Why did the Pentagon become a major shareholder in a rare earth miner in the United States?

Thanks to a "multi-billion dollar investment package" and a "long-term commitment from the DoD," the company plans to begin construction of a second magnet manufacturing facility as soon as a location is identified. Production, expected to begin in 2028, is intended to serve both defense and private sector customers. This will give MP Materials a total capacity of 10,000 tons per year, combined with its existing facility in Mountain Pass, California. This facility is touted as the second-largest rare earth mining site in the world.

In detail, the agreement provides for the Department to acquire the equivalent of $400 million in newly issued convertible preferred stock and a right to purchase common stock at a price of $30.03 per share. Ultimately, the DoD is expected to own 15% of MP Materials, making it its largest shareholder.

MP Materials stock soars

At around 6:45 p.m., MP Materials' shares jumped more than 50 percent to $45.23 on the New York Stock Exchange. The ministry also committed to paying a minimum price of $110 per kilo (the price is currently around $60) for ten years for its production of NdPr (a neodymium and praseodymium alloy used in motors and generators, among other things) in order to "reduce the risks associated with external market speculation" and "ensure a stable flow of cash" for the company. It will also ensure that all the magnets produced by the second plant (called 10X) are purchased for ten years after its construction is completed.

Rare earths (seventeen raw materials, discovered at the end of the 18th century in Sweden, each with different properties) are strategic because they are essential to the economy of tomorrow, particularly for energy transition technologies and electronics.