The Pentagon took a 400 million dollar stake in the only major American rare earth miner, and its own price guarantee already costs less than half what it did 2 quarters earlier

The Pentagon rare earth mining stake and its 110 dollar price guarantee

In July 2025 the Pentagon, then still named the Department of Defense, took a 400 million dollar stake in MP Materials, the mining company that runs Mountain Pass, California, the only rare earth mine and processing plant operating at scale in the United States. Rare earth elements are the minerals inside the magnets that spin electric motors and wind turbines, and the deal also gave the government the right to buy 350 million dollars more stock, a path to owning 15% of MP Materials and becoming its largest shareholder, and a 150 million dollar loan toward separating the rarer rare earth elements that are harder to refine than the neodymium and praseodymium the company already produces. At the center of the deal sits a price floor, a promise to pay a fixed price no matter what the market charges, so a company will not lose money mining something whose price it does not control. The government agreed to pay MP Materials 110 dollars for every kilogram of neodymium praseodymium oxide it produces, for 10 years, starting October 1, 2025. The agency signed this deal as the Department of Defense and renamed itself the Department of War by the time it filed its next earnings report in February 2026, the same agency under a new name.

James Litinsky, founder, chairman and chief executive officer of MP Materials, said the deal marks a turning point for American supply chains.

This initiative marks a decisive action by the Trump administration to accelerate American supply chain independence.

James Litinsky, founder, chairman and chief executive officer of MP Materials. Source 2.

The price guarantee already costs less every quarter

Reading the 3 quarterly reports MP Materials filed since the deal shows a trend none of them states on its own. The price floor payment the company collected fell for 3 straight quarters, about 51 million dollars in the fourth quarter of 2025, 42.3 million dollars in the first quarter of 2026, and 17.6 million dollars in the second quarter of 2026, even as output from the company rose across the same year. The government payment is the gap between 110 dollars a kilogram and whatever the open market actually pays, so a shrinking payment means the market price is climbing toward that guaranteed floor, and the guarantee is doing its job for less money each quarter.

Rare earth output is climbing at the mine the deal was built for

MP Materials produced 718 metric tons of neodymium praseodymium oxide in the fourth quarter of 2025, a 74% increase over a year earlier, then 917 metric tons in the first quarter of 2026, a company record and a 63% increase, then 840 metric tons in the second quarter of 2026, a 41% increase but a dip from the record set the quarter before. The Independence facility, which MP Materials runs in Fort Worth, Texas, produced its first commercial magnets in the fourth quarter of 2025, and construction of a second magnet plant, the 10X Facility in Northlake, Texas, backed by a 200 million dollar Texas incentive package, accelerated through the second quarter of 2026.