MP Materials (NYSE:MP) shares surged almost 50% after it revealed the Pentagon has become its largest shareholder in a bid to boost the domestic supply of rare earth minerals.
The US Department of Defense (DoD) has invested $400 million in MP Minerals’ preferred stock, giving it a roughly 15% stake in the company.
MP Minerals operates the only functional rare earths mine in the US, in Mountain Pass, California. The investment is part of the Trump administration’s strategy to reduce its dependence on China for rare earth minerals critical for defense technologies such as fighter jets, drones, and submarines as well as commercial products such as wind turbines.
It will fund expansion of rare earth processing and the construction of a new magnet manufacturing facility in the US, scheduled to start commissioning in 2028 with a capacity of 10,000 metric tons per year.
Additionally, the DoD has committed to purchasing 100% of the magnets produced at the new facility for 10 years and has set a price floor for certain rare earth materials.
“This initiative marks a decisive action by the Trump administration to accelerate American supply chain independence,” MP Materials CEO James Litinsky said in a statement.
“We are proud to enter into this transformational public-private partnership and are deeply grateful to President Trump, our partners at the Pentagon, and our employees, customers and stakeholders for their unwavering support and dedication.”
Shares of MP Materials were up 48% at about $44 in the early afternoon on Thursday.