MP Materials' 2025 Capital Expansion: A Strategic Inflection Point in U.S. Rare Earths and Magnetics Supply Chains

The U.S. rare earth supply chain has long been a vulnerability in the nation's industrial and technological infrastructure. For decades, China dominated 90% of global rare earth processing, leaving the U.S. exposed to geopolitical risks and supply shocks. But 2025 marks a turning point. MP Materials Corp. (NYSE: MP), the dominant U.S. rare earth producer, has transformed its role from a niche player into a cornerstone of national supply chain resilience through a historic partnership with the Department of Defense (DoD) and a strategic alliance with Apple. This article examines how these partnerships are reshaping MP's trajectory and why investors should view the company as a critical asset in the race for industrial sovereignty.

A Public-Private Partnership for Strategic Sovereignty

MP's collaboration with the DoD is unprecedented in scale and ambition. The DoD has become MP's largest shareholder, acquiring a 15% stake through a $400 million preferred stock investment and a warrant for additional shares. This is not merely a financial transaction—it is a strategic alignment of national security and corporate growth. The DoD's $150 million loan to expand MP's Mountain Pass facility, coupled with a 10-year offtake agreement for 100% of the output from MP's new “10X Facility,” ensures a guaranteed market for high-performance magnets used in defense systems, electric vehicles, and wind turbines.

The partnership's most innovative feature is a 10-year price floor of $110 per kilogram for neodymium-praseodymium (NdPr), the key component in permanent magnets. This floor insulates MP from volatile global markets, where Chinese state-driven pricing has historically suppressed margins. By locking in revenue stability, the DoD has effectively de-risked MP's $1 billion capital expansion, which aims to scale U.S. magnet production from 1,000 to 10,000 metric tons annually by 2028.

The market has already priced in much of this potential. MP's shares have more than doubled since the partnership's announcement, trading at a forward P/E of 35x, reflecting investor confidence in its de-risked growth path. Yet the company's valuation remains anchored to tangible assets: a vertically integrated supply chain, a dominant domestic market position, and a government partner with deep pockets and long-term patience.

Tech Sector Synergies: Apple's Bet on Domestic Resilience

While the DoD partnership secures MP's defense-oriented future, its collaboration with Apple addresses the tech sector's growing demand for rare earths. Apple's $500 million investment in a recycling line at MP's Independence, Texas, facility is a masterstroke of sustainability and supply chain innovation. By processing recycled magnets and components, MP can reduce reliance on primary mining while meeting Apple's environmental goals. This partnership also includes a Texas factory tailored for Apple's neodymium magnet needs, ensuring a direct link between MP's production and one of the world's most valuable tech brands.

Apple's involvement is part of its broader $500 billion U.S. manufacturing initiative, which underscores the tech giant's commitment to reshoring critical components. For MP, this means a diversified revenue stream beyond defense—a crucial hedge against sector-specific risks. The collaboration also accelerates R&D in magnet performance and recycling technologies, positioning MP as a leader in the circular economy for rare earths.

Geopolitical Resilience as a Competitive Advantage

MP's expansion is not just about scale; it is about reshaping the global rare earth landscape. China's dominance in this sector has been a strategic lever for decades, but MP's partnerships with the DoD and Apple are part of a broader U.S. push to diversify supply chains. The 10X Facility, once operational, will make the U.S. a net exporter of high-performance magnets—a feat unthinkable a decade ago. This shift has profound implications for national security, reducing reliance on adversarial nations for materials critical to defense and clean energy technologies.

The geopolitical angle cannot be overstated. As tensions with China escalate, the U.S. is prioritizing “friend-shoring” over globalization. MP's role in this strategy is akin to that of a national champion, akin to how the U.S. once supported semiconductor giants like Intel. The DoD's price floor and offtake agreements are not just corporate contracts—they are tools of industrial policy, ensuring that MP can outcompete Chinese producers on cost and quality.

Risks and Realities

No investment is without risk. MP's ambitious expansion hinges on timely execution of the 10X Facility and the Texas factory. Delays in construction or regulatory hurdles could strain cash flow, though the DoD's financial backing provides a buffer. Additionally, while the NdPr price floor offers stability, it does not shield MP from broader macroeconomic headwinds, such as inflation or interest rate volatility.

Another concern is the potential for oversupply in the rare earth market. As other nations and private firms ramp up production, MP's pricing power could face pressure. However, its government-backed scale and strategic partnerships provide a moat that few competitors can match.

Investment Thesis: A Long-Term Play on Industrial Sovereignty

MP Materials' 2025 expansion represents a rare confluence of public and private incentives. The DoD's stake aligns its interests with MP's success, while Apple's investment ensures demand from the tech sector. Together, these partnerships create a dual revenue stream that mitigates sector-specific risks and accelerates MP's path to profitability.

For investors, MP offers exposure to a sector that is both strategically vital and undervalued relative to its long-term potential. While the stock's current valuation reflects optimism, the company's de-risked capital structure and guaranteed offtake agreements justify a premium. This is not a speculative play—it is a calculated bet on the U.S. industrial renaissance.

Conclusion: MP Materials is no longer just a rare earth miner; it is a linchpin in the U.S. effort to secure its technological and defense future. For those seeking to invest in the infrastructure of the 21st-century economy, MP's stock is a compelling long-term hold—provided the company executes on its ambitious vision.