Highlights

• The DoD's multibillion-dollar partnership with MP Materials includes developing a new rare earth magnet manufacturing plant and taking a 15% equity stake.
• Australian rare earth stocks surged, with Lynas Rare Earths jumping 17% and Iluka Resources recording a 27% intraday gain.
• The deal represents a strategic move to reduce dependence on China's rare earth market and establish a robust Western rare earth supply chain.

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A surge in Australian rare earth equities followed news of a landmark U.S. Department of Defense (DoD) deal with MP Materials, sending a ripple effect across the global critical minerals sector. Shares of Lynas Rare Earths (opens in a new tab) jumped 17%, hitting their highest levels since August 2022, while Iluka Resources recorded a record-breaking 27% intraday gain.

The catalyst? A multibillion-dollar strategic partnership between the DoD and MP Materials Corp. that includes the development of a second U.S.-based rare earth magnet manufacturing plant, dubbed the “10X Facility.” In a rare move, the DoD has also taken a 15% equity stake in MP Materials, signaling a long-term federal commitment to rebuilding domestic rare earth capabilities.

Arafura Rae Earths (opens in a new tab) (ARAFF) is up 8.3% since yesterday. Rare Earth Exchanges (REEx) recently interviewed Managing Director and CEO Darryl Cuzzubbo (opens in a new tab), finding that this advanced asset, ranked fifth on the REEx Project/Deposit Rankings, is ready for contribution to the ex-China market, and there is a considerable probability that this asset is significantly undervalued. However, REEx does not provide financial advice. Please consult with your own financial advisor if you have an interest in this or any stock.

On the DoD/MP deal, for the next 10 years, 100% of the magnets produced at the facility—targeting both defense and commercial sectors—will be guaranteed off-take, providing MP Materials with unparalleled revenue predictability. Jefferies analysts, cited by Reuters, called the agreement a powerful signal that the U.S. is “pushing hard for rare earth magnet independence,” lifting upside risk across the entire rare earth pricing complex.

Australian equities reacted swiftly, highlighting how closely aligned Australia’s producers are to Western industrial policy momentum. This moment underscores Australia’s positioning as a strategic partner in the emerging ex-China rare earth supply chain.

However, critical questions remain unanswered:

• Where will the 10X Facility be located, and will its construction create new procurement channels for Australian or other allied-source feedstocks?
• How will this affect rare earth oxide pricing across NdPr, Dy, and Tb in spot and long-term contracts?
• Will other Western governments follow the DoD’s lead by investing equity in critical mineral companies?

As China tightens rare earth export controls, this U.S.-Australia market synchronization suggests a fast-consolidating geopolitical strategy around supply chain independence. But for retail investors, the need for clarity on operational timelines, procurement specifics, and downstream OEM demand remains high.

Some of these movements were reported recently by Tsvetana Paraskova writing for OilPrice.com (opens in a new tab).

REEx will continue monitoring the capital flows, policy developments, and pricing signals emerging from this pivotal inflection point in the global rare earth race.

Check out the REEx Forum (opens in a new tab) for relevant discussions.