Pentagon Invests in Rare Earth Magnet Producer

Rare earth magnet producer MP Materials Corp. secured a $400 million equity investment from the US Department of Defense to build a new plant, with a $1 billion financing commitment from JPMorgan Chase & Co. and Goldman Sachs Group Inc. James Litinsky, Founder, Chairman and Chief Executive Officer of MP Materials says the investment will allow MP Materials to drastically increase their partnership, and that the Department of Defense is now their largest shareholder. He was joined by Bloomberg News Economic Statecraft reporter Joe Deaux.

MP Materials shares are up as much as 60%, the most intraday since the company’s IPO in 2020, after the firm struck a multibillion dollar public-private deal with the US Department of Defense to build a new magnet plant and expand rare earth capabilities, backed by $400m in equity and a $1b loan commitment.

US stocks linked to rare earth metals and other critical minerals gained this week, getting a boost from signs that the Trump administration will favor a sector that’s become a flashpoint in the trade standoff between the US and China.

Rare-earth magnet player USA Rare Earth Inc. jumped 70% in the short trading week. TMC The Metals Company Inc., a Vancouver-based company that’s seeking permission from the US to gather critical metals at the bottom of the ocean, gained 52%.

Shares of MP Materials Corp., a miner and refiner of rare earth elements, rose 16% this week in their best performance since September — even after giving up some of the week’s gains when the company halted shipments of rare earth concentrate to China as a result of Chinese tariffs on imports.

All three soared on Monday after the Financial Times reported over the weekend that the Trump administration is planning an executive order to enable the stockpiling of critical metals found on the floor of the Pacific Ocean. The US was responding to China’s efforts to limit exports of its own rare earth supplies. MP Materials and USA Rare Earth jumped again on Wednesday after Trump launched a probe into the need for tariffs on critical minerals.

“The moves that they’re making would suggest that they understand that we have to build out our supply chain here,” Steven Schoffstall, director of ETF product management at Sprott Asset Management, said of the Trump administration. “If you want to tariff something, presumably you want to build up that industry within the US borders, and the hope there is that investment will follow.”

The actions have become a central part of the escalating trade tension between Washington and Beijing. China is the dominant producer of metals that are vital to making crucial products like computer chips, nuclear reactor rods and fighter planes, and Beijing appears to be using that position to push back against Trump’s tariffs. As Washington looks to boost domestic production, Trump’s trade probe could cover all minerals defined as critical by the United States Geological Survey, a list that includes rare earth elements alongside other materials like lithium, cobalt and zinc.

Rare Earth USA is building a magnet factory in Oklahoma that’s scheduled to come online commercially next year, and it owns a rare earth deposit in Texas where it plans to extract ore for its own facility and other sectors such as the defense industry.

MP Materials, meanwhile, bills itself as the sole fully-integrated producer of rare earths in the US, with capabilities ranging from mining and refining to magnet manufacturing.

“In recent days, manufacturers across critical industries have urgently reached out in search of a secure, resilient source of materials and magnets,” the company said in a statement on Thursday. “We are uniquely positioned to answer that call”

TMC aims to gather nodules from the seabed that contain metals such as cobalt and nickel used in electric vehicle batteries. Its move to seek approval from the Trump administration has drawn condemnation from an organization affiliated with the United Nations that regulates the commercialization of deep sea resources.

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