The most consequential number in MP Materials’ July 10, 2025, agreement with the Department of Defense was a price: $110 per kilogram. For ten years, the government would protect the company’s neodymium-praseodymium products against a specified benchmark falling below that level.
That provision addressed a problem a construction grant alone cannot solve. A company may finance a processing plant and still struggle if the material it produces sells for too little. The Pentagon partnership sought to support both the facilities and the economics of running them, extending from rare-earth processing in California to future magnet manufacturing.
MP announced plans for a second American magnet factory, called 10X, with a location still to be selected. Commissioning was expected to begin in 2028. Together with expansion at its Independence operation in Texas, the company targeted 10,000 metric tons of annual magnet capacity. The presentation divided that ambition into 7,000 tons at 10X and 3,000 at Independence. None of those future additions was operating capacity created on announcement day.
Capital, prices and customers
The package contained several instruments with different jobs.
| Instrument | Problem it addressed |
|---|---|
| $400 million convertible preferred equity investment | Capital for the company’s expansion |
| $150 million loan commitment | Additional heavy-rare-earth separation capability |
| Ten-year NdPr price floor | Exposure to low material prices |
| Ten-year magnet offtake arrangement | A market for output from the future 10X plant |
The SEC filing also disclosed a commitment for up to $350 million in additional preferred-equity funding. Separately, MP had a $1 billion financing commitment from JPMorgan Chase and Goldman Sachs for developing and constructing 10X, subject to its terms. Adding these figures into a single “money received” total would misstate the transaction: equity, loans and conditional financing are different obligations, with different timing.
The price-protection agreement was similarly specific. Quarterly payments would cover the gap between $110 and the contractual benchmark for NdPr, the neodymium-praseodymium combination used in important magnet materials. Coverage extended across products including concentrate, oxide and metal. After 10X reached full production, the government would receive 30% of benchmark-price upside above $110.
That sharing provision matters. The arrangement transferred some downside exposure to the government while also giving it a claim when specified conditions produced stronger prices. It was more elaborate than a simple promise to buy material at a fixed price.
The magnet agreement addressed a separate market. The project company would sell its output to the Defense Department, with provisions allowing production to go to commercial and other buyers with government consent. The stated ten-year term began with commercial operation, rather than with the July announcement. The arrangement therefore supported a future factory whose customers could include civilian manufacturers.
A factory economics commitment
MP’s presentation described cost-plus magnet pricing and a minimum annual EBITDA threshold of $140 million at full production, with a 2% annual escalator. EBITDA is an earnings measure before interest, taxes, depreciation and amortization; here, the agreements supplied their own calculation. It is not the same as cash available to shareholders or net profit.
The government also shared in earnings above the threshold: the first $30 million of additional EBITDA, then half of the amount beyond that tier. Those contractual protections and returns make the eventual public cost dependent on production, pricing and sales outcomes. The announcement alone cannot establish that cost.
The industrial rationale was visible in the data available before the deal. A March 2025 USGS chart put net import reliance for rare-earth compounds and metals at 80% for 2024. Its China-related estimate drew on an earlier multiyear import-source average. Those figures describe compounds and metals, not a direct count of finished magnets, but they show why domestic mining by itself did not settle the supply question.
The July deal attempted to connect the missing stages: processing, manufacturing and a durable market. Its success would require equipment to work, factories to reach scale and customers to accept their products. What changed immediately was the allocation of financial risk around that effort—and the federal government’s willingness to take a much larger role in it.
Sources
- MP Materials announces public-private partnership with the Department of Defense — MP Materials · 2025-07-10.
- Current report on definitive Defense Department agreements — MP Materials / U.S. Securities and Exchange Commission · 2025-07-10.
- A Transformational Public-Private Partnership — MP Materials · 2025-07-10.
- Minerals with Net Import Reliance on China — U.S. Geological Survey · 2025-03-14.