MP Materials (NYSE: MP) has struck a multibillion-dollar alliance with the US Department of Defense that rewires the nation’s rare earth magnet supply and elevates the Pentagon to its largest shareholder. The pact gives the military $400 million in convertible preferred stock—plus attached warrants—equal to a 15% fully diluted stake once exercised.
At the center of the deal is a new “10X” magnet factory slated to commission in 2028. The site, still to be chosen, will add 10,000 tonnes per year of finished magnets to MP’s downstream network, extending a chain that already runs from ore to oxide at Mountain Pass, California, and into first-generation magnet output at the Independence plant in Texas.
Financing is stitched together on two fronts. JPMorgan and Goldman Sachs have signed a $1 billion construction credit line, while the DoD will lend $150 million to expand heavy-rare earth separation at Mountain Pass. The preferred equity purchase clears tomorrow at $30.03 a share, locking in capital without immediate dilution.
Economics tilt further in MP’s favor under a 10-year floor price of $110 per kg for neodymium-praseodymium oxide and a matching 10-year offtake that directs every magnet the plant produces to defense and commercial buyers.
Spot NdPr oxide is around US$55–56 per kg, so the DoD’s US $110 per kg floor amounts to roughly a 100% premium that taxpayers would absorb if market prices stay flat—double the subsidy implied in the earlier draft.
Strategically, the arrangement vaults MP into national-champion status as Washington scrambles to cut reliance on Chinese supply, which still controls more than 90% of global magnet output. The Pentagon’s equity seat tightens oversight, secures feedstock for advanced weapons, and signals a more activist industrial policy that extends well beyond grants or tax credits.
MP Materials last traded at $30.02 on the NYSE, then jumping over 60% on opening bell following the news.
Information for this story was found via the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
