Highlights

• MP Materials receives historic $400 million DoD investment
• Becomes a critical player in U.S. rare earth supply chain independence
• The deal includes a 10-year revenue floor
• Government equity stake
• Guaranteed magnet purchase agreement
• Company aims to compete globally
• Reduces dependency on Chinese rare earth suppliers
• Potential for further industrial policy support

Shares of MP Materials (NYSE: MP) skyrocketed to $45.69 (as of this writing) following the blockbuster $400 million investment from the U.S. Department of Defense (DoD) and a guaranteed 10-year offtake agreement for rare earth magnets. First reported early this morning by Rare Earth Exchanges, this public-private deal marks the largest federal backing of a U.S.-based rare earth firm in history.

According to _WallStreetPit_’s Ari Haruni, the DoD investment—via preferred convertible stock priced at $30.03 per share—instantly makes the U.S. government MP’s largest shareholder (15%). Importantly, the deal also includes a $110/kg price floor for neodymium-praseodymium (NdPr) oxides and a full purchase guarantee for output from MP’s 10X magnet plant.

Market euphoria is understandable: the U.S. has long lacked an integrated rare earth supply chain. MP’s sole operating mine at Mountain Pass, California, has been a linchpin of federal efforts to reduce China dependency.

Yet today’s frenzied buying raises several unanswered questions for retail investors:

• Is MP now too dependent on the DoD? While the 10-year revenue floor brings predictability, the government’s equity stake and magnet purchase guarantee concentrate risk. What happens in 2035 when the deal expires? Of course, REEx has suggested the management team is more than solid, and with this financial platform and the ability to grow with government support, the prospects for MP Material to grow and rival some Chinese conglomerates are now a possibility.
• What about commercial competitiveness? With a price floor and guaranteed magnet demand, will MP innovate and compete globally—or become a semi-state supplier?
• Where are the heavy rare earths? A $150M DoD loan is expected to support heavy REE separation, but no clear timeline was shared. This matters for magnet alloys requiring dysprosium and terbium—still mostly imported from China. More on this to come.
• Why now? Is this a direct response to China's tightening grip on REE refining and its consolidation into six major state champions? If so, more U.S. firms may follow. Investors are already bidding up stocks like Energy Fuels (UUUU), hoping for similar deals.

Retail investors should celebrate this historic vote of confidence in American rare earth production, but with tempered expectations. While MP is now better capitalized than ever, its future depends on delivering competitive performance beyond the safety net of government contracts. While we refer to this asset as an American treasure trove, more assistance in the form of industrial policy will be necessary. At the same time, MP must execute with velocity, quality, and precision.