Defense Dollars: How MP Materials’ Government Partnerships Fuel Rare Earth Investment

The United States’ reliance on foreign entities for rare earth elements (REEs) has long been a point of concern for national security. These elements are critical for various defense and commercial applications, from missile guidance systems to electric vehicle batteries. In response, the U.S. government has been actively forging partnerships with domestic companies to bolster the rare earth supply chain. One prominent example is MP Materials, which has received significant government support to expand its operations and reduce foreign dependency.

The Strategic Importance of Rare Earth Elements

Rare earth elements are a group of 17 metallic elements with unique magnetic, luminescent, and electrochemical properties. They are essential components in a wide range of advanced technologies, including:

Defense Systems: REEs are used in missile guidance systems, radar systems, sonar transducers, enhanced gamma-ray radiation detection devices, and electronic warfare equipment. Specifically, neodymium-iron-boron (NdFeB) magnets, containing high concentrations of neodymium and dysprosium, power precision guidance systems in missiles and smart munitions. They also drive electric motors in naval propulsion systems and enable the miniaturization of electronic warfare equipment.
Renewable Energy: REEs are crucial for manufacturing wind turbines and electric vehicle motors.
Electronics: REEs are used in smartphones, computers, and other consumer electronics.

China dominates the rare earth supply chain, controlling a significant portion of both mining and processing capacity. This dominance has raised concerns about potential supply disruptions and the need for a more secure domestic supply chain. In 2025, China instated new export controls on seven rare earth elements, which resulted in a significant decrease in exports as companies had to apply for new licenses and wait for approval.

MP Materials: A Key Player in the U.S. Rare Earth Supply Chain

MP Materials is the operator of the Mountain Pass mine in California, the only active and significant rare earth mine in the United States. The company has been viewed as a key player in efforts to reduce reliance on Chinese rare earths.

Government Partnerships and Funding

The U.S. government, particularly the Department of Defense (DoD), has been investing heavily in MP Materials to accelerate the development of a domestic rare earth supply chain. These investments include:

Financial Support: Since 2020, the DOD has awarded more than $439 million to establish domestic rare earth element supply chains.
Public-Private Partnership: In July 2025, MP Materials announced a multi-billion dollar public-private partnership with the DoD. As part of the agreement, the DoD agreed to purchase $400 million of a newly-created series of the Company’s preferred stock convertible into shares of the Company’s common stock, and a warrant permitting DoD to purchase additional shares of the Company’s common stock.
Price Floor Commitment: The DoD has entered into a 10-year agreement establishing a price floor commitment of $110 per kilogram for MP Materials’ NdPr products stockpiled or sold, reducing vulnerability to non-market forces and ensuring stable and predictable cash flow with shared upside.
Magnet Offtake Agreement: For a period of 10 years following the construction of the 10X Facility, DoD has agreed to ensure that 100% of the magnets produced at the 10X Facility will be purchased by defense and commercial customers with shared upside.
Loan: MP Materials will also receive a $150 million loan from DoD to expand their rare earth processing facility.

The 10X Facility

With the support of government funding and private investment, MP Materials is constructing its second domestic magnet manufacturing facility, the “10X Facility.” Once completed, MP Materials’ total U.S. rare earth magnet manufacturing capacity will reach an estimated 10,000 metric tons. The facility is expected to begin commissioning in 2028.

Impact on National Security and the Economy

The partnership between MP Materials and the U.S. government is expected to have a significant impact on national security and the economy:

Reduced Foreign Dependency: By expanding domestic rare earth production and processing capabilities, the U.S. can reduce its reliance on foreign sources, particularly China.
Strengthened Supply Chains: A secure domestic supply chain will ensure that critical industries, such as defense, renewable energy, and electronics, have access to the rare earth elements they need.
Economic Growth: The development of a domestic rare earth industry will create jobs and stimulate economic growth in the United States.

Challenges and Opportunities

While the partnership between MP Materials and the U.S. government is a positive step, there are still challenges to overcome:

Heavy Rare Earths: Mountain Pass primarily contains light rare earths, while heavy rare earths, which are also critical for defense applications, are less abundant.
Competition: The deal also makes it incrementally more difficult for other would-be U.S. rare-earths miners and processors to compete with MP without similar support.

Despite these challenges, the partnership between MP Materials and the U.S. government represents a significant opportunity to secure the rare earth supply chain and strengthen national security.

The Role of Legal and Regulatory Frameworks

The development of a domestic rare earth supply chain is also influenced by legal and regulatory frameworks. These frameworks can impact various aspects of the industry, including:

Mining and Environmental Regulations: Laws governing mining operations and environmental protection can affect the cost and feasibility of rare earth projects.
Trade Policies: Tariffs and trade agreements can impact the competitiveness of domestic rare earth producers.
National Security Regulations: Regulations related to national security can restrict foreign investment in critical industries and promote domestic production.

Investing in a Secure Future

The U.S. government’s partnerships with companies like MP Materials are crucial for securing the rare earth supply chain and ensuring national security. By investing in domestic production and processing capabilities, the U.S. can reduce its reliance on foreign sources and promote economic growth.

Are you looking to invest in the rare earth elements market? Contact our firm today for a consultation and discover how you can be a part of securing America’s future.