U.S. Department of Defense Invests $400 Million in Domestic Rare Earth Production

In a significant move to bolster domestic production of critical minerals, the U.S. Department of Defense (DoD) announced on July 10, 2025, a $400 million investment in MP Materials, the operator of the Mountain Pass rare earth mine in California—the only active rare earth mining and processing facility in the United States. This strategic partnership aims to reduce the nation's reliance on foreign sources, particularly China, for essential materials used in military applications and advanced technologies.

The investment involves the DoD purchasing newly issued preferred stock in MP Materials, convertible into common shares, granting the government a 15% ownership stake and making it the company's largest shareholder. Additionally, the agreement includes a $150 million loan to enhance the Mountain Pass facility's capabilities, particularly in heavy rare earth separation. MP Materials also plans to construct a new magnet manufacturing plant, referred to as the "10X Facility," expected to commence operations in 2028. To stabilize the market and encourage domestic production, the DoD has guaranteed a minimum price of $110 per kilogram for neodymium-praseodymium oxide (NdPr), a key component in permanent magnets used in various defense systems.

MP Materials operates the Mountain Pass Rare Earth Mine and Processing Facility, located in California's Mojave Desert. Discovered in 1949, Mountain Pass has been a significant source of rare earth elements, supplying a substantial portion of the world's demand between 1965 and 1995. After periods of inactivity due to competition from Chinese suppliers and environmental concerns, the mine resumed operations under MP Materials in 2017. In 2020, Mountain Pass produced over 38,500 metric tons of rare earths in concentrate, representing more than 15% of global consumption.

This partnership signifies a significant shift in U.S. industrial policy, emphasizing the importance of securing a domestic supply chain for rare earth elements critical to national security. Rare earth magnets are essential components in advanced technology systems spanning defense and commercial applications, including electric vehicles, wind turbines, and various military equipment. By investing in MP Materials, the U.S. aims to reduce its dependence on foreign sources, particularly China, which currently dominates the global supply and processing of these critical elements.

Following the announcement, MP Materials' stock experienced a significant surge, closing at $45.23, an increase of about 50% from the previous trading session. This reflects investor confidence in the company's strengthened position and the strategic importance of domestic rare earth production.

The U.S. has been almost entirely dependent on foreign countries for rare earths, with China representing about 70% of imports as of 2023. Rare earths have been a central point of contention in recent trade disputes between the U.S. and China. This investment aligns with the Trump administration's efforts to reduce reliance on foreign sources for critical materials and to strengthen domestic supply chains.

The DoD's substantial investment in MP Materials marks a pivotal moment in the U.S. effort to reestablish a secure and independent supply chain for rare earth elements, with far-reaching implications for national security, economic policy, and international relations.