The Pentagon Bet $400 Million That One U.S. Company Could Break China’s Rare Earth Monopoly. MP Materials Is About To Deliver GM’s First Rare Earth Magnets Not Made In China
The Pentagon placed a massive bet on a single American company to break China's stranglehold on rare earth magnets, and General Motors is first in line to find out if that wager pays off.
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On July 10, 2025, the Department of Defense agreed to buy $400 million of convertible preferred stock in MP Materials (NYSE:MP), along with a ten-year warrant. The government’s projected ownership stake of 15% made it the company’s largest shareholder. The deal also included a $150 million loan to expand Mountain Pass and a 10-year commitment to buy all of the company’s output at $110/kg for neodymium-praseodymium (NdPr), the key rare earth input in permanent magnets.
General Motors (NYSE:GM | GM Price Prediction) is first in line for MP’s magnets, according to The Business Journals. The Pentagon deal and GM supply agreement fund different facilities on separate schedules.
Pentagon Capital Targets Mountain Pass and a Future Plant
Pentagon money funds upgrades at Mountain Pass in California and a separate magnet plant called 10X. Commissioning at 10X is expected around 2028. The Department of War remains MP’s partner on the project.
GM’s Magnets Come From an Already Running Texas Plant
GM’s magnets come from a different facility, and MP paid for it. The two companies signed their supply agreement in December 2021 and released the details in April 2022. MP backed the deal with a $700 million investment commitment of its own to supply magnets for GM’s Ultium-platform electric vehicles. MP began commercially producing rare earth metal for GM in 2024. Its Independence facility in Fort Worth has made neodymium-iron-boron magnets since December 2025, according to MP’s fourth-quarter 2025 earnings release filed with the SEC.
Reports on delivery timing conflict. In mid-September, The Business Journals reported that MP delivered its first magnets to GM from Fort Worth. Days later, GM Authority described GM as “About To” take delivery. On MP’s August earnings call, the CFO said regular production deliveries should begin sometime in the fourth quarter of 2026, starting at small volumes. No exact shipment date has been made public. The best reading of the record is that the milestone is underway or very close.
Mine to Magnet Under One Roof
Co-founder and CEO James Litinsky said “no single entity” elsewhere handles the entire supply chain under one roof. MP is America’s only fully integrated rare earth producer, from mining and processing through metallization and magnet manufacturing. Its customers include Apple (NASDAQ:AAPL) and U.S. aerospace and defense contractors.
China has dominated rare earths since Deng Xiaoping’s 1992 comment that the Middle East has oil and China has rare earths. MP stopped selling concentrate to China in July 2025.
Stock Already Traded the Pentagon Story
MP’s share price at each of its recent filings shows how the market responded. At its May 8, 2025 filing, before the agreement, shares stood at $23.90. At its August 7, 2025 filing, weeks after the deal, they were at $77.05. They were at $72.20 at the May 7, 2026 filing and $48.47 at the August 6, 2026 filing.
The shares closed at $46.98 on Friday, October 2, 2026, up 1.93% for the session. That close left them down 33.81% over one year and 14.13% over one month, for a market value of $8.37 billion. Over ten years, they are up 369.70%.
The stock ran up sharply on Pentagon news, then gave back much of the gain. MP rallied on unrelated headlines, including a 6% surge in late September as traders considered the critical minerals growth story, according to 24/7 Wall St.
China’s grip on the rare earth supply chain is the whole reason the Pentagon wrote the check, and we mapped out why the fix takes years, not weeks, in a free guide here: The Next Nvidia Playbook.
Amin Credits MP’s Pace for the Shorter Timeline
GM’s chief supply officer Shilpan Amin said the full development cycle should have taken 8 years. The companies got there in 5 years because of MP’s pace. Litinsky said finding customers who believe in you is the “hardest thing” early on. GM signed as an anchor customer in 2021, before Washington invested capital, and that commitment cut the schedules.
The GM milestone shows Independence works. Government capital depends on 10X, still under construction and expected to begin commissioning around 2028.
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AJ spent 10 years writing about financial markets at The Motley Fool. His coverage centers on technology stocks and the broader macroeconomic trends, from interest rates to geopolitics, that shape where markets are headed next. AJ is drawn to the stories where big-picture economics and individual companies collide.
