DoD and MP Materials Forge Landmark Partnership to Secure US Rare Earth Magnet Supply

The U.S. Department of Defense (DoD) has forged a significant public-private partnership with MP Materials, aiming to bolster domestic rare earth magnet production. This multi-billion dollar initiative seeks to reduce America's reliance on foreign sources for these critical components, essential for advanced technology and defense systems, by expanding MP Materials' manufacturing capabilities and securing a stable supply chain.

A Strategic Alliance for National Security

MP Materials, already operating the world's second-largest rare earth mine in Mountain Pass, California, and commissioning a magnetics facility in Texas, will significantly expand its U.S. operations. This partnership is a direct response to the nation's near-total dependence on foreign rare earth magnet sources, which are vital for various defense and commercial applications.

Key Takeaways

• Accelerated Domestic Production: The partnership will dramatically speed up the establishment of an end-to-end U.S. rare earth magnet supply chain.
• New Manufacturing Facility: MP Materials will construct a second domestic magnet manufacturing facility, the "10X Facility," projected to begin commissioning in 2028 and increase total U.S. rare earth magnet manufacturing capacity to an estimated 10,000 metric tons.
• Enhanced Separation Capabilities: The Mountain Pass facility will add heavy rare earth separation capabilities, solidifying its role as a national strategic asset.
• Long-Term Commitments: The agreement includes a 10-year NdPr price floor commitment of $110 per kilogram and a 10-year magnet offtake agreement, ensuring stable revenue and demand.
• Significant DoD Investment: The DoD's multi-billion dollar package includes convertible preferred equity, warrants, and loans, positioning the DoD to become MP Materials' largest shareholder.

Financial Commitments and Structure

The partnership is underpinned by substantial financial commitments:

• DoD Investment: The DoD will purchase $400 million in convertible preferred stock and warrants, representing 15% of MP Materials' common stock on an as-converted and as-exercised basis.
• Loan for Expansion: A $150 million loan from the DoD is expected within 30 days to expand heavy rare earth separation capabilities at Mountain Pass.
• Third-Party Financing: JPMorgan Chase Funding Inc. and Goldman Sachs Bank USA have committed $1.0 billion in financing for the 10X Facility's construction and development.

Impact and Future Outlook

This collaboration is poised to transform the U.S. rare earth industry, fostering industrial resilience and securing critical supply chains for high-growth sectors. James Litinsky, Founder, Chairman, and CEO of MP Materials, emphasized the initiative as a decisive step towards American supply chain independence, expressing gratitude to the Trump administration and the Pentagon for their support. The strategic investment aims to create a durable and scalable economic platform, ensuring the availability of essential materials for future dual-use applications.

Sources

• MP Materials Announces Transformational Public-Private Partnership with the Department of Defense to
  Accelerate U.S. Rare Earth Magnet Independence, Junior Mining Network.