interests, as China currently controls >90% of global magnetic REE production and is weaponising them as part of an existential trade war crisis between the two superpowers - which Azzet has previously talked about.
Find out more: Mission Critical: Why China can keep weaponising REEs
A $10 billion manufacturing revolution
The Pentagon investment will fund construction of MP's second U.S. magnet manufacturing facility - dubbed "10X" - expected to begin operations in 2028.
The facility will bring its REE manufacturing capacity up to 10,000 tonnes - enough to meaningfully support both defense and commercial needs.
The DoD has also committed to purchasing 100% of the new facility's magnet REE output for 10 years, providing unprecedented revenue certainty.
Additionally, the Pentagon is guaranteeing a price floor for 10 years of US$110 per kilogram for NdPr products - the rare earth compounds used in permanent magnets.
Financial firepower
Beyond the Pentagon's equity investment, JPMorgan and Goldman Sachs are providing $1 billion in financing for the manufacturing facility itself.
MP Materials will also receive a $150 million Pentagon loan to expand REE separation capabilities at Mountain Pass.
The convertible shares and the exercise of the common stock equal about a 15% stake in MP Materials as of July 9, making the Pentagon the company's largest shareholder - surpassing even CEO Litinsky's 8.61% stake.
Takeaway: The U.S. government is finally wielding its financial muscle to compete with Chinese state-backed rare earth dominance, creating a blueprint for securing other critical mineral supply chains essential to America's - and the West's - economic and military future.
Shares in MP Materials surged >50% on the news, closing at US$45.23 per share.
