MP Materials and DoD Partner to Expand US Rare Earth Magnet Supply Chain

Understanding the US Rare Earth Dependency Challenge

The United States currently faces a critical national security and economic vulnerability that few Americans fully comprehend. The country is almost entirely dependent on foreign sources for rare earth magnet components – essential materials that power everything from military equipment to renewable energy technologies. This dependency creates significant supply chain vulnerabilities that threaten both defense readiness and economic competitiveness.

Rare earth elements (REEs) comprise 17 metallic elements with unique properties that make them irreplaceable in modern technology. Despite their name, most REEs are relatively abundant in the Earth's crust, but economically viable concentrations are scarce. What makes them strategically vital is their application in permanent magnets used in electric vehicle motors, wind turbines, missile guidance systems, and countless other high-tech applications.

China currently dominates global rare earth production and processing, controlling approximately 85% of the refined materials market. This monopolistic position gives foreign entities significant leverage over critical American supply chains – a vulnerability that has prompted urgent action from both government and industry stakeholders.

"This initiative marks a decisive action to accelerate American supply chain independence," notes James Litinsky, CEO of MP Materials. "The risks of continued dependency aren't just theoretical – they represent real threats to our national security and technological leadership."

The dependency challenge extends beyond simple material shortages. Without domestic production capabilities, the U.S. faces potential supply disruptions during geopolitical tensions, price manipulation by foreign suppliers, and limited ability to maintain manufacturing sovereignty for sensitive defence critical minerals.

What is MP Materials' Strategic Partnership with the DoD?

MP Materials has established a transformative public-private partnership with the U.S. Department of Defense to dramatically expand domestic rare earth magnet production capabilities. This collaboration represents a multibillion-dollar investment package aimed at stimulating domestic production, enhancing industrial resilience, and securing essential supply chains for both defense applications and commercial industries.

The partnership's financial framework includes:

• A $400 million investment from the DoD through the purchase of convertible preferred stock in MP Materials
• A $150 million loan from the DoD to expand heavy rare earth separation capabilities at the Mountain Pass facility
• $1 billion in financing secured from JPMorgan Chase Funding and Goldman Sachs Bank for the construction of the 10X Facility

Beyond capital infusion, the DoD has provided market stability guarantees, including a ten-year price floor of $110 per kilogram for MP Materials' neodymium-praseodymium (NdPr) products and a commitment to purchase all magnets produced at the 10X Facility for ten years after construction.

"We are proud to enter into this transformational public-private partnership and are deeply grateful to President Trump, our partners at the Pentagon and our employees, customers and stakeholders for their unwavering support and dedication," said Litinsky.

This partnership represents a fundamental shift in U.S. industrial policy, with the government taking an active role in securing critical supply chains rather than leaving them entirely to market forces. The approach recognizes that certain capabilities are too strategically important to outsource, especially when global supplies are concentrated in potentially adversarial nations.

What Will the 10X Facility Contribute to US Rare Earth Production?

Manufacturing Capacity and Timeline

The centerpiece of the MP Materials-DoD partnership is the planned 10X Facility – a state-of-the-art rare earth magnet manufacturing center that will dramatically expand domestic production capabilities. This second domestic magnet manufacturing facility will have an estimated annual production capacity of 10,000 tonnes of finished magnets, representing a significant percentage of current U.S. consumption.

The facility, scheduled to begin commissioning in 2028, will employ advanced mining industry innovation techniques to produce high-performance NdFeB (neodymium-iron-boron) magnets – the most powerful permanent magnets commercially available. These magnets deliver exceptional magnetic force in compact, lightweight packages, making them ideal for applications ranging from electric vehicle motors to wind turbine generators and defense systems.

While the specific location for the 10X Facility has not yet been determined, it will be strategically positioned to serve both defense and commercial clients across the United States. The site selection process will likely consider factors such as proximity to transportation infrastructure, energy costs, workforce availability, and synergies with existing supply chain partners.

