The Pentagon has announced plans to invest $400 million in MP Materials, marking a significant step towards American independence in rare earth element production.
Investment and New Manufacturing
The Pentagon will acquire a 15% stake in MP Materials, making it the largest shareholder of the company. A new factory is also planned to produce 10,000 metric tonnes of magnets per year, with operations expected to start in 2028.
The Role of Rare Earth Elements
MP Materials is the only company in the U.S. extracting rare earth elements. These materials, including praseodymium and neodymium, are critical for manufacturing electric vehicles and military equipment such as the F-35 and Tomahawk.
Roots of Dependence on China
China controls about 55% of global rare earth supplies. In April 2023, it imposed export limits, significantly disrupting magnet imports to the U.S. and raising concerns in the automotive and defense sectors.
The Pentagon's investment in MP Materials is part of a broader strategy to reduce dependence on Chinese suppliers. The new factory and funding agreement protect the company from sudden price drops in rare earth materials.
