MP Materials Corp. (NYSE: MP) has just announced a significant public-private partnership with the United States Department of Defense (DoD) aimed at accelerating the development of a U.S. rare earth magnet supply chain and reducing foreign dependency. This partnership involves a multibillion-dollar commitment from the DoD, which is set to become the largest shareholder in MP Materials.
As part of this collaboration, MP Materials will be constructing its second domestic magnet manufacturing facility, referred to as the "10x facility," with a completion date expected in 2028. This new facility is projected to increase the company's total U.S. rare earth magnet manufacturing capacity to an estimated 10,000 metric tons.
Additionally, the company will be expanding its heavy rare earth separation capabilities at its Mountain Pass, California, facility, solidifying its position as a national strategic asset for the extraction, separation, and refinement of high-purity rare earth materials.
The DoD has committed to a 10-year agreement establishing a price floor of $110 per kilogram for MP Materials' NDPR products, ensuring stable and predictable cash flow for the company. Furthermore, for a decade following the completion of the 10x facility, the DoD has agreed to ensure the purchase of 100% of the magnets produced at the facility by defense and commercial customers.
To finance the construction and development of the 10x facility, MP Materials has obtained a commitment for $1.0 billion in financing from JPMorgan Chase Funding Inc. and Goldman Sachs Bank USA. In addition, the company expects to receive 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 will purchase $400 million of a newly-created series of the company’s preferred stock convertible into shares of the company’s common stock, with the intention of using the proceeds to expand rare earths separation and processing capabilities, as well as magnet production capacity. 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, to anchor its downstream capabilities.
The company will be hosting an investor conference call to provide additional details regarding the agreements.
Today the company's shares have moved 47.52% to a price of $44.30. If you want to know more, read the company's complete 8-K report here.
