Source: YouTube
Rare-earth miner MP Materials received a wave of high-profile support this month, driving its share price up nearly 50% to $45.23 and lifting its market capitalization by $2.5 billion. Thanks to a sizable investment, the U.S. Department of Defense will now become the company’s largest shareholder after buying $400 million worth of preferred stock. Separately, Apple signed a $500 million agreement to help develop rare earth recycling and custom magnet manufacturing in the United States.
The Pentagon deal includes more than just equity. The Defense Department will finance a new magnet manufacturing facility, guarantee prices for key rare earth compounds, and lock in exclusive purchase agreements for a decade. At the same time, Apple’s support focuses on bringing a portion of its rare earth supply chain back onshore, with plans to use MP’s magnets in future iPhones and computers. These announcements follow a years-long buildup of federal interest in MP Materials, which owns and operates the only rare earth mine in the U.S., located at Mountain Pass, California.
A Strategic Bet on Domestic Supply Chains
For years, China has dominated rare earth production and refining. In 2023, it accounted for more than 70% of U.S. rare earth imports. These materials are essential in everything from smartphones and electric vehicles to guided missile systems and advanced fighter jets. Policymakers have increasingly pushed for secure domestic supply chains, especially as geopolitical tensions with Beijing remain unresolved.
MP Materials has positioned itself as a key player in that effort. In addition to owning the country’s sole operational rare earth mine, it is expanding into separation, magnet manufacturing, and recycling. The Pentagon’s $400 million investment will support construction of a second magnet facility, bringing total U.S. capacity to 10,000 metric tons per year.
The government will also guarantee a minimum price of $110 per kilogram for neodymium-praseodymium oxide, a key magnet input, for ten years. If prices fall below that level, the government will pay the difference. If they rise, it receives 30% of the upside. The Pentagon also secured a 10-year commitment to purchase 100% of magnet output from the new facility.
Investor Optimism and Caution
With MP Materials stock rising quickly, investors have reacted eagerly. The stock’s 50% surge reflects expectations of long-term revenue stability from both public and private contracts. Apple’s deal further enhances visibility. The tech giant will pay $200 million upfront and help MP Materials build recycling and manufacturing capacity in Texas. Production is expected to begin by 2027.
Analysts see multiple paths for revenue growth: recurring sales to the Pentagon, long-term supply agreements with Apple, and possible expansion into commercial magnet markets. JPMorgan and Goldman Sachs are also backing the Texas plant with $1 billion in financing.
However, the enthusiasm is not without risk. Critics have warned that the deal structure resembles state-backed industrial policy more common in China than in free markets. Some industry insiders argue that MP Materials now enjoys an unfair advantage, citing the price floors and guaranteed government contracts. Another concern is execution: MP does not yet manufacture magnets at commercial scale. Building out both capacity and reliability will take time. The company’s heavy dependence on a single mine and partner contracts could limit flexibility. Still, as long as the government views rare earths as a matter of national security, MP may continue to benefit from policy tailwinds.
A New Phase for Strategic Commodities
The Defense Department’s direct equity stake signals a shift in how the U.S. may approach other critical supply chains in the future. With this model, the government shares commercial risk in exchange for guaranteed access to key materials. Apple’s involvement adds further validation from the private sector. MP Materials is not yet a dominant player by global standards, but it is now clearly positioned at the center of America’s rare earth ambitions. Whether it can deliver sustainable returns depends on execution, cost discipline, and the durability of its public-private partnerships.
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