The investment will help MP Materials build a second magnet manufacturing facility, with construction beginning in 2028.

The investment would make the DoD the largest shareholder with around a 15% stake, eclipsing the previous lead shareholders; the current CEO James Litinsky (8.27%) and BlackRock Fund Advisors (8.27%).  Additionally, JPMorgan and Goldman Sachs will provide $1 billion in financing for the second facility.

As part of the deal, the DoD has ensured that "100% of the magnets made at the new facility, called 10x, are purchased by defense and commercial customers for 10 years after the plant is built," according to NBC News.

Currently, the U.S. imports around 95% of Rare Earth Elements (REEs) it consumes, mainly from China.  In April, China imposed restrictions on seven of the 17 REEs exported to the U.S. in response to President Trump's reciprocal tariffs.  Those restrictions eased up in July; however, the dependence on China for those materials is likely a motivation behind this investment.

Rare Earth Elements (REEs) are a group of 17 metallic elements that are used for advanced military technologies, as they possess unique magnetic, luminescent, and electrochemical properties.  These are critical components in modern guidance systems, precision-guided munitions, radar, and satellite systems.

For example, the F-35 requires an estimated 900 lbs of REEs for its manufacturing, while a Virginia-class submarine needs more than 9,000 lbs.  According to FairObserver, even with the mining operation of MP Materials, the U.S. is still dependent on China for processing the ore extracted in Mountain Pass.

According to a March 2024 release, the Pentagon's Manufacturing Capability Expansion and Investment Prioritization (MCEIP) previously invested $45 million into MP Materials prior to this stock purchase.