MP Materials announces deal with Department of Defense to develop US rare earth magnet supply chain

MP Materials has formed a public-private partnership with the US Department of Defense (DoD) aimed at developing a US rare earth magnet supply chain.

Rare earth magnets are used in the majority of EV traction motors, as well as smartphones, robotics, and various defense-related applications. Over 90% of the world’s rare earth magnets are currently produced in China. MP Materials, which has a mine and processing facility in the US, claims to be the only scaled producer of rare earth materials in the Western Hemisphere. Recycling rare earth materials is also an integral part of MP’s business plan. (Read our 2024 interview with MP Materials Senior Vice President Matt Sloustcher.)

Under the new multibillion-dollar agreement, DoD will invest some $400 million in MP Materials stock, becoming the company’s largest shareholder with as much as a 15% stake. The US government will also establish a 10-year neodymium-praseodymium (NdPr) price floor, enter into a 10-year offtake agreement for 100% of the magnets produced at MP’s new 10X Facility, and provide a $150-million loan to expand heavy rare earth separation at the company’s Mountain Pass mining facility.

MP Materials will also receive a $1-billion loan from JPMorgan Chase and Goldman Sachs to fund the 10X Facility, which is expected to be commissioned in 2028, and to produce 7,000 metric tons of NdFeB magnets at full capacity—approximately 34% of projected US demand by that year.

The scale of the deal, and its strategic significance, are such that Adamas Intelligence asked rhetorically if it represents a nationalization of the rare earth industry. The answer, of course, is no—MP remains a publicly traded company, governed by its shareholders. However, the agreement does represent a bold, market-oriented step toward establishing a US supply chain for rare earth materials and challenging China’s dominance of the global market.

China’s control of NdFeB magnet production has had the effect of keeping global NdPr prices low, and deterring investment outside China. The $110-per-kilogram floor, a substantial premium over current prices, will guarantee MP Materials a stable revenue stream (which Adamas characterized as “a utility-like cash flow”), allowing it to make the necessary investments to expand its operations.

Separately, MP Materials has announced a long-term agreement to supply Apple with rare earth magnets manufactured in the US from 100% recycled materials. Magnet shipments are expected to begin in 2027, and ramp up to support hundreds of millions of Apple devices. The companies will also work together to accelerate technological advancements in magnet production and end-of-life recovery.

Sources: Adamas Intelligence, MP Materials