The Pentagon has announced a significant investment in MP Materials, a company that runs the only rare earth minerals mine in the United States. The Defense Department will buy $400 million worth of preferred stock in MP Materials, which operates its mine in Mountain Pass, California, about 60 miles from Las Vegas. This move is part of a broader strategy to reduce U.S. reliance on China for critical rare earth minerals, which are essential for military technology.
James Litinsky, the CEO of MP Materials, expressed pride in this partnership, highlighting its importance for American supply chain independence. He thanked President Trump and others for their support in this initiative.
Rare earth minerals are crucial for producing magnets used in various military systems, including drones, submarines, and the F-35 fighter jet. The Trump administration has been vocal about the need to ramp up domestic rare earth mining, noting that the U.S. currently imports about 70% of these materials from China. Trump has made it clear that he aims to position the U.S. as a leading producer of non-fuel minerals.
China dominates the global rare earth market, producing around 60% of the world’s supply and refining nearly 90% of it. Recently, tensions arose when China halted shipments of these minerals to the U.S. following tariffs imposed by the Trump administration. However, an agreement was reached last month to resume imports.
The deal with the Pentagon will lead to the construction of a new magnet manufacturing facility, dubbed the "10X Facility." This facility will be built in a yet-to-be-determined location and is expected to be completed by 2028. It will significantly increase MP Materials’ manufacturing capacity to 10,000 metric tons. The agreement is set for a decade and includes a price floor to protect the company from market fluctuations.
Following the announcement, MP Materials’ stock surged nearly 50%, reaching $44. This is a notable increase, considering its all-time high of $56.54 in April 2022.
The timing of this investment coincides with recent legislative efforts by Senator Tom Cotton, who introduced a bill aimed at speeding up the extraction of rare earth elements in the U.S. Cotton argues that current environmental regulations hinder national security and waste taxpayer money. He believes this bill will create jobs and enhance the military’s readiness.
In summary, the Pentagon’s investment in MP Materials marks a key step toward securing the U.S. supply of rare earth minerals, reinforcing the country’s military capabilities and reducing dependence on foreign sources.