Strategic Government Partnership Positions MP Materials

MP Materials, which operates the only scaled rare earth mining and processing facility in North America at its Mountain Pass site in California, announced a transformational public-private partnership with the U.S. Department of Defense in July. The multi-billion-dollar agreement represents one of the most significant efforts to date to reduce American dependence on Chinese rare earth supplies.³

Under the landmark deal, the DoD committed $400 million in convertible preferred equity with a fixed conversion price of $30.03 per share and a 7% annual payment-in-kind liquidation preference. The government also received warrants exercisable over a 10-year period that would increase DoD ownership to 15% on an as-converted, as-exercised basis. Additionally, the agreement includes a $150 million loan with a 12-year duration to expand the company’s heavy rare earth element separation capabilities.

The partnership’s most notable feature is a neodymium-praseodymium price floor mechanism designed to provide MP Materials with stable, predictable revenue. The DoD has committed to paying the company the difference between a $110 per kilogram floor price and the market price for all NdPr products—including oxide, metal, and concentrate—over a 10-year term beginning in the fourth quarter of 2025. The agreement also includes revenue-sharing provisions, with the DoD receiving 30% of upside above the $110/kg threshold once MP Materials’ planned “10X” facility achieves target capacity.⁴

Ambitious Manufacturing Expansion

The DoD partnership also encompasses plans for MP Materials to construct a new “10X” magnet manufacturing facility that, combined with its existing Independence plant expansion, will target 10,000 metric tons of annual magnet production capacity. The DoD has committed to a 100% offtake agreement for defense consumption and commercial syndication, with cost-plus pricing and a $140 million minimum EBITDA guarantee with a 2% annual escalator.⁵

This 10-year offtake commitment includes additional upside-sharing provisions, with the DoD receiving the first $30 million of EBITDA exceeding $140 million and splitting any additional upside above $170 million on a 50-50 basis with MP Materials. The structure provides the company with predictable cash flows while aligning government and shareholder interests in scaling domestic rare earth magnet production.

Company Operations and Recent Performance

MP Materials is the largest rare earth materials producer in the Western Hemisphere, operating the Mountain Pass mine and processing facility in San Bernardino County, California. The company also owns and operates the Independence rare earth metal, alloy, and magnet manufacturing facility in Fort Worth, Texas, where it began production of magnetic precursor products in December 2024.⁶

The company’s operations span the entire rare earth value chain. Its Materials segment produces both rare earth concentrate and separated rare earth products, including neodymium-praseodymium oxide. The Magnetics segment, based at the Independence facility, anticipates manufacturing neodymium-iron-boron permanent magnets by the end of 2025.

In its second quarter 2025 earnings report released in August, MP Materials demonstrated significant operational progress. Total revenue increased 84% year-over-year to $57.4 million, driven primarily by higher production of separated products. The company achieved record NdPr production of 597 metric tons, representing a 119% increase compared to the prior year period, while NdPr sales volumes more than tripled to 443 metric tons.⁷

Materials segment revenue rose 20% to $37.5 million, as NdPr oxide and metal sales surged $18.5 million due to the 226% increase in sales volumes and a 19% improvement in realized pricing. The company’s strategic decision to cease rare earth concentrate shipments to China resulted in a $12.5 million decline in concentrate revenue, but this was more than offset by growth in higher-value separated products. Rare earth oxide production reached 13,145 metric tons, the second-highest quarterly output in company history, up 45% year-over-year.

The Magnetics segment continued scaling operations, generating $19.9 million in revenue and $8.1 million in Adjusted EBITDA as the company profitably ramped metal production. Despite these operational gains, the company reported a net loss of $30.9 million for the quarter, though this represented a 9% improvement from the prior year’s loss of $34.1 million.

For the full year 2024, MP Materials reported total revenue of $203.9 million, down 20% from $253.4 million in 2023, as lower rare earth pricing pressured results. The company posted a net loss of $65.4 million compared to net income of $24.3 million in the prior year. However, as of December 31, 2024, the company maintained a strong liquidity position with $850.9 million in cash, cash equivalents, and short-term investments.⁸

Strategic Implications

The confluence of escalating U.S.-China trade tensions and MP Materials’ strengthened government partnership highlights the growing strategic importance of domestic rare earth production. Rare earth elements are essential inputs for permanent magnets used in electric vehicle motors, wind turbines, defense systems, robotics, and numerous advanced technologies.

China currently dominates the global rare earth supply chain, controlling the vast majority of refining and processing capacity even as other countries have developed mining operations. Beijing’s willingness to use export restrictions as a geopolitical tool has intensified Western concerns about supply chain vulnerabilities, particularly for applications critical to national security and the energy transition.⁹

Other U.S. rare earth companies also rallied sharply on Friday, with American Rare Earths (ARRNF) surging +32% and Energy Fuels (UUUU) jumping +3.3%, reflecting broad investor recognition that escalating trade friction could accelerate efforts to develop alternative supply chains outside China.

MP Materials’ integrated approach—combining low-cost mining operations with midstream separation capabilities and downstream magnet manufacturing—positions the company as a potential cornerstone of a revitalized American rare earth industry. The DoD’s substantial financial commitment and offtake guarantees provide both capital for expansion and revenue visibility during what is expected to be a multi-year buildout of domestic capacity.

The company’s Mountain Pass facility, which has produced rare earths intermittently since 1952, represents the Western Hemisphere’s largest commercial source of rare earth materials. MP Materials acquired the site from the Molycorp estate in 2017 and has since implemented significant operational improvements, achieving what it describes as world-class production cost levels for rare earth concentrate.¹⁰

As geopolitical tensions show no signs of abating and demand for rare earth magnets continues growing with electric vehicle and renewable energy adoption, MP Materials appears increasingly positioned to benefit from what could be a fundamental restructuring of global rare earth supply chains. Friday’s stock performance, in stark contrast to broader market weakness, suggests investors are beginning to price in this strategic shift.