Pentagon to become largest shareholder in rare earth miner MP Materials; shares surge 50%

Published: Thursday, July 10, 2025 at 1:36 pm

Pentagon to Become Largest Shareholder in Rare Earth Miner MP Materials

In a significant move to bolster domestic supply chains, the U.S. Department of Defense is set to become the largest shareholder in MP Materials, a leading rare earth miner. The Pentagon's investment involves purchasing a new class of preferred shares convertible into MP Materials' common stock, along with a warrant to acquire additional common stock. This investment is valued at a fixed price of $30.03 per share and does not include a cash dividend.

The conversion of the preferred shares and the exercise of the warrant are projected to give the Defense Department approximately a 15% stake in MP Materials. This would surpass the holdings of existing major shareholders.

This strategic investment is coupled with plans to construct a second magnet manufacturing facility in the United States, named 10X. The facility, slated to begin operations in 2028, will significantly increase MP Materials' rare earth magnet manufacturing capacity to 10,000 metric tons. The Pentagon is guaranteeing the purchase of 100% of the magnets produced at the new facility by defense and commercial customers for a decade.

Furthermore, the Defense Department is providing a price floor for NdPr products, a rare earth compound used in permanent magnets, for ten years. The U.S. government will cover the difference if the market price falls below $110 per kilogram. The construction of the new facility will be financed with the help of $1 billion from JPMorgan and Goldman Sachs. MP Materials will also receive a $150 million loan from the Pentagon to expand its rare earth separation capabilities.

BNN's Perspective: This investment by the Pentagon underscores the growing importance of securing domestic supplies of critical materials. While the move raises questions about government intervention in the market, it also highlights the strategic importance of rare earth elements for national security and economic competitiveness. The guaranteed purchase agreements and price floors provide stability for MP Materials, potentially encouraging further investment in the sector. However, it is crucial to monitor the long-term impact on market dynamics and ensure fair pricing for consumers.

Keywords: Pentagon, MP Materials, rare earth, shareholder, investment, magnet manufacturing, defense, commercial, NdPr, supply chain, government, finance.

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