As the U.S. faces a critical vulnerability in its supply chain concerning the rare earth supply, MP Materials Corp. ( MP ) on Thursday entered into a public-private partnership with the United States Department of Defense (DoD) to accelerate the build-out of an end-to-end U.S. rare earth magnet supply chain and reduce foreign dependency.

In April, China decided to restrict the export of rare earths and related magnets, disrupting supply chains worldwide. This move has impacted key automotive, aerospace, semiconductor, and defense industries. China’s firm control over these vital minerals gives it an important advantage in its ongoing trade tensions with the U.S.

With a multibillion-dollar investment package and long-term commitments from DoD, MP Materials ( MP ) will construct the company’s second domestic magnet manufacturing facility (the 10X Facility) at a soon-to-be-chosen location to serve both defense and commercial customers.

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Once the new facility is completed, expected to begin commissioning in 2028, MP Materials’ total U.S. rare earth magnet manufacturing capacity will reach an estimated 10,000 metric tons.

The company also expects to add heavy rare earth separation capabilities at its Mountain Pass, California, facility, solidifying its status as a national strategic asset where high-purity rare earth materials are extracted, separated, and refined all in one location.

“This initiative marks a decisive action by the Trump administration to accelerate American supply chain independence,” said James Litinsky, Founder, Chairman, and CEO of MP Materials ( MP ). “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.”

DoD has entered into a 10-year agreement establishing a price floor commitment of $110 per kilogram for MP Materials’ NdPr products stockpiled or sold, reducing vulnerability to non-market forces and ensuring stable and predictable cash flow with shared upside.

For ten years following the construction of the 10X Facility, DoD has agreed to ensure that defense and commercial customers will purchase 100% of the magnets produced there, with a shared upside.

The company has obtained a commitment letter from JPMorgan Chase Funding Inc. and Goldman Sachs Bank USA to provide $1.0 billion of financing for constructing and developing the 10X Facility.

In addition, within 30 days, the company expects to receive the proceeds of a $150 million loan from DoD in connection with its plan to expand its heavy rare earth separation capabilities at Mountain Pass.

As part of the agreement, DoD agreed to purchase $400 million of a newly-created series of the company’s convertible preferred stock. The initial conversion price and exercise price are $30.03 per share.

As a result of the strategic investment, DoD is positioned to become the company’s largest shareholder. On an as-converted and as-exercised basis, the convertible preferred stock and the warrant represent, in the aggregate, 15% of the company’s issued and outstanding shares of common stock as of July 9, 2025, without giving effect to the issuance of such shares.

MP Materials ( MP ) operates the world’s second-largest rare earth mine in Mountain Pass, California, where it extracts, refines, and separates rare earth materials. The company is commissioning a magnetics facility in Texas, Independence, which will anchor its downstream capabilities.

In June, Trump administration officials met with Chinese officials to discuss the export control on rare earth alloys, minerals, and magnets.

Price Action: MP stock is trading higher by 42.5% to $42.80 during the premarket session at last check Thursday.

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