MP Materials Soars on DoD Investment-But What Does It Mean for Rare Earth ETF Investors?

Highlights

• MP Materials receives a $400M DoD investment.
• Gains strategic partnership and 15% ownership stake in domestic rare earth production.
• Owns Mountain Pass, the only U.S. commercial rare earth mining site with vertically integrated capabilities.
• MP Materials stock surged 50%.
• Represents a more assertive U.S. industrial policy response to global rare earth market challenges.

---

As Rare Earth Exchanges (REEx) covered, shares of MP Materials Corp. (NYSE: MP) surged nearly 50% Thursday following the announcement of a major public-private partnership with the U.S. Department of Defense. The deal includes a $400 million preferred equity investment—convertible at $30.03 per share—giving the DoD a 15% ownership stake and significant strategic alignment.

The move is part of Washington’s broader campaign to build a domestic rare earth supply chain, reducing reliance on China, which still accounts for more than two-thirds of global REE production. The partnership includes a 10-year magnet offtake agreement and helps finance MP’s second U.S.-based magnet plant, backed by $1 billion in private capital from JPMorgan and Goldman Sachs.

MP: America’s Rare Earth Cornerstone

MP Materials owns and operates the Mountain Pass mine, the only commercial rare earth mining and processing site in the U.S. The company is also one of the few Western players with vertically integrated capabilities, from mining to magnet production, making it uniquely positioned amid rising geopolitical tensions.

While U.S.–China trade talks have calmed in recent weeks, Beijing’s 2025 rare earth export restrictions continue to hang over global markets. MP’s rise—and Washington’s cash infusion—suggest a more assertive U.S. industrial policy response is unfolding.

ETF Implications: REMX Trails the Story

The VanEck Rare Earth/Strategic Metals ETF (REMX), (opens in a new tab) which holds MP as its fourth-largest position (6.7%), rose 9% on the news. But the ETF has lagged MP’s explosive growth—up just 17% year-to-date vs. MP’s 183%.

As ETF.com’s (opens in a new tab) Sumit Roy notes, the problem is REMX’s structure: it’s not a pure-play on rare earths. With roughly one-third of its exposure in Chinese companies and significant weight in lithium producers like Albemarle and Pilbara Minerals, the fund is diluted and exposed to non-aligned market risks.

What Investors Should Ask

• Is REMX delivering what it markets—rare earth strategy—or is it a hybrid metals bet?
• Can a U.S.-China strategic decoupling undermine the fund’s performance due to China-heavy exposure?
• Is a direct equity position in MP a better way to express conviction?

Bottom Line

MP Materials is clearly the flagship U.S. rare earth stock. REMX, by contrast, remains a broad-brush instrument—and one whose underlying exposure may clash with Western critical mineral policy goals.