MP Materials (MP, Financial), a leading U.S. rare earth miner, announced that the U.S. Department of Defense has agreed to purchase $400 million in preferred stock, making it the company's largest shareholder. MP Materials operates the only active rare earth mine in the United States, located at Mountain Pass, California, approximately 60 miles from Las Vegas.
This investment from the Pentagon will be used to enhance MP Materials' rare earth processing capabilities and magnet production. Following the announcement, MP Materials' stock surged over 50%, closing at $45.23. This increase elevated the company's market capitalization to $7.4 billion, up by approximately $2.5 billion from the previous trading day.
Rare earth elements are crucial for manufacturing magnets, which are essential components in military systems such as F-35 fighter jets, drones, and submarines. Earlier this year, U.S. Interior Secretary Doug Burgum indicated that the Trump administration was considering direct equity investments in critical mineral companies. MP Materials CEO James Litinsky described the Pentagon's investment as a public-private partnership aimed at accelerating the establishment of a comprehensive U.S. supply chain for rare earth magnets.
