“The Pentagon is making a big investment in rare-earth magnets, striking an unusual deal with a private-sector company aimed at undercutting China's dominance.
MP Materials, America's largest rare-earths miner, said Thursday it has reached a deal under which the Defense Department will take a 15% stake in the company. The government is committing to spending billions of dollars investing in MP Materials and purchasing its output.
The deal calls for MP Materials to build a factory to make rare-earth magnets at a scale that vastly exceeds current U.S. magnet production. It is expected to come online in 2028.
Rare-earth magnets, which are needed in industrial products such as automobiles, wind turbines, jet fighters and missile systems, have been at the center of the U.S.-China trade war this year.
In April, after President Trump imposed high tariffs on Chinese goods, Beijing began limiting rare-earth exports, sending shock waves through the global auto, electronics and defense industries because they couldn't get alternate supplies. Some factories, including a Ford plant, were forced to close temporarily.
The U.S. and China reached a trade truce in June, under which Trump reduced tariffs on China for now, and Beijing pledged to approve rare-earth export applications more quickly. But the threat of a cutoff of supplies remains.
In its deal with MP Materials, the Defense Department is guaranteeing a price floor for rare-earth minerals and magnets.
That means the company is protected against a scenario in which China fully withdraws its restrictive export policies and the minerals flood into the market, lowering global prices.
MP described the deal as a multibillion-dollar package of investments and long-term commitments but didn't give specific figures.” [1]
1. U.S. News: Pentagon to Acquire 15% Of a Rare-Earth Miner. Emont, Jon. Wall Street Journal, Eastern edition; New York, N.Y.. 11 July 2025: A4.
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