MP Materials Stock Surges 50% on Rare Earths Contract With Defense Department

Shares of MP Materials (MP) surged 50% in premarket trading Thursday after the rare earths miner announced a multibillion-dollar agreement with the Department of Defense.

The DoD is set to become MP Materials’ largest shareholder at 15% following an initial $400 million purchase of a new class of “preferred stock convertible into shares of the Company’s common stock, and a warrant permitting DoD to purchase additional shares of the Company’s common stock.”

MP Materials will use the government investment, along with a $1 billion funding line from JPMorgan Chase (JPM) and Goldman Sachs (GS) to fund the construction of its second domestic magnet manufacturing facility at a yet-to-be-decided location.

The company also agreed to a 10-year deal with the DoD establishing the government as a long-term customer of MP’s rare earths with a price floor of $110 per kilogram.

The Trump administration has stated that becoming less dependent on other nations like China for rare earths—metals used in production of a variety of commercial and military products—is a top priority and national security concern. Shares of MP and USA Rare Earth (USAR) have been boosted this year by that commitment.

If MP Materials shares open at their current levels, it would mark their highest price since April 2022. USA Rare Earth shares were also up 18% about 30 minutes before the bell.