The Pentagon’s Bold Move To Secure U.S. Rare Earth Mineral Needs

Acting on President Donald Trump’s April 15, 2025 executive order directing cabinet officials to take action to enhance U.S. energy security by lessening dependence on imports of rare earth minerals, the Pentagon moved in recent days to secure a major ownership interest in America’s only operational rare earth mine.

Moving Fast On Rare Earth Minerals

The U.S. Department of Defense, headed by Defense Secretary Pete Hegseth, acquired a 15% position in the MP Materials mine, located adjacent to Interstate 15 in southeast California, making it the largest single shareholder in this critical national resource. MP Materials common stock spiked 54% on July 10 following the announcement.

It has been well reported that rare earths are crucial to the wind, solar, battery, and electric vehicles industries. Less reported until recently is the fact that rare earth metals are critical elements for making high-grade magnets that go into every modern military weapons system, jets, and ships.

In addition to producing a large percentage of rare earths in its own mines, China holds a dominant position in the refining and processing of the minerals and manufacturing of the magnets from which they are made. Ongoing tensions between the two countries make America’s heavy reliance on imports of these metals via China-dominated supply chains represents a significant national security risk.

The Pentagon maintains significant stores of these minerals for its own use, but restrictions on rare earth exports invoked by China in recent months could threaten to force a depletion in those inventories. An analysis posted on June 25 by S&P Global notes that those restrictions “led to a 32.1% year-over-year decline in US rare earth imports, highlighting mainland China’s dominance in supplying critical minerals.”

The chart below, published along with that S&P Global analysis, details that China controls either the production of or supply chain for almost 70% of U.S. rare earth imports, based on data compiled by the U.S. Geological Survey:

In addition to its status as America’s only active rare earth mining operation, MP Materials is a fully integrated operation which also refines and manufactures magnets at its California operation. MP Materials was created in 2017 to acquire and restart the Mountain Pass mining operation which was originally discovered in 1949 and was a dominant player in the global rare earth market from the 1960s into the 1990s.

According to the Science History Institute Museum and Library, production at Mountain Pass “increased dramatically in 1965, after the discovery that europium phosphors could be used to make a much brighter red in color television screens. The Mountain Pass Mine and the Molybdenum Corporation of America (often referred to as Molycorp) dominated world rare earth production and global exports from about 1960 until the 1990s. During the early 1990s California environmental regulators detected low-level radioactive wastewater leaking from the separation plant’s pipelines. Market prices for rare earth metals were low; Molycorp shut down the separation plant in 1998 and then the mine in 2002.”

A ‘Transformational Partnership’ On Rare Earth Minerals

“This initiative marks a decisive action by the Trump administration to accelerate American supply chain independence,” said James Litinsky, Founder, Chairman, and CEO of MP Materials said in a release. “We are proud to enter into this transformational public-private partnership and are deeply grateful to President Trump, our partners at the Pentagon, and our employees, customers and stakeholders for their unwavering support and dedication.”

CNBC reports that the deal between the Pentagon and MP Materials involves the DoD investing in a “newly created class of preferred shares convertible into MP Materials’ common stock, in addition to a warrant convertible at $30.03 a share for 10 years that allows the U.S. to buy additional common stock.” The 15% share held by the Pentagon would be almost double the shares held by Litinsky (8.61%) and BlackRock Fund Advisors (8.27%).

As part of the deal, the Pentagon will guarantee a minimum price of $110 per kilogram for neodymium-praseodymium oxide (NdPr) produced at the facility for 10 years and agrees to buy 100% of the magnets manufactured by MP Materials. JP Morgan and Goldman Sachs have pledge $1 billion in financial support for the expansion of the site’s manufacturing facility.

MP Materials says it also expects to receive a loan of $150 million from the Pentagon “in connection with its plan to expand its heavy rare earth separation capabilities at Mountain Pass.” Once improvements and expansions are completed, the MP Materials site will be the only site of its kind in the Western Hemisphere.

Keeping A Presidential Promise on Rare Earth Minerals

Speaking at an April conference organized by the Hamm Institute in Oklahoma City, Interior Secretary Doug Burgum advocated for the federal government to make direct investments in critical energy resources. “We should be taking some of our balance sheet and making investments,” Burgum said, adding, “You’re competing against state capital because China is picking these strategically as areas that they want to invest in.”

Burgum also advocated for the establishment of a U.S. sovereign wealth fund similar to those held by countries like Norway and Saudi Arabia. “Why wouldn’t the wealthiest country in the world have the biggest sovereign wealth fund,” the Interior secretary said.

This bold move to enhance U.S. energy and national security by reducing U.S. dependence on China for its rare earth mineral supplies is an outcome of the vision laid out by Burgum. It also represents another example of the administration moving quickly to keep a promise made by candidate Trump during his 2024 presidential campaign.