MP Materials' Strategic Alliances and Geopolitical Tailwinds: A Rare-Earth Play with National Security Implications

The rare earth elements (REEs) market is no longer a niche corner of the commodities world—it is a geopolitical battleground. As global demand for high-performance magnets, advanced electronics, and green technologies surges, control over REEs has become synonymous with industrial and military dominance. MP Materials, the sole active rare earth miner in the United States, has positioned itself at the epicenter of this transformation through a groundbreaking partnership with the U.S. Department of Defense (DoD). This alliance, bolstered by unprecedented government backing, offers a compelling case for investors seeking exposure to a sector where supply chain independence and national security converge.

A Government-Backed Industrial Renaissance

MP Materials' partnership with the DoD is a masterclass in strategic industrial policy. The DoD's $400 million investment in preferred shares grants it a 15% stake in the company, while a warrant allows it to increase ownership to 30% over the next decade. This is not mere financial support—it is a strategic stake in the U.S. rare earth supply chain. The DoD is also providing a $150 million loan to expand MP's Mountain Pass processing facility, which will enable the separation of heavy rare earth elements (HREEs), a critical bottleneck in global magnet production.

The crown jewel of this partnership, however, is the “10X Facility,” a $1 billion magnet manufacturing plant set to begin operations in 2028. This facility will scale MP's neodymium-praseodymium (NdPr) production from 3,000 to 10,000 metric tons annually, creating the first vertically integrated rare earths-to-magnets supply chain in the U.S. in decades. The DoD's 10-year offtake agreement for 100% of the 10X Facility's output ensures demand certainty, while a price floor of $110/kg for NdPr—nearly double the current market price—shields MP from volatility. This mechanism not only stabilizes revenue but also incentivizes innovation, as the DoD shares in upside profits if prices rise.

Geopolitical Tailwinds and Market Dynamics

China's dominance in the rare earth sector—controlling 90% of global processing and 70% of U.S. imports—has long been a vulnerability for the West. MP's expansion directly addresses this risk. By 2028, the U.S. will have the capacity to produce 11,000 metric tons of NdFeB magnets annually, sufficient to meet both defense needs and a significant share of commercial demand. This shift is not just about reducing reliance on China; it's about redefining the rules of the game.

Global demand for rare earths is accelerating, driven by the defense, EV, and renewable energy sectors. Neodymium and praseodymium are essential for permanent magnets in F-35 fighter jets, EV motors, and wind turbines. From 2025 to 2030, the rare earth market is projected to grow at a 5.8% compound annual rate, with demand outpacing supply in key applications. MP's vertically integrated model—spanning mining, processing, and magnet production—positions it to capture a disproportionate share of this growth, particularly as the DoD's offtake and price floor create a de facto monopoly on U.S. defense-grade magnets.

Supply Chain Independence as a Competitive Advantage

MP's strategic value extends beyond its technical capabilities. The company's partnership with the DoD under the Defense Production Act (DPA) sets a precedent for how governments can leverage public-private partnerships to secure critical industries. The DPA Title III authorities used here—loan guarantees, price floors, and offtake commitments—are tools previously reserved for wartime production. By applying them to rare earths, the U.S. has signaled that it treats these materials as strategic assets, not commodities.

This approach has broader implications. Interior Secretary Doug Burgum has hinted at similar partnerships for lithium, cobalt, and battery-grade graphite, sectors where MP's model could be replicated. For investors, this means MP is not just a rare earth play—it's a blueprint for how the U.S. will reshape its industrial base in the 21st century.

Investment Thesis: A Resilient, High-Growth Play

MP Materials offers a rare combination of government-backed security and high-growth potential. The DoD's $110/kg price floor and 10-year offtake agreement provide a stable revenue stream, while the 10X Facility's expansion creates a path to scale. With the U.S. consuming 15% of global rare earth oxides and demand set to double by 2030, MP's vertically integrated model is uniquely positioned to profit from both supply-side constraints and demand-side tailwinds.

Moreover, MP's recent international partnerships—such as its 2025 agreement with Saudi Arabia's Ma'aden—add geographic diversification and access to new markets. This dual strategy of domestic resilience and global expansion enhances long-term value creation.

For investors, the key risks include execution delays in the 10X Facility and potential bottlenecks in HREE separation. However, the DoD's deep involvement and financial commitments mitigate these risks, ensuring that MP's expansion remains on track.

Conclusion: A National Security-Backed Investment

MP Materials is more than a rare earth miner—it is a linchpin in the U.S. strategy to secure its industrial future. The company's partnership with the DoD is a masterstroke of industrial policy, combining equity stakes, price floors, and offtake guarantees to build a self-sufficient supply chain. As global demand for rare earths surges and geopolitical tensions escalate, MP's role in this critical sector will only grow.

For investors, this is a rare opportunity to align with a company that is not only reshaping its industry but also advancing national security. With a clear path to scale, government-backed stability, and exposure to high-growth sectors, MP Materials represents a compelling long-term investment in the new industrial age.