The DOD’s Role in Critical Minerals
The DOD is stepping up efforts to secure critical minerals, especially rare earth elements (REEs), vital for defense technologies like fighter jets and missiles. On July 10, 2025, it invested $400 million in MP Materials, becoming the largest shareholder, and provided a $150 million loan to expand operations at the Mountain Pass mine in California. This includes building the “10X Facility” by 2028, producing 10,000 metric tons of magnets annually for defense and commercial use, with 10-year purchase guarantees and a $140 million revenue floor Bloomberg, July 10, 2025.
It is also notable that the DOD is authorizing investments and manufacturing of Drone capabilities in the United States. This crossing into the business lines makes me wonder if the DOD will become a downstream refinery operator if Gavin Newsom completes his destruction of California’s energy independence by closing another 20% refining capacity.
🚨BREAKING: The Pentagon is becoming the largest shareholder in an American rare earth mining company.
This is one of the biggest moves yet to decouple from China—and it’s a Trump administration masterstroke.
Here’s what just happened—and why it matters 🧵 pic.twitter.com/B1hNwTc1uQ
— Rod D. Martin (@RodDMartin) July 10, 2025
This aligns with the U.S. critical minerals strategy, updated in 2022 by the USGS to include 50 essential minerals, and recent executive orders to accelerate domestic production USGS, February 21, 2022. The DOD’s actions aim to counter China’s dominance, which has tightened export controls, and support national security Wall Street Journal, February 4, 2025.
Implications for Investors
For investors, this suggests increased interest in mining stocks, with MP Materials’ stock surging over 50% post-announcement, reflecting market confidence CNBC, July 10, 2025. The DOD’s backing reduces financial risks, offering long-term growth potential, especially with international partnerships like the Minerals Security Partnership. However, challenges like environmental regulations and market volatility should be considered.
Background on Critical Minerals and National Security
Critical minerals, including rare earth elements (REEs), lithium, cobalt, and others, are vital for advanced technologies such as military hardware, electric vehicles (EVs), wind turbines, and consumer electronics. The DOD has identified over 250 strategic and critical materials, emphasizing their role in defense systems like F-35 fighter jets, which require over 900 pounds of REEs, and Virginia-class submarines, needing 9,200 pounds Deloitte, May 11, 2025.
China’s dominance, controlling over 80% of global REE production, poses a significant risk, especially with recent export restrictions Reuters, December 3, 2024. This has prompted the U.S. to prioritize domestic production, with the DOD playing a central role.
The DOD’s Recent Investment in MP Materials
On July 10, 2025, the DOD announced a $400 million equity investment in MP Materials, making it the largest shareholder with a potential 15% stake upon conversion of preferred shares and warrants CNBC, July 10, 2025. This deal, part of a multi-billion-dollar partnership, includes:
- A $150 million loan to expand the Mountain Pass mine in California, the only U.S. rare earth mine.
- 10-year purchase guarantees and a $140 million minimum revenue floor to ensure financial stability.
- $1 billion in private financing from JPMorgan and Goldman Sachs to support the construction of the “10X Facility,” a new magnet plant expected to produce 10,000 metric tons annually by 2028 Bloomberg, July 10, 2025.
MP Materials, described as the “national champion” for REEs, aims to create a fully integrated U.S. supply chain, reducing foreign dependency Washington Post, July 10, 2025. The CEO, Jim Litinsky, emphasized this as a “decisive action” by the Trump administration to accelerate supply chain independence Wealth Daily, July 9, 2025.
Broader U.S. Critical Minerals Strategy
The DOD’s investment aligns with a comprehensive U.S. strategy to secure critical minerals, updated in recent years. The USGS released a 2022 list of 50 critical minerals, up from 35 in 2018, reflecting increased recognition of their importance USGS, February 21, 2022. The Trump administration has issued executive orders to accelerate permitting, mobilize financing, and open federal lands for mining, aiming to strengthen domestic production Deloitte, May 11, 2025.
International efforts include the Minerals Security Partnership and G7 coordination to diversify supply chains, while offshore exploration targets seabed minerals like nickel and cobalt White House, April 24, 2025. The DOE is also investing in research and development, focusing on recycling and alternatives to reduce import reliance DOE, January 19, 2021.
Market Reaction and Investor Implications
The market responded enthusiastically to the DOD’s investment, with MP Materials’ stock surging over 50%, reaching a 60% increase in some reports, reflecting investor confidence Business Insider, July 10, 2025. Analysts view this as a signal of long-term growth, with the government’s backing reducing financial risks through purchase guarantees and revenue floors.
For investors, this suggests:
- Increased Interest in Mining Stocks: Companies like MP Materials and others in the critical minerals sector may see heightened investment, driven by government support and growing demand for clean energy and defense technologies.
- Reduced Financial Risk: The DOD’s commitments provide stability, making MP Materials an attractive option despite mining sector challenges.
- Potential for Growth: The “10X Facility” and expanded operations position MP Materials for significant revenue growth, potentially benefiting shareholders.
- Broader Market Impact: Opportunities may arise for companies in processing, refining, and manufacturing, as the U.S. onshores the supply chain.
However, investors should consider challenges such as environmental regulations, high operational costs, and market volatility. The sector’s complexity, with overlapping federal initiatives, requires careful analysis GAO, June 15, 2022.
Global Context and Future Outlook
The DOD’s actions are part of a global race for critical minerals, with allies like Canada and Australia also ramping up production. The Trump administration’s focus on supply chain independence, including deals in Ukraine for REEs, highlights a diversified approach [Financial Times, July 10, 2025, inferred from X post context]. This could open investment opportunities in regional mining firms and related infrastructure.
Looking ahead, the U.S. strategy aims to position the country as a leader in critical minerals, supporting energy security and technological advancement. Investors should monitor policy developments, market trends, and environmental regulations to navigate this evolving landscape.
Conclusion
The DOD’s entry into critical minerals, exemplified by its investment in MP Materials, is a strategic move to secure national security and economic interests. For investors, it presents opportunities in mining stocks and related sectors, backed by government support, but requires awareness of sector-specific challenges. As the U.S. continues to prioritize critical minerals, this sector is poised for significant growth, shaping the future of energy and defense industries.
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Investment Details
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Amount/Details
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Equity Investment
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$400 million (preferred shares)
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Loan
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$150 million
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Purchase Guarantees
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10 years
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Minimum Revenue Floor
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$140 million
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Private Financing
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$1 billion (JPMorgan, Goldman Sachs)
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MP Materials Stock Performance
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Details
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Surge Post-Announcement
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Over 50% (up to 60% in reports)
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Market Confidence
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High, driven by DOD backing
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