After a groundbreaking public-private cooperation with the U.S. Department of Defense (DoD) was announced, MP Materials Corp. (NYSE: MP) experienced a 40.53% increase in share price to $42.20 during pre-market trading. By drastically accelerating the creation of a domestically sourced rare earth magnet supply chain, the pact seeks to strengthen national security and lessen dependency on outside sources.
A New Facility to Increase Rare Earth Capacity in the U.S.
As part of this long-term strategic partnership, MP Materials will construct the “10X Facility,” its second magnet manufacturing facility in the United States. Although the precise site is yet unknown, the factory is anticipated to start operations in 2028 and increase the company’s ability to produce 10,000 metric tons of magnets per year in the United States. This initiative will serve both commercial and defense sectors.
MP Materials will increase its heavy rare earth separation at its current location in Mountain Pass, California, to bolster U.S. capabilities even further. Due to its ability to extract, refine, and separate high-purity minerals in one place, this plant already plays a significant role in the domestic rare earths business.
Ten-Year Promises and Financial Support
The DoD has committed to a decade-long support package, including equity, warrants, loans, and offtake agreements. A notable element is the 10-year price floor of $110 per kilogram for MP’s NdPr products, offering protection against market volatility and assuring stable revenues. The DoD has also committed to sourcing 100% of the magnets produced at the new facility for defense and commercial use during the same period.
MP Materials secured a $1 billion financing commitment from JPMorgan Chase Funding Inc. and Goldman Sachs Bank USA, contingent on standard terms. An additional $150 million DoD loan will be disbursed within 30 days to support the Mountain Pass expansion.
DoD to Become Largest Shareholder
As part of the investment agreement, the DoD will acquire $400 million in convertible preferred stock and receive warrants to purchase additional common stock at $30.03 per share. The transaction is expected to close on July 11, 2025. Upon completion, the DoD is set to become MP Materials’ largest shareholder.
