To quote Sam Bankman Fried (after being caught mid Ponzi scheme on Twitter): “that escalated quickly.” Roughly a month ago, reports started trickling out that the Trump administration was dusting off some Cold War playbooks and looking to invoke the Defense Production Act (basically the federal government’s “break glass in case of national emergency” toolkit) to pump taxpayer money into rare earth projects.
And this morning, the Pentagon did just that: they wrote a fat $400 million check to MP Materials… and in return, became the company’s largest shareholder. Welcome to 2025… where the U.S. government is now the biggest bagholder of a rare earth mining stock. Shares exploded 42% on the news that Uncle Sam is using our tax dollars to buy into the commodities market.
While this move seems out of left field… it’s actually a good “strategery.” You probably haven’t heard of MP Materials, but you’ve definitely used something powered by their products.
MP runs the only operational rare earth mine in the United States… the Mountain Pass facility in California. And they specialize in neodymium and praseodymium, which are key to making high-performance magnets used in everything from EV motors and wind turbines to missile guidance systems and fighter jets. In other words: without rare earth magnets, half of modern defense tech stops working (kind of a big deal).
Unfortunately for the U.S. government, China currently controls around 85% of the world’s processing capacity for these metals. That became a huge problem when Beijing decided to hold that over Donald’s head during trade talks… threatening to block rare earth exports and effectively choke out U.S. tech and defense production. (Ever tried building a hypersonic missile without magnets? Good luck, buddy.)
While this $400 million injection might look like another classic “government gone shopping” moment, there’s actually some method to the madness. The Pentagon grabbed preferred shares in MP Materials… complete with a 15% stake, plus warrants to buy even more. Meaning: the U.S. government is now betting on MP like it’s a sure thing in the Kentucky Derby.
And it’s not hard to see why. Just pulling stuff out of the dirt doesn’t cut it anymore. Washington wants the whole supply chain… dig it, refine it, mold it into a magnet, and print a big “Made in the U.S.A.” stamp on it before it gets stuffed inside an EV motor, a missile, or top-secret DoD drone that definitely doesn’t exist (wink).
(Source: Reuters)
That’s where MP’s next big move comes in: a magnet manufacturing plant called the “10X Facility,” expected to go live in 2028. The idea is simple… mine the rare earths in California, turn them into finished magnets in the U.S., and finally build the supply chain Washington’s been talking about for a decade. Backing the plan is $1 billion from JPMorgan and Goldman Sachs, plus a $150 million loan from the Pentagon to ramp up processing and make sure this thing actually gets built. And because the government wanted to go full Costco-size commitment, they also locked in a $110/kg floor price for NdPr magnets and agreed to buy everything the plant produces for the next ten years. Imagine opening a business and the U.S. military shows up with a 10-year pre-order (cha-ching).
This whole move is the clearest signal yet: America’s done being ghosted by China every time rare earths come up. Trump wants the entire supply chain onshore and under his control. MP’s sitting right at the center of that plan, and they’re getting the royal treatment for it. CEO James Litinsky summed it up like a guy who knows he just got a blank check: “This is a decisive action to accelerate American supply chain independence.” (What he’s probably telling his wife tonight: “Start marinating the filet… we’re eating like defense contractors for the next decade.”)
Now, let’s not get carried away… this isn’t a guaranteed home run. Rare earth prices have mood swings that would make crypto jealous, and building a high-tech magnet facility isn’t exactly a weekend side hustle.
But when your largest shareholder is the U.S. government and your only customer for the next 10 years has a military budget north of $800 billion? Let’s just say MP caught more than a break… they caught the whole Pentagon. Honestly, forget meme stocks and earnings reports… maybe the real cheat code is buying into companies backed by Uncle Sam. If the Pentagon’s buying stock, maybe I should be too.
At the time of publishing this article, Stocks.News doesn’t hold positions in companies mentioned in the article.
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