Defense Department Becomes Largest Shareholder Of Company That Owns America’s Lone Rare Earth Mine

The Pentagon agreed to purchase $400 million of preferred stock in MP Materials, which operates the only rare earth minerals mine in the United States, the company announced on Thursday.

The mine, located in Mountain Pass, California — 60 miles southwest of Las Vegas — extracts rare earth minerals that are vital for the U.S. military, CNBC reported. The Defense Department’s move is part of the Trump administration’s plan to break its dependence on China for rare earths, a goal that Interior Secretary Doug Burgum discussed in April.

“This initiative marks a decisive action by the Trump administration to accelerate American supply chain independence,” said James Litinsky, Founder, Chairman, and CEO of MP Materials. “We are proud to enter into this transformational public-private partnership and are deeply grateful to President Trump, our partners at the Pentagon, and our employees, customers and stakeholders for their unwavering support and dedication.”

Rare earths are used to produce magnets that are incorporated into critical U.S. military weapons systems, including those for drones, submarines, and the F-35 fighter jet, CNBC reported. Shortly after taking office, Trump signed an executive order to ramp up American rare earth mining, bemoaning the fact that 70% of the United States’ imports of rare earths come from China. Trump stated that he wants to make the United States “the leading producer and processor of non-fuel minerals, including rare earth minerals.”

China currently produces around 60% of the world’s rare earths and refines nearly 90%, according to the Center for Strategic and International Studies. Rare earth minerals are also used to manufacture electronics, including smartphones and laptops, as well as electric vehicles and renewable energy technologies. After Trump levied tariffs on China, the communist country halted shipments of rare earth minerals to the United States. The administration announced late last month that it had reached an agreement with China to restart rare earth imports.

MP Materials’ agreement with the Pentagon will result in the construction of the company’s “second domestic magnet manufacturing facility (the ’10X Facility’) at a soon-to-be-chosen location to serve both defense and commercial customers.” The “10X Facility” is expected to be completed in 2028, which will boost MP Materials’ manufacturing capacity to 10,000 metric tons, according to the company. The Pentagon’s agreement with MP Materials is for 10 years and establishes “a price floor commitment” to ensure that the company is protected from “non-market forces.”

Shares of MP Materials jumped nearly 50% on Thursday, hitting $44 as of Thursday morning. The company’s all-time high was $56.54, reached on April 1, 2022.

News of the agreement comes shortly after Sen. Tom Cotton (R-AR) introduced a bill to expedite the extraction of rare earth elements in the United States, aiming to better protect America’s national security.

“Current environmental laws put our readiness to counter Communist China at risk and waste taxpayer dollars on projects that stall out and die on the vine,” Cotton told Fox News Digital. “This bill will create jobs, better arm and prepare our soldiers, and spend taxpayer dollars more efficiently.”