MP Materials Partners with DoD to Secure US Rare Earth Magnet Supply Chain

MP Materials has partnered with the US Department of Defense to develop a domestic rare earth magnet supply chain. The $10 billion investment will expand MP's production capacity and reduce US reliance on China. MP will construct a new magnet manufacturing facility, and DoD has committed to purchasing 100% of its products for 10 years. This partnership will boost the US rare earth magnet supply chain and support various advanced technologies.

MP Materials Corp. (NYSE: MP) has announced a transformational public-private partnership with the United States Department of Defense (DoD) aimed at developing a domestic rare earth magnet supply chain. The agreement, valued at $10 billion, includes a multibillion-dollar investment package and long-term commitments from DoD to support MP Materials' expansion of production capacity. This strategic partnership seeks to reduce U.S. reliance on foreign sources, particularly China, for rare earth magnets, which are critical components in advanced technologies.

The partnership will enable MP Materials to construct a new magnet manufacturing facility, known as the "10X Facility," at a yet-to-be-determined location. Once operational, expected by 2028, the facility will significantly increase the company's domestic production capacity. The total U.S. rare earth magnet manufacturing capacity is expected to reach 10,000 metric tons. Additionally, MP Materials plans to enhance its heavy rare earth separation capabilities at its Mountain Pass facility in California.

The agreement includes a 10-year price floor commitment of $110 per kilogram for NdPr products, ensuring stable and predictable cash flow. DoD has also agreed to purchase 100% of the magnets produced at the 10X Facility for the next decade. This long-term commitment provides MP Materials with a secure market for its products and supports the company's growth.

The partnership also includes financial commitments from major financial institutions. JPMorgan Chase Funding Inc. and Goldman Sachs Bank USA have agreed to provide $1.0 billion in financing for the construction and development of the 10X Facility. Within 30 days, MP Materials expects to receive a $150 million loan from DoD to expand its heavy rare earth separation capabilities at Mountain Pass.

In return for these investments, DoD will become MP Materials' largest shareholder, owning 15% of the company's common stock. The initial conversion price and exercise price for the preferred stock and warrants are set at $30.03 per share.

The partnership underscores the U.S. government's commitment to securing critical supply chains and reducing dependence on foreign sources. MP Materials, with its fully integrated rare earth production capabilities, is well-positioned to play a pivotal role in this effort.

References:
[1] https://mpmaterials.com/news//mp-materials-announces-transformational-public-private-partnership-with-the-department-of-defense-to-accelerate-u-s-rare-earth-magnet-independence/