MP Materials: The Cornerstone of U.S. Rare Earth Independence and a High-Conviction Buy for the Long-Term

In an era where global supply chains are under siege by geopolitical tensions, climate pressures, and technological disruption, the U.S. tech sector's reliance on foreign sources for critical materials has become a vulnerability. Nowhere is this more evident than in the rare earth element (REE) market, where China has dominated 85% of global processing capacity for decades. Enter MP Materials (MP), a company poised to rewrite the narrative. With a landmark $1 billion-plus public-private partnership with the U.S. Department of Defense (DoD), MP Materials is not just building a rare earth supply chain—it is constructing a strategic lifeline for American industry. For investors, this is a rare opportunity to align with a company at the intersection of geopolitical necessity, technological innovation, and long-term demand certainty.

The DoD Partnership: A Game-Changer

MP Materials' July 2025 agreement with the DoD is nothing short of transformative. The partnership includes a $1 billion commercial debt package from JPMorgan Chase and Goldman Sachs, a $150 million loan from the DoD to upgrade its Mountain Pass, California, facility, and a $400 million investment in preferred stock from the government. In exchange, the DoD secures a 15% equity stake and a 10-year offtake agreement for 100% of the output from MP's 10X Magnet Manufacturing Facility, set to begin commissioning in 2028. This facility alone will add 10,000 metric tons per year of neodymium-iron-boron (NdFeB) magnet capacity, the backbone of high-performance magnets used in everything from electric vehicles to fighter jets.

The financial terms are equally compelling. A $110/kg price floor for neodymium-praseodymium (NdPr) oxide ensures MP Materials avoids the volatility that has plagued the REE market for years. This is a textbook example of demand-side stabilization—a concept long championed in energy and agriculture but now applied to critical minerals. For investors, it translates to predictable cash flows and reduced exposure to cyclical downturns.

Strategic Resilience in a Fractured World

The broader context cannot be ignored. China's dominance in rare earth processing has allowed it to weaponize supply chains, as seen during the 2010-2011 REE crisis and again during the pandemic. The U.S. now faces a stark choice: either continue to outsource its technological sovereignty or invest in domestic capabilities. MP Materials' partnership with the DoD answers this call.

Consider the 10X Facility and the Texas plant, which together will create the first end-to-end U.S. rare earths-to-magnets supply chain in decades. This vertical integration is not just about efficiency—it's about resilience. By controlling the flow from ore to magnet, MP Materials eliminates bottlenecks and geopolitical risks associated with third-party processors. For the DoD, this means secure access to materials for hypersonic weapons, drones, and next-generation batteries. For the private sector, it means a reliable partner for the clean energy transition.

Heavy Rare Earths: The Next Frontier

While light rare earth elements (LREEs) like neodymium and praseodymium are well-understood, the heavy rare earth element (HREE) market remains a wildcard. MP Materials is already investing in HREE separation capabilities at its Mountain Pass facility, a technical challenge given the low concentration of HREEs in its ore. The U.S. government's potential role in sourcing HREEs from abroad—despite the 50% tariff on Brazilian imports—highlights the lengths to which the country will go to reduce dependency on China. For MP Materials, this is a strategic advantage: it positions the company as the preferred partner for HREE innovation, a sector with explosive growth potential as high-tech applications expand.

Why This Is a High-Conviction Buy

MP Materials is not a speculative play—it is a strategic infrastructure investment. The DoD's offtake agreement alone guarantees a $5 billion annual revenue stream by 2030 (10,000 metric tons of magnets at $500/kg, a conservative estimate). Even without considering commercial demand from electric vehicle or wind turbine manufacturers, this is a compelling base case.

For investors, the key risks are execution and commodity volatility. Can MP Materials deliver the 10X Facility on time? Will the DoD's 15% stake dilute future growth? These are valid concerns, but the company's track record—scaling Mountain Pass from a 30,000-ton-per-year mine to a 200,000-ton-per-year operation in just three years—suggests it has the operational rigor to meet its goals.

Moreover, the geopolitical tailwinds are insurmountable. As the U.S. ramps up investments in the CHIPS Act, Inflation Reduction Act, and critical mineral initiatives, MP Materials stands to benefit from a policy tailwind that is unlikely to reverse.

Conclusion: A Strategic Asset, Not Just a Commodity Play

MP Materials is no longer just a rare earth miner—it is a national strategic asset. Its partnership with the DoD is a masterclass in aligning corporate strategy with national interest. For investors, this is a rare chance to own a stake in a company that is not only securing the U.S. tech sector's future but also generating durable, inflation-protected cash flows.

In a world where supply chains are the new battlegrounds, MP Materials is the Fort Knox of rare earths. Buy it with conviction—and hold for decades.