Financial Structure and Support

The 10X Facility represents a significant capital investment backed by both private and public funding sources:

• $1 billion in financing secured from JPMorgan Chase Funding and Goldman Sachs Bank
• $400 million DoD investment through the purchase of convertible preferred stock in MP Materials
• Ten-year price floor guarantee of $110 per kilogram for MP Materials' NdPr products
• DoD purchase commitment for all magnets produced at the facility for ten years after construction

This financial structure demonstrates the strategic importance placed on rare earth magnet production by both government and private sectors. The price floor guarantee is particularly significant, as it shields the operation from potential market manipulation by foreign competitors who might otherwise attempt to drive prices below production costs to eliminate American competition.

The DoD's purchase commitment provides revenue certainty that makes the massive capital investment viable, while the convertible preferred stock arrangement gives the government a potential equity stake in the success of the venture – aligning public and private interests in rebuilding this critical industrial capability.

How Will Mountain Pass Operations Expand?

MP Materials plans to enhance its heavy rare earth separation capabilities at its Mountain Pass facility in California – currently the only integrated rare earth extraction, separation, and refinement site in the United States. This expansion will be supported by a $150 million loan from the DoD, expected to be received within 30 days of the July 2025 announcement.

The Mountain Pass mine, located in California's Mojave Desert, contains one of the world's richest deposits of rare earth elements. The facility already produces approximately 15% of global rare earth oxide supply, but the expansion will focus specifically on enhancing capabilities for separating heavy rare earth elements – the most technologically challenging and valuable subset of REEs.

Heavy rare earths, including dysprosium and terbium, are particularly crucial for enhancing the temperature resistance and performance of permanent magnets. Their addition allows magnets to maintain strength at high operating temperatures, which is essential for applications like electric vehicle motors and wind turbines.

The Mountain Pass expansion represents a critical upstream enhancement to the rare earth supply chain. By increasing domestic separation capabilities for heavy rare earths, MP Materials will reduce dependency on foreign processing while providing the essential materials needed for downstream magnet production at both the Independence and 10X facilities.

"The Mountain Pass expansion is fundamentally about closing gaps in our domestic supply chain," explained an MP Materials representative. "Without these enhanced separation capabilities, we'd still be reliant on foreign processors for critical materials, regardless of our mining capacity."

What Other Facilities Are Part of MP Materials' Rare Earth Strategy?

In addition to the Mountain Pass facility and the planned 10X Facility, MP Materials is commissioning a magnetics facility in Texas, named Independence. This facility will anchor the company's downstream capabilities, creating a more complete domestic supply chain for rare earth materials.

The Independence facility represents the critical middle step in MP Materials' vertically integrated strategy. While Mountain Pass handles the upstream extraction and initial processing, and the 10X Facility will significantly expand manufacturing capacity, Independence serves as the company's first venture into magnet production – translating raw materials into finished components ready for use in advanced applications.

This three-facility approach establishes a comprehensive strategy for addressing the entire rare earth value chain within U.S. borders:

1. Mountain Pass (California): Extraction and processing of rare earth materials from ore to separated oxides and metals
2. Independence (Texas): Initial manufacturing facility for converting processed rare earth materials into magnets
3. 10X Facility (Location TBD): Large-scale production center that will dramatically expand magnet manufacturing capacity

Together, these facilities create a domestic rare earth ecosystem that spans from mine to magnet – eliminating reliance on foreign entities for any stage of the production process. This vertically integrated approach provides greater supply chain security while capturing more value within the domestic economy.

What Are the National Security Implications?

The partnership between MP Materials and the DoD addresses critical national security concerns by reducing dependence on foreign sources for materials essential to defense applications. Rare earth magnets are used in numerous military technologies, including guidance systems, radar, communications equipment, and electronic warfare systems.

Without secure access to these materials, the U.S. defense industrial base faces significant vulnerabilities. Foreign suppliers could potentially restrict access to critical components during geopolitical tensions, creating unacceptable risks for military readiness and operational capabilities.

