MP Materials (NYSE:MP) saw its shares leap by as much as 32% in premarket trading after announcing a landmark agreement with the U.S. Department of Defense aimed at strengthening America’s rare earth supply chain and expanding domestic magnet production.
The deal marks a multibillion-dollar public-private initiative, featuring a $400 million equity investment from the Defense Department via the purchase of preferred stock convertible at $30.03 per share. In addition, the DoD has pledged a $150 million loan, expected to be disbursed within 30 days, to accelerate the expansion of MP’s Mountain Pass operations in California.
As part of its broader growth plan, MP Materials has secured $1 billion in funding commitments from JPMorgan and Goldman Sachs to develop its second U.S.-based magnet manufacturing site, known as the 10X Facility. This plant, slated to begin operations in 2028, is expected to boost domestic magnet output to 10,000 metric tons annually.
The 10-year agreement also includes a price floor of $110 per kilogram for neodymium-praseodymium (NdPr) produced by MP Materials, with the Pentagon agreeing to purchase the entire magnet output from the new facility for a full decade.
The contract comes with warrants that could see the Defense Department become MP’s largest stakeholder, with up to 15% ownership if exercised. JPMorgan served as the exclusive financial advisor to MP Materials on the transaction.
The deal highlights Washington’s growing efforts to reduce reliance on foreign sources for critical minerals and bolster domestic manufacturing in strategic sectors.
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