News & Insights

The Defense Department will buy $400 million of MP Materials’ preferred stock, becoming its largest shareholder, the company announced today (CNBC). MP Materials owns the only rare earth mine operating in the U.S. today at Mountain Pass, California.

The background: “Rare earths are used in magnets that are key components in a range of military weapons systems including the F-35 warplane, drones and submarines, according to the Defense Department.”

• The U.S. imports almost all its rare earths, with China supplying about 70% of imports in 2023, according to the U.S. Geological Survey.
• Rare earth imports from China have become a point of dispute in U.S.–China trade relations.

Looking ahead: “MP Materials will build a second magnet manufacturing facility in the U.S. to serve defense and commercial customers with support from the Pentagon. The facility, whose location wasn’t disclosed, is expected to start commissioning in 2028 and will bring MP Materials rare earth magnet manufacturing capacity to 10,000 annual metric tons.”

• The Pentagon will buy all magnets produced by the new facility for a period of 10 years after it is built.

What they’re saying: “We understand that this partnership is ultimately on behalf of the taxpayers and our national security, and with that comes a great responsibility to get this done right,” MP Materials CEO James Litinsky told investors in a call this morning.

• “Securing America’s supply of rare earth materials and magnets is essential to our economic and national security.”

The NAM says: “The NAM has long led the charge for diversifying sources of critical minerals both to strengthen manufacturing supply chains and to safeguard its national security,” NAM Director of Energy and Resources Policy Michael Davin said.

• “Investments like this one are an innovative way for the U.S. government to make good on its promise to manufacturers and the American people.”