Pentagon Becomes Top Shareholder In Only Active US Rare Earth Producer

The US Department of Defence has acquired a 15 per cent stake in MP Materials, America's only operational rare earth mine, to boost domestic production and reduce reliance on Chinese-controlled supply chains.

The acquisition follows US President Donald Trump's April 15 executive order directing federal agencies to enhance US energy security and safeguard critical mineral supplies.

Located near Interstate 15 in southeast California, the MP Materials mine is now part of what officials are calling a "transformational" public-private partnership. Following the announcement, MP Materials' stock surged 54 per cent on July 10, Forbes reported.

Rare earth minerals are essential to technologies spanning wind and solar energy, electric vehicles, and, crucially, US military systems such as jets, ships, and precision-guided weapons. While China leads in mining and dominates refining and magnet production, recent export restrictions from Beijing have intensified concerns over national security.

According to the US Geological Survey, nearly 70 per cent of US rare earth imports are controlled by China. A June 25 analysis from S&P Global reported a 32.1 per cent year-over-year drop in US rare earth imports due to Chinese export controls.

MP Materials, which owns and operates the historic Mountain Pass site, offers a fully integrated supply chain, from extraction to refinement and magnet production. The company was formed in 2017 to revive the mine, originally discovered in 1949 and once a global leader, until environmental and market challenges led to its shutdown in the early 2000s.

The Pentagon's investment includes preferred shares convertible into MP's common stock and a 10-year warrant priced at $30.03 per share. This gives the Defence Department the largest single ownership share, surpassing those of CEO James Litinsky (8.61 per cent) and BlackRock Fund Advisors (8.27 per cent).

"This initiative marks a decisive action by the Trump administration to accelerate American supply chain independence," said Mr Litinsky in a statement. "We are proud to enter into this transformational public-private partnership and are deeply grateful to President Trump, our partners at the Pentagon, and our employees, customers and stakeholders."

As part of the deal, the Pentagon will guarantee a price of $110 per kg for neodymium-praseodymium oxide (NdPr) for the next 10 years. It will also buy 100 per cent of the magnets made at the site. MP Materials is expected to get a $150 million loan from the Pentagon to help expand its heavy rare earth processing at Mountain Pass. JP Morgan and Goldman Sachs have pledged $1 billion to support the expansion.