Pentagon Secures Stake in MP Materials to Strengthen U.S. Rare Earth Supply Chain and Reduce Dependence on China

U.S. Invests in Rare Earths to Counter China’s Dominance and Secure Critical Materials for Defense, Technology, and Clean Energy

The U.S. Department of Defense has acquired a 15% stake in MP Materials, operator of America’s only active rare earth mine at Mountain Pass, California, as part of a $400 million initiative to boost domestic production and reduce reliance on China’s supply chain dominance.

This move follows an executive order from former President Donald Trump, prioritizing U.S. energy security and critical mineral independence. MP Materials, revived in 2017, controls a fully integrated supply chain from mining to rare earth refining and neodymium magnet production, crucial for defense, electric vehicles, and consumer electronics.

China currently dominates global rare earth processing and supplies around 70% of America’s imports. Recent export restrictions from Beijing have heightened concerns about national security and technological independence. The Pentagon’s investment includes preferred shares convertible into common stock and a warrant priced at $30.03, making the U.S. government MP’s largest single shareholder.

As part of the agreement, the Pentagon will guarantee a price of $110 per kilogram for neodymium-praseodymium oxide (NdPr) over the next decade and purchase all magnets produced at the site. MP Materials will also receive a $150 million loan to expand heavy rare earth processing capabilities.

In a significant private sector collaboration, Apple Inc. has committed $500 million to purchase rare earths from MP Materials. The two companies plan to build a factory in Texas dedicated to producing neodymium magnets for Apple products, supporting Apple’s broader $500 billion U.S. investment pledge.

The partnership will create new manufacturing and R&D jobs and launch a rare earth recycling facility at Mountain Pass, enabling recycled materials to be incorporated into Apple devices. Shipments from the new Texas plant are expected to start in 2027, scaling to support hundreds of millions of devices.

MP Materials CEO James Litinsky hailed the deal as a milestone for supply chain resilience and U.S. industrial strength, stating: “This collaboration deepens our vertical integration and reinforces America’s capacity to secure vital rare earth materials.”

Meanwhile, despite some signs of easing tensions in U.S.-China trade relations, the rare earth sector remains a critical battleground. Beijing’s recent export curbs disrupted supply chains for major industries, from automakers like Ford and Suzuki to tech companies, prompting Western governments to secure alternative suppliers such as MP Materials and Lynas Rare Earths in Australia.

While global rare earth prices surged amid supply fears, long-term challenges persist for Western producers due to price volatility and market oversupply. Nevertheless, the Pentagon’s strategic investment underscores the critical importance of securing a stable rare earths supply for both national defense and advanced technologies.