Mountain Pass, California – In a significant move to bolster domestic production of rare earth elements, the U.S. Department of Defense is set to become the largest shareholder in MP Materials, the only operational rare earth mine in the country. This development follows an agreement for the Pentagon to invest $400 million in preferred stock, a decision aimed at increasing the nation’s capacity for producing rare earth magnets critical to various industries, particularly defense.

MP Materials operates its mine approximately 60 miles from Las Vegas, Nevada. The funding from the Defense Department will play a pivotal role in expanding the company’s capabilities in both processing rare earth minerals and producing magnets essential for military applications and commercial use. The anticipated investment has already caused a surge in MP Materials’ stock, which climbed over 40 percent in premarket trading.

Earlier this year, Interior Secretary Doug Burgum indicated that efforts were underway to reduce U.S. reliance on Chinese imports of critical minerals. This initiative is viewed as a strategic step by the administration to secure supply chains, further emphasizing the growing importance of domestic mining operations.

James Litinsky, CEO of MP Materials, remarked on the initiative, calling it a transformative moment for U.S. supply chain independence. The Defense Department’s purchasing plan includes a new class of preferred shares that are convertible into common stock, along with a warrant that allows for the acquisition of additional shares. Should all options be exercised, this could give the Pentagon roughly a 15 percent stake in the company.

MP Materials also plans to establish a second facility dedicated to magnet manufacturing, with financial support from the Pentagon. Although the specific location has yet to be disclosed, the facility is expected to be operational by 2028, enhancing the company’s production capacity by 10,000 metric tons annually.

The Defense Department is fully backing the production from this new facility, ensuring that all magnets manufactured will be purchased by defense and commercial clients for a decade following its completion. Moreover, the Pentagon will set a guaranteed price floor for neodymium-praseodymium products—used in permanent magnets—at $110 per kilogram for the next ten years.

In addition to the Department of Defense funding, major financial institutions JPMorgan and Goldman Sachs have committed to providing $1 billion to support the construction of the new facility. MP Materials anticipates receiving a further $150 million loan from the Pentagon to enhance its rare earth separation processes at the Mountain Pass site.

This strategic partnership underlines a critical shift towards revitalizing American mineral production capabilities, laying the groundwork for increased independence from foreign suppliers while addressing the growing demand for essential rare earth materials in advanced technologies.