On August 10 (Eastern Time), the U.S. Department of Defense (DoD) announced a major initiative: providing a $150 million loan to MP Materials, the owner of a rare earth mine. This fund will be used to enhance the heavy rare earth separation capacity of MP Materials' existing processing plant in Mountain Pass, California. Upon the release of this news, it immediately attracted widespread attention from all sectors, and people are wondering whether this will bring about a major transformation in the global rare earth industry.




MP Materials is no ordinary player—it is the owner of the only operational rare earth mine in the United States. With its unique position, it holds a pivotal role in the rare earth sector. Prior to this, the U.S. DoD had already made a $400 million equity investment in the company, holding a 15% stake, which also made the Pentagon the largest shareholder of MP Materials. Moreover, the DoD has reached multiple agreements with MP Materials, such as purchasing neodymium-praseodymium oxide products from the company at a floor price of $110 per kilogram—nearly twice the market price.



Driven by a series of favorable policies, MP Materials has maintained a robust growth momentum. According to its newly released financial report, the company's neodymium-praseodymium oxide output surged by nearly 120% in the second quarter of this year, reaching a record 597 tons. It is also expected that the output in the third quarter will increase by 10% to 20% quarter-on-quarter. Its stock performance is even more striking, with a cumulative year-to-date increase of over 367%, making it a "star" in the capital market.

The U.S. DoD's provision of this $150 million loan carries profound strategic intentions. Emil Michael, Under Secretary of Defense for Research and Engineering, stated that this is a decisive action aimed at restoring the domestic critical mineral supply chain, revitalizing the industrial base, and strengthening the military. Rare earths play an irreplaceable role in modern national defense and numerous high-tech fields, and the U.S. has long relied heavily on external sources—especially China—for rare earth supplies, which has made it deeply uneasy.



For the global rare earth industry, this move by the U.S. may have multiple impacts. On one hand, if MP Materials successfully improves its heavy rare earth separation capacity and expands production scale with this fund, the U.S. dependence on external sources for rare earth supplies may decrease, which could alter the global rare earth trade pattern. On the other hand, the U.S. strong support for its rare earth industry may prompt other countries to attach greater importance to their own rare earth sectors, increasing investment in rare earth mining, refining technology R&D, and other areas, thereby intensifying competition in the global rare earth industry.

However, it will not be easy for the U.S. to completely reshape the global rare earth industry pattern solely through its investment in MP Materials. The rare earth industry has a complex industrial chain, and each link—from mining and processing to application—faces numerous challenges. For instance, rare earth refining involves high technical difficulty, high costs, and significant environmental impact. Furthermore, the global distribution of rare earth resources is uneven, and China still maintains strong advantages in terms of rare earth reserves, output, and industrial chain integrity.

The U.S. DoD's $150 million investment in MP Materials has indeed injected a "booster shot" into the rare earth industry. Nevertheless, it is still too early to conclude that this will trigger a major transformation in the sector. The future development of the rare earth industry will require continuous attention to dynamics in technology, policies, markets, and other aspects from all relevant parties.