The Pentagon invests in his defense. The United States Department of Defense has completed a long-term public-private partnership with MP Materials, a rare earth operational company in the United States, under which it will become its largest shareholder and will invest several billions of dollars, the company announced Thursday.
Thanks to an “investment package of several billions of dollars”, including a loan of 150 million in twelve years, and in the “long -term commitment” of the Ministry of Defense, the company plans to launch the construction of a second factory for the manufacture of magnets as soon as a place is identified.
Second site of rare earth extraction in the world
Production, which should begin in 2028, is intended to serve customers in the defense sector, but also in the private sector. This will allow a total capacity of 10,000 tons of magnets per year, in combination with its existing infrastructure located in Mountain Pass (California). This is presented as the second most important rare earth extraction site in the world.
The current production reached a thousand tons per year (sufficient to equip about 500,000 electric vehicles) on the Californian site, which is being expanded to climb to 3,000 tons, while the new site must have a capacity of 7,000 tons per year. The General Manufacturer General Motors is one of its first clients.
15% of the capital
In detail, the agreement establishes the acquisition of the pentagon of the equivalent of $ 400 million in recently issued preferential shares, as well as the right to buy ordinary shares for ten years, all at the unit price of $ 30.03. In the end, the Ministry must have 15% of the capital of MP materials, which would make it its first shareholder.
Among the current shareholders is in particular the Chinese group Shenghe Resources (approximately 7%) but, the stipulation of the contract with the Ministry, MP Materials will no longer expand production in China, managers said during an audipience with analysts. The action of MP materials ended 51% to $ 45.23 in the New York Stock Exchange.
A minimum price of $ 110 per kilo for ten years
The Ministry also promised to pay a minimum price of $ 110 per kilo for ten years for its NDPR production, the alloy of neodymium and Prastodymous used in engines and generators in particular. This clause, which guarantees a significantly higher price than the current course (around 60 dollars), aims to “reduce the risks related to external speculation to the market” and “guarantee a stable liquidity flow” for the company. If the price is higher, the agreement establishes that the Pentagon recovers a 30% participation of the surplus. It will also ensure that all magnets produced by the second factory, called 10x, are bought for ten years after the end of its construction.
Rare earths, seventeen raw materials, discovered at the end of the 18th century in Sweden, and each with different properties, are strategic because it is essential for tomorrow’s economy, particularly for energy transition technologies and electronics. President Donald Trump is very sensitive to the subject, placing them in the heart of an American help agreement in Ukraine in February or even current commercial negotiