MP Materials Stock Soars 51% on a Defense Pact for Rare Earths

A dump truck moves raw ore inside the pit at the Mountain Pass mine, operated by MP Materials. (Joe Buglewicz/Bloomberg)

The Department of Defense struck agreements with MP Materials to accelerate the build-out of the country’s rare earth magnet supply chain and reduce foreign dependency, the company announced Thursday.

Shares of the mining company soared as high as $48.12, closing up about 51% at $45.23 apiece, while the S&P 500 and Dow Jones Industrial Average added 0.3% and 0.4%, respectively.

The agreements include an initial $400 million equity investment, a commitment for up to $350 million in additional funding, and a $150 million loan from the Pentagon, according to regulatory filings. The money will fund the construction of a new domestic magnet-manufacturing facility and the expansion of MP Materials’ current mining and processing capabilities.

“Rare earth magnets are one of the most strategically important components in advanced technology systems spanning defense and commercial applications,” the mining company wrote in a press release. “Yet today, the U.S. relies almost entirely on foreign sources.”

Rare earth materials end up in things such as magnets for electric motors and in navigation equipment. For the Pentagon, supplies are a matter of national security. An F-35 has more than 900 pounds of rare earths in it.

In 2024, the Defense Department published its National Defense Industrial Strategy, which includes a “mine to magnet” plan for rare earths that aims to make the DoD self-sufficient by 2027.

MP Materials is the largest producer of rare earths in the Western Hemisphere, making neodymium and praseodymium oxides, two among a list of more than a dozen.

Coming into Thursday trading, MP Materials stock was already up more than 90% year to date, with China threatening to restrict exports amid rising trade tensions between China and the U.S.

China is the global leader in mining rare earths. In 2024, China mined about 270,000 metric tons of rare-earth oxides out of a worldwide total of 390,000 metric tons; the U.S. mined only about 45,000 metric tons. China also dominates the refining process of rare earths, controlling about 85% of worldwide capacity.

Some of the material MP Materials mines ends up being processed in China, although that’s changing. Today, MP Materials processes about 40% its concentrate.

Importantly, the deal with the Defense Department includes a floor price for neodymium and praseodymium oxide of $110 per kilogram. Prices have averaged about $60 per kilogram since 2008.

That price ensures MP Materials can continue to operate successfully, even if China tries to flood the market with product to drive down prices.

When a group, in this case China, controls more than 80% of something, it can control pricing and production for everyone, says Michael Silver, CEO of American Elements, a distributor of advanced materials, including rare earths.

The deal is impacting other stocks. Shares of Energy Fuels, a holder of uranium and rare earth mining rights in the U.S., gained 16.1% on Thursday, closing at $6.49 a share. The company applauded the contract in a tweet, adding, “We see this as a strong precedent and indication that the Trump Administration is indeed serious about restoring domestic rare earth and critical minerals supply chains.”

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The Defense Department has deep pockets and capital, and floor pricing is attractive to commercial firms.

Write to Nate Wolf at nate.wolf@barrons.com and Al Root at allen.root@dowjones.com