MP Materials Sees 51% Surge in Stock Value Amid Defense Pact for Rare Earth Magnet Production

MP Materials stock surged 51% after the Department of Defense signed agreements to accelerate the US rare earth magnet supply chain and reduce foreign dependency. The funding will support the construction of a new domestic magnet-manufacturing facility and the expansion of MP Materials' mining and processing capabilities. Rare earth magnets are critical in advanced technology systems, including defense and commercial applications.

MP Materials stock surged 51% on July 2, 2025, following the Department of Defense (DoD) signing agreements to accelerate the U.S. rare earth magnet supply chain and reduce foreign dependency. The agreements, which include a $400 million investment in preferred stock, will support the construction of a new domestic magnet-manufacturing facility and the expansion of MP Materials' mining and processing capabilities.

MP Materials, which owns the only operational rare earth mine in the U.S. at Mountain Pass, California, will use the Pentagon's investment to expand its rare earths processing capabilities and its magnet production capacity. The company plans to build a second magnet manufacturing facility, known as the "10X Facility," expected to begin commissioning in 2028. This expansion will increase the company's total magnet production capacity to approximately 10,000 metric tons annually [1].

The DoD has committed to a comprehensive 10-year support package comprising preferred equity, warrants, loans, and offtake agreements. One key component is a price floor of $110 per kilogram for MP Materials' NdPr products, providing price stability and shielding the industry from market volatility [2]. The agreement ensures that all magnets produced at the 10X Facility will be purchased by defense and commercial customers for a decade post-commissioning.

To finance the 10X Facility, MP Materials has secured a $1 billion financing commitment from JPMorgan Chase and Goldman Sachs, subject to customary conditions. Additionally, the company anticipates a $150 million loan from the DoD within 30 days to support the Mountain Pass expansion [3].

The Pentagon's investment will make the DoD the largest shareholder in MP Materials, with a 15% stake in the company's outstanding common stock as of July 9, 2025 [1]. This strategic partnership comes amidst growing urgency to establish a U.S.-based mine-to-magnet supply chain, especially after China's export restrictions on rare earths in April underscored American vulnerabilities.

Rare earth magnets are critical in advanced technology systems, including defense and commercial applications. The Pentagon's investment and MP Materials' expansion plans aim to boost domestic production, strengthen supply chain security, and support dual-use technologies for both defense and commercial markets.

References:
[1] https://www.cnbc.com/2025/07/10/pentagon-to-become-largest-shareholder-in-rare-earth-magnet-maker-mp-materials.html
[2] https://defence-industry.eu/mp-materials-and-u-s-department-of-defense-partner-to-build-rare-earth-magnet-supply-chain-for-america/
[3] https://www.indexbox.io/blog/mp-materials-partners-with-dod-for-us-rare-earth-magnet-supply-chain/