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19h ago

Defense Department Secures 15% Stake in MP Materials With $400 Million Investment

The deal locks in a ten-year commitment to buy all magnets from MP’s planned 10X facility at $110 per kilogram.

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A view of mining facilities at the MP Materials rare earth mine in Mountain Pass, California, U.S. January 30, 2020. Picture taken January 30, 2020. REUTERS/Steve Marcus/File Photo
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Overview

  • The Department of Defense will invest $400 million in newly issued preferred stock, giving it about a 15% stake in MP Materials and making it the company’s largest shareholder.
  • As part of the agreement, the Defense Department guaranteed it will purchase 100% of output from MP’s 10X magnet manufacturing facility at a minimum price of $110 per kilogram for ten years.
  • MP Materials plans to use the Pentagon funds alongside $1 billion in financing arranged by JPMorgan Chase and Goldman Sachs to build its second domestic magnet plant and expand rare earth processing.
  • The Defense Department also extended a $150 million loan to MP Materials for enhanced heavy rare earth separation capabilities at its Mountain Pass, California, mine.
  • Shares of MP Materials surged nearly 50% in premarket trading on July 10, reflecting investor confidence in a strengthened US mine-to-magnet supply chain.