Summary
- Pentagon acquires 15% stake in MP Materials, the only active U.S. rare earth mineral , to boost national security and reduce dependence on China.
- Rare earths are vital for military systems and green tech, but China controls nearly 70% of U.S. supply chains and recently restricted exports.
- Deal includes $110/kg price guarantee, full Pentagon purchase of MP’s magnets, and a $150M loan to expand heavy rare earth capabilities.
- Trump administration delivers on energy security promise, backed by support from JP Morgan, Goldman Sachs, and Interior Secretary Doug Burgum.
Defense Department Acquires 15% of MP Materials, Securing Strategic U.S. Mineral Supply
Acting on President Donald Trump’s April 15, 2025 executive order “directing cabinet officials to take action to enhance U.S. energy security by lessening dependence on imports of rare earth minerals,” the Pentagon moved swiftly to acquire a 15% ownership stake in MP Materials, the operator of the only active rare earth mine in the United States.
The mine is located along Interstate 15 in southeast California. With the Department of Defense becoming the largest single shareholder, MP Materials stock surged 54% on July 10.
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Why Rare Earths Matter: National Security and Military Tech at Stake
The article stresses that rare earth metals are vital not just for renewable technologies like wind, solar, and EVs, but also form the backbone of every modern military weapons system, including jets and ships, due to their role in high-grade magnet production.
Although China is not the only producer of rare earths, it dominates the refining and magnet manufacturing process, leaving the U.S. in a vulnerable position, especially amid rising tensions and recent Chinese export restrictions.
A June 25 analysis by S&P Global revealed that these restrictions caused a 32.1% year-over-year drop in U.S. rare earth imports. According to U.S. Geological Survey data cited in that analysis, China controls nearly 70% of U.S. rare earth import supply chains.
A Fully Integrated Operation With Historical Roots
MP Materials is more than just a mine. It also refines and manufactures magnets on-site at its California facility. The Mountain Pass mine, originally discovered in 1949, played a dominant role in global rare earth production from the 1960s through the 1990s.
As detailed by the Science History Institute Museum and Library:
“Production at Mountain Pass increased dramatically in 1965, after the discovery that europium phosphors could be used to make a much brighter red in color television screens.”
However, operations ceased in the early 2000s after low metal prices and environmental concerns led to shutdowns.
A Public-Private Power Play: Terms of the Deal
Calling the arrangement a “transformational public-private partnership”, MP Materials Founder and CEO James Litinsky said:
“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 for their unwavering support and dedication.”
According to CNBC, the deal includes:
- The Pentagon acquiring preferred shares convertible to common stock.
- A 10-year warrant allowing the government to purchase more stock at $30.03 per share.
- A price guarantee of $110 per kilogram for neodymium-praseodymium oxide (NdPr).
- A commitment by the Pentagon to buy 100% of MP’s magnets.
With this 15% stake, the Pentagon now holds almost double the shares of CEO Litinsky (8.61%) and BlackRock Fund Advisors (8.27%).
$1.15 Billion in Expansion Support and Strategic Loans
Financial heavyweights JP Morgan and Goldman Sachs pledged $1 billion in support to expand MP’s manufacturing facility. The Pentagon is also expected to issue a $150 million loan to bolster heavy rare earth separation capabilities at Mountain Pass.
Once these projects are completed, MP Materials will operate the only fully integrated rare earth site in the Western Hemisphere.
A Presidential Promise Fulfilled
Interior Secretary Doug Burgum, speaking at the Hamm Institute in Oklahoma City, pushed for direct federal investments in critical energy resources, saying:
“We should be taking some of our balance sheet and making investments… You’re competing against state capital because China is picking these strategically as areas that they want to invest in.”
Burgum even proposed the creation of a U.S. sovereign wealth fund, echoing the models of Norway and Saudi Arabia:
“Why wouldn’t the wealthiest country in the world have the biggest sovereign wealth fund.”
This decisive move, blending military urgency and economic foresight, fulfills a core Trump campaign promise from 2024—to reduce U.S. dependence on China for rare earths and secure the supply chains essential for energy and national defense.
