MP Materials Corp. (NYSE: MP) has announced a significant public-private partnership with the United States Department of Defense (DoD) that is set to accelerate the development of an end-to-end U.S. rare earth magnet supply chain and reduce dependency on foreign sources. The partnership involves a multi-billion dollar package of investments and long-term commitments from the DoD.
As part of the partnership, MP Materials is set to construct its second domestic magnet manufacturing facility, referred to as the "10x facility," which is expected to begin commissioning in 2028. This new facility is anticipated to increase the company's total U.S. rare earth magnet manufacturing capacity to an estimated 10,000 metric tons.
Additionally, MP Materials expects to enhance its heavy rare earth separation capabilities at its Mountain Pass, California facility to further solidify its status as a national strategic asset for the extraction, separation, and refinement of high-purity rare earth materials.
The DoD has entered into a 10-year agreement with MP Materials, establishing a price floor commitment of $110 per kilogram for the company's ndpr products stockpiled or sold. Furthermore, the DoD has committed to ensuring that 100% of the magnets produced at the 10x facility will be purchased by defense and commercial customers for a period of 10 years following the facility's construction.
To support the construction and development of the 10x facility, MP Materials has obtained a commitment of $1.0 billion in financing from JPMorgan Chase Funding Inc. and Goldman Sachs Bank USA. The company also expects to receive the proceeds of a $150 million loan from the DoD to expand its heavy rare earth separation capabilities at Mountain Pass.
As part of the agreement, the DoD has agreed to purchase $400 million of a newly-created series of the company’s preferred stock, which is convertible into shares of the company’s common stock. This strategic investment positions the DoD to become the company’s largest shareholder.
MP Materials currently operates the world's second-largest rare earth mine in Mountain Pass, California, and is commissioning a magnetics facility in Texas, known as Independence, which anchors its downstream capabilities.
The company will be hosting an investor conference call to provide additional details regarding the agreements with the DoD.
MP Materials, listed on the NYSE under the ticker symbol MP, is America’s only fully integrated rare earth producer, with capabilities spanning the entire supply chain. The company's products play a crucial role in critical sectors of the modern economy, including transportation, energy, robotics, defense, and aerospace. The market has reacted to these announcements by moving the company's shares -3.72% to a price of $30.03. If you want to know more, read the company's complete 8-K report here.
