MP Materials surges 47% as DoD commits billions to domestic rare earth magnet supply chain

MP Materials Corp. (NYSE: MP) stock soared nearly 47% on July 10, 2025, following the announcement of a sweeping public-private partnership with the United States Department of Defense (DoD) aimed at building out a fully domestic rare earth magnet supply chain.

The Las Vegas-headquartered rare earth miner confirmed the DoD will invest approximately $400 million in preferred equity—convertible at $30.03 per share—and issue warrants that would make it MP Materials’ largest shareholder. The federal agency has also agreed to a 10-year offtake commitment and pricing floor to secure U.S. magnet supply for defense and commercial applications.

MP Materials Corp., which operates the world’s second-largest rare earth mine in Mountain Pass, California, and is commissioning a downstream magnetics facility in Fort Worth, Texas, said the new initiative would fund construction of a second, significantly larger magnet plant—dubbed the “10X Facility”—scheduled for commissioning in 2028.

At 11:05 a.m. EDT, shares of MP Materials were trading at $44.13, up $14.10 or 46.95% from the previous close of $30.03. Trading volume had crossed 50 million shares, nearly five times its daily average.

What are the long-term implications of the DoD partnership for MP Materials’ magnet production capacity and U.S. industrial policy?

The newly announced 10X Facility will reportedly increase MP Materials’ annual U.S. magnet production capacity to 10,000 metric tons, aligning with America’s broader national security agenda to reduce reliance on Chinese rare earth supply chains.

This initiative builds upon the rare earth-focused firm’s integrated operations strategy—extracting and separating rare earth oxides at Mountain Pass, converting them into metals at its Texas site, and now manufacturing magnets in a purpose-built megafacility.

Institutional investors interpret this DoD partnership as a structural tailwind that will insulate MP Materials from commodity volatility, strengthen industrial sovereignty, and anchor a dual-use supply chain capable of supporting electric vehicles, wind turbines, and defense-grade propulsion systems.

The magnet sector, especially neodymium-praseodymium (NdPr), is viewed as strategically essential. At present, the U.S. imports the vast majority of its NdFeB magnets from China—a vulnerability this partnership explicitly aims to address.

Why did MP Materials stock rally so sharply, and what does it suggest about investor sentiment?

The nearly 47% single-day surge in MP Materials’ stock marks one of the company’s largest historical intraday gains and signals strong institutional confidence in the federal government’s backing of domestic rare earth infrastructure.

Pre-market trades pushed the stock above $48 before settling near $44 in late-morning action. Analysts noted that investor enthusiasm was driven by the multi-pronged nature of the DoD agreement—combining equity ownership, fixed price commitments, offtake guarantees, and loan-based support for capex-intensive facility buildouts.

Market observers suggested that the upside was magnified due to MP Materials’ relatively depressed valuation heading into the announcement, with its stock previously trading well below its 52-week high. The conversion price and warrant exercise level of $30.03 now appear meaningfully in-the-money, further validating the transaction’s perceived value.

What are the full financial terms of the DoD agreement and how do they impact MP Materials’ capital structure?

Under the agreement, the United States Department of Defense will invest $400 million in a newly created series of convertible preferred stock issued by MP Materials Corp., with an initial conversion price set at $30.03 per share. In addition to the equity investment, the DoD will receive a warrant that allows it to purchase further shares of common stock at the same $30.03 exercise price.

Upon full conversion of the preferred stock and full exercise of the warrant, the Department of Defense is positioned to become MP Materials’ largest shareholder, with ownership equivalent to approximately 15% of the company’s total issued and outstanding common stock on a fully diluted basis. This strategic equity arrangement is scheduled to close on July 11, 2025, and is designed to provide MP Materials with long-term funding stability while aligning federal ownership with the company’s domestic production objectives.

In addition, the DoD will provide a $150 million loan to expand heavy rare earth separation capabilities at Mountain Pass. The company also received a commitment letter for $1 billion in commercial financing from JPMorgan Chase Funding Inc. and Goldman Sachs Bank USA, intended to cover construction and development costs for the 10X Facility.

A 10-year price floor of $110/kg has been established for MP Materials’ NdPr products sold or stockpiled, insulating the company against market downturns and price manipulation risks. Simultaneously, the DoD has agreed to an offtake deal for 100% of the output from the 10X Facility for a decade following commissioning.

This financial architecture blends strategic industrial planning with capital market flexibility, a model increasingly favored for critical infrastructure sectors tied to national security.

How are analysts and institutional investors interpreting the long-term risks and rewards of this public-private initiative?

Institutional sentiment appears overwhelmingly constructive. The fixed price and offtake structure offer predictable cash flows, derisking the substantial capex and operational investment needed to complete the 10X Facility. Analysts believe this model could serve as a template for other critical minerals ventures, especially amid increasing scrutiny of Chinese mineral supply chains.

That said, some market watchers caution that the project carries execution risks. The 2028 commissioning target could slip due to permitting delays, construction challenges, or shifts in political priorities. There is also the potential for geopolitical retaliation from China, including tighter export controls on magnet inputs or retaliatory pricing strategies.

Nonetheless, the prevailing view is that bipartisan support for rare earth independence—combined with the structure and scale of the DoD partnership—places MP Materials in a leading position to scale profitably while delivering strategic value to the U.S. government.

What comes next in MP Materials’ project timeline and why are investors watching upcoming milestones closely?

The July 11, 2025, closing of the DoD investment is the next major financial milestone. Investors will also be looking for site selection details for the 10X Facility, updates on permitting and procurement timelines, and progress on the heavy rare earths upgrade at Mountain Pass.

Given the guaranteed offtake and government buy-in, analysts anticipate that future equity raises or project financings may benefit from enhanced market confidence. MP Materials could also seek long-term supply agreements with Tier 1 EV manufacturers or defense contractors looking to onshore their magnet sourcing.

Strategically, this deal opens the door for other critical mineral developers to pursue similar public-private funding models—particularly in lithium, cobalt, and graphite—if execution at MP’s facilities proceeds according to plan.

For investors, MP Materials is now effectively a proxy for U.S. rare earth industrial policy—and any inflection in the execution path or political environment could materially impact its valuation.