The national security implications extend beyond immediate defense applications to include:

• Strategic autonomy: Ability to maintain defense production regardless of international relations
• Technology security: Protection of sensitive designs and specifications that might otherwise be exposed to foreign entities in the supply chain
• Industrial readiness: Maintenance of domestic manufacturing capabilities that could be rapidly scaled during crises
• Deterrence value: Demonstration to potential adversaries that supply chain leverage has been neutralized

By establishing domestic production capabilities for rare earth magnets, the United States aims to mitigate these supply chain vulnerabilities and ensure access to these materials during potential geopolitical mining landscape disruptions. The DoD's significant financial commitment demonstrates the high priority placed on securing this supply chain for national security purposes.

How Does This Initiative Impact Commercial Industries?

Beyond defense applications, the development of domestic rare earth magnet production capabilities will benefit numerous commercial industries that rely on these materials for cutting-edge technologies. The initiative creates a more secure and reliable supply chain for sectors driving the critical minerals energy transition and advanced manufacturing renaissance.

Key industries that will benefit include:

• Electric vehicles: NdFeB magnets power the high-efficiency motors in EVs, with each vehicle requiring approximately 1-2 kg of rare earth materials
• Renewable energy: Wind turbines use rare earth magnets in their generators, with a typical 5 MW turbine containing nearly 2 tonnes of permanent magnets
• Consumer electronics: Smartphones, laptops, and audio equipment rely on small but powerful rare earth magnets for speakers, vibration motors, and hard drives
• Medical equipment: MRI machines, surgical tools, and other medical devices use rare earth magnets for precise control and functionality
• Aerospace: Aircraft components, satellite systems, and space technologies incorporate rare earth materials for their weight-to-performance advantages

The initiative promises to create high-skilled manufacturing jobs, stimulate technological innovation, and strengthen America's position in high-tech manufacturing sectors. By providing a secure domestic supply of critical materials, the MP Materials-DoD partnership enables American companies to innovate without supply chain uncertainty.

"This isn't just about defense applications," notes an industry analyst. "The same magnets that power missile guidance systems also drive electric vehicles and wind turbines. Securing this supply chain accelerates our clean energy transition while strengthening national security."

What Global Partnerships Complement This Domestic Strategy?

MP Materials is pursuing international partnerships to strengthen its position in the global rare earth market while complementing its domestic production strategy. In May 2025, the company signed a memorandum of understanding with the Saudi Arabian Mining Company (Ma'aden) to create a fully integrated, end-to-end rare earth supply chain within Saudi Arabia.

This Saudi partnership represents a strategic diversification that provides several advantages:

• Geographic diversification: Establishing production capabilities in multiple regions reduces vulnerability to localized disruptions
• Market access: Provides entry points to Middle Eastern and European markets from a strategically positioned location
• Resource diversity: Access to potentially different rare earth deposits with varying elemental compositions
• Diplomatic alignment: Strengthens industrial ties with a key U.S. ally in the Middle East

International collaborations like the Ma'aden partnership demonstrate MP Materials' global vision while reinforcing its commitment to building resilient supply chains. Rather than focusing exclusively on domestic production, the company is creating a network of allied production capabilities that can collectively offset Chinese market dominance.

This balanced approach – building domestic capabilities while fostering international partnerships with allied nations – represents a sophisticated strategy for addressing rare earth supply chain vulnerabilities on multiple fronts simultaneously.

What Economic Benefits Will Result from This Initiative?

The partnership between MP Materials and the DoD is expected to generate significant economic benefits that extend far beyond the direct operations of the company itself. The initiative contributes to broader economic security while creating high-value jobs and technological capabilities.

Key economic benefits include:

• High-skilled job creation: Manufacturing facilities will generate hundreds of direct jobs in engineering, production, quality control, and facility management
• Supply chain employment: Thousands of indirect jobs will be created among suppliers, service providers, and downstream manufacturers
• Technology development: R&D investments will advance processing techniques and magnet designs, creating intellectual property and competitive advantages
• Export potential: As domestic needs are met, excess production capacity could serve export markets, improving trade balances
• Price stability: Domestic production provides a competitive alternative to foreign suppliers, potentially moderating prices for all U.S. manufacturers
• Industrial clustering: Magnet production facilities may attract related industries, creating manufacturing ecosystems in their regions

The economic impact extends to strategic resilience – reducing vulnerability to supply disruptions that could otherwise idle production lines and cause economic damage far exceeding the direct cost of the materials themselves.

