The rare earth materials sector has experienced a seismic shift following the Department of Defense's unprecedented partnership with MP Materials, creating ripple effects across ETF markets and positioning investors at the forefront of a supply chain revolution. This transformational deal, announced July 10, 2025, represents the most significant government intervention in critical mineral markets since the Cold War era, fundamentally altering the investment thesis for rare earth exposure.

The Pentagon's multibillion-dollar commitment to MP Materials marks a decisive pivot toward supply chain independence, with the DoD positioned to become the company's largest shareholder through a comprehensive package including convertible preferred equity, warrants, and long-term procurement guarantees. The deal's structure reveals sophisticated risk mitigation strategies that institutional investors should closely examine.

Under the agreement, MP Materials will construct a massive "10X Facility" expected to begin commissioning in 2028, scaling U.S. rare earth magnet manufacturing capacity to 10,000 metric tons annually. The DoD's commitment includes a critical price floor of $110 per kilogram for neodymium-praseodymium oxide—nearly double current Chinese market prices—providing unprecedented revenue stability for a historically volatile sector.

The partnership's financial architecture demonstrates the government's commitment to reshoring critical capabilities. JPMorgan and Goldman Sachs have committed $1 billion in construction financing, while the Pentagon will provide an additional $150 million loan within 30 days to expand heavy rare earth separation capabilities at the Mountain Pass facility.