The Pentagon is seen in October 2021. (Robert H. Reid/Stars and Stripes)
The Defense Department will become the largest shareholder in rare-earth mining company MP Materials by buying $400 million of its stock and providing another $150 million loan.
Las Vegas-based MP Materials owns the only rare-earth mine in the United States, at Mountain Pass, Calif. Chief executive Jim Litinsky said the company aims to restore the full rare-earth supply chain in the United States and eliminate a “single point of failure” in the country’s military-industrial base.
“Recent events have underscored the urgency of this mission,” Litinsky said in a Thursday call with investors. China dominates the market for a category of minerals known as “rare earths,” which are needed to make industrial magnets used in military aircraft such as drones as well as commercial automobiles.
In April, the Trump administration ordered the Commerce Department to investigate the national security implications arising from imported critical minerals and their related products, something that could lead to new tariffs. Beijing responded by starving U.S. automakers of necessary supplies, seeking leverage in trade talks with President Donald Trump.
Treasury Secretary Scott Bessent last week said a new deal with China will increase the supply of rare-earth magnets. But U.S. presidential administrations have long sought to boost domestic sources.
Although other companies are racing to develop rare-earth businesses of their own, MP Materials is the furthest along and refers to itself as the “national champion” for hopes of a fully integrated supply chain. It received $45 million from the Biden administration in 2022 and expects to soon begin production of magnets for General Motors.
In addition to taking a direct stake in MP Materials, the Defense Department is extending a $150 million loan to help the company add to its capabilities at Mountain Pass. The company is also getting $1 billion in separate financing from investment banks.
The company agreed to build a second factory for rare-earth magnets, and the Defense Department agreed to ensure that everything produced by that facility is bought by a defense or commercial customer for 10 years after its construction.
“We understand that this partnership is ultimately on behalf of the taxpayers and our national security, and with that comes a great responsibility to get that done right,” Litinsky said.