By capturing more of the rare earth value chain domestically, the U.S. economy retains wealth that would otherwise flow to foreign producers. The high-value manufacturing jobs created typically pay well above median wages, contributing to broader economic prosperity in their communities.

FAQ: Rare Earth Elements and US Supply Chain Security

What are rare earth elements and why are they important?

Rare earth elements comprise 17 metallic elements on the periodic table (specifically the 15 lanthanides plus scandium and yttrium) that possess unique magnetic, luminescent, and electrochemical properties. Despite their name, most rare earths are relatively abundant in the Earth's crust, but economically viable concentrations are less common.

Their importance stems from their irreplaceable role in numerous technologies:

• Neodymium, praseodymium, dysprosium and terbium: Used in powerful permanent magnets
• Europium, yttrium, and terbium: Create red, green and blue phosphors for displays and lighting
• Cerium: Critical for catalytic converters and glass polishing
• Lanthanum: Used in battery electrodes and high-refractive-index glass

Without these elements, many modern technologies would be impossible or significantly less efficient, making their secure supply essential for technological advancement and economic competitiveness.

How dependent is the US on foreign sources for rare earth materials?

Prior to recent initiatives, the United States was almost entirely dependent on imports for rare earth magnet components, primarily from China. While the U.S. does have domestic mining capabilities at Mountain Pass, the lack of processing and manufacturing infrastructure meant that even domestically mined materials often had to be sent overseas for processing before returning as finished components.

This dependency created significant vulnerabilities in critical supply chains for both defense and commercial applications. Fluctuations in pricing, export restrictions, or geopolitical tensions could potentially disrupt access to materials essential for everything from military systems to renewable energy technologies.

The current initiatives by MP Materials and the DoD directly address this vulnerability by building domestic capabilities across the entire supply chain – from mining and processing to magnet manufacturing.

What role does the Mountain Pass mine play in the US rare earth supply chain?

The Mountain Pass mine in California is the only integrated site in the United States where high-purity rare earth materials are extracted, separated, and refined. Operated by MP Materials, the facility represents a crucial first step in establishing a domestic rare earth supply chain.

Mountain Pass contains one of the world's richest and highest-quality rare earth deposits, with a particularly favorable ratio of light rare earth elements critical for magnet production. The mine has a storied history – it once supplied most of the world's rare earths before being outcompeted by Chinese producers in the 1990s and temporarily shutting down.

The revitalized operation now produces approximately 15% of global rare earth oxide supply, but the materials have typically required overseas processing to convert them into metals and magnets. The DoD-supported expansion will enhance Mountain Pass's capabilities for separating heavy rare earth elements, further reducing dependence on foreign processing.

How will the price floor guarantee benefit the domestic rare earth industry?

The DoD's ten-year price floor guarantee of $110 per kilogram for MP Materials' neodymium-praseodymium (NdPr) products provides crucial stability for the emerging domestic industry. This guarantee serves multiple strategic purposes:

• Investment security: Ensures MP Materials can confidently invest in expansion without fear of predatory pricing from foreign competitors
• Market stability: Reduces price volatility that might otherwise deter downstream manufacturers from committing to domestic supply chains
• Competitive protection: Shields the nascent industry from potential market manipulation by established foreign producers who might temporarily lower prices to eliminate competition
• Planning certainty: Allows for long-term operational and financial planning based on predictable revenue streams

Price floors represent a recognition that market dynamics alone may not support strategic industries facing established foreign competition, especially when that competition may receive subsidies or other government support. By ensuring a minimum viable price, the DoD enables domestic production without requiring ongoing operational subsidies.

The recent executive order on critical minerals further supports this domestic production ecosystem by prioritizing government procurement of essential materials from American suppliers.

Disclaimer: This article contains information about future facilities, production timelines, and financial arrangements that may be subject to change. Economic projections and market impact assessments represent analysis based on current information and should not be considered investment advice.

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