U.S. Defense Department Becomes Largest Shareholder of Rare Earth Company to Weaken China's Dominance

"Pentagon to Invest Billions of Dollars
in Building Rare Earth Production Facilities"

The U.S. Department of Defense will become the largest shareholder of the only rare earth mine operator in the United States, as part of its efforts to reduce dependence on China for rare earth elements, which are essential for the development of advanced military equipment.

Rare earth mine of MP Materials in California, USA. Photo by Reuters Yonhap News

According to the Wall Street Journal (WSJ), CNBC, and other sources on July 10 (local time), MP Materials (hereafter MP), the largest rare earth mining company in the U.S., signed an agreement with the Department of Defense to trade $400 million (about 550 billion won) worth of MP preferred shares, representing 15% of the company.

Founded in 2017 and headquartered in Las Vegas, Nevada, MP owns and operates the only rare earth mine in the United States, located in Mountain Pass, California, about 60 miles (97 km) from Las Vegas. The company also operates a facility in Fort Worth, Texas, that produces rare earth metals and magnets.

MP stated that the Department of Defense will invest several billion dollars more to promote domestic production of rare earth elements and that it plans to rapidly construct a facility capable of manufacturing 10,000 tons of rare earth magnets annually in order to reduce foreign dependence. MP also added that the agreement includes a minimum price guarantee and a 10-year supply commitment to address the global price drops caused by the release of cheap rare earth elements from China.

The WSJ evaluated the Department of Defense's move as "an unusual contract with a private company to weaken China's dominance in rare earth elements."

Analysts point out that, after Donald Trump took office and the U.S.-China tariff war began, China used rare earth export controls as a bargaining chip, making it an urgent national security priority for the United States to secure domestic production capacity for rare earths. According to CNBC, in 2023, the U.S. relied on foreign sources for nearly all of its rare earth elements, with 70% coming from China. Rare earth magnets are essential not only for civilian products such as automobiles and wind turbines, but also for the production of military equipment including fighter jets like the F-35, drones, submarines, and missile systems.

James Litinsky, CEO of MP, said, "This plan by the Department of Defense is a decisive action by the Trump administration to accelerate the independence of the U.S. supply chain," adding, "The 10,000 tons of rare earth magnets to be produced in the future will be sufficient to meaningfully support both defense and commercial demand."