Pentagon takes stake in rare earth company MP Materials
WASHINGTON
A U.S. rare earth company has announced an agreement with the Pentagon granting the government a stake in the venture in exchange for billions of dollars to finance additional manufacturing.
Las Vegas-based MP Materials described the arrangement as a "transformational public-private partnership" that includes a "multibillion-dollar package of investments" and long-term commitments from the Department of Defense (DoD).
It will allow MP to construct a second domestic magnet manufacturing facility, according to a company press release, and to expand production at MP's Mount Pass, California facility, the only large-scale rare earth mining and processing operation in North America.
Under the arrangement, the Pentagon agreed to purchase $400 million of newly created MP preferred stock, convertible to common stock.
Ultimately, the agreement will result in the DoD holding 15 percent of MP's common shares, making it the company's largest shareholder.
It is rare for the Pentagon to take stakes in private companies.
Rare earths are critical building blocks in many U.S. weapons systems and are also needed for smartphones, automobiles and other goods. The dearth of capacity in the United States — and the continued dominance of China — has emerged as a growing worry in Washington.
China controls close to 70 percent of global rare earth production.
MP said the partnership with DoD would "catalyze domestic production, strengthen industrial resilience, and secure critical supply chains for high-growth industries and future dual use applications."
