12:51 PM EDT, 07/10/2025 (MT Newswires) -- MP Materials ( MP ) on Thursday outlined a plan to construct a rare-earth magnet manufacturing facility in the US as part of a private-public partnership with the Department of Defense, which will become the largest shareholder in the company.

The company aims to accelerate domestic production of rare earth magnets and reduce foreign dependency for the product. MP Materials ( MP ), which intends to select a location for the plant soon, expects the facility to become operational in 2028 and boost its manufacturing capacity to an estimated 10,000 metric tons. The DoD has agreed to a "multibillion-dollar package" of investments and long-term commitments for the initiative, the company said.

MP Materials ( MP ) shares surged 46% in Thursday afternoon trade.

"This initiative marks a decisive action by the Trump administration to accelerate American supply chain independence," MP Materials ( MP ) Chief Executive James Litinsky said in a statement. "We are proud to enter into this transformational public-private partnership and are deeply grateful to President (Donald) Trump, our partners at the Pentagon, and our employees, customers and stakeholders."

In April, the company announced it had halted shipments of rare earth concentrate to China in response to the country's retaliatory tariffs and export controls against the US at the time. The US and China late in June confirmed details of a trade framework that would allow exports of rare earths and ease technology curbs.

As part of the partnership, the DoD agreed to acquire $400 million of a newly created series of the company's preferred stock convertible into its common shares and a warrant allowing the department to buy additional shares. On an as-converted and as-exercised basis, the convertible preferred stock and the warrant represent a total of 15% of MP Materials' ( MP ) issued and outstanding common shares. The purchase is scheduled to close Friday.

MP Materials ( MP ) said it plans to use the proceeds to expand its current rare earths separation and processing capabilities, as well as its magnet production capacity.

The department also agreed to 10-year price floor commitment of $110 per kilogram for MP Materials' ( MP ) neodymium-praseodymium products, a rare earth alloy and a crucial component in high-performance permanent magnets used for several technologies, such as electric vehicles. The DoD also agreed that all of the magnets produced at the company's planned facility will be purchased by defense and commercial customers with "shared upside," MP Materials ( MP ) said.

The company secured a funding commitment of $1 billion for the construction and development of the new manufacturing plant. MP Materials ( MP ) expects to expand its heavy rare earth separation capabilities at its existing California facility through proceeds from a $150 million loan from the DoD, the company said.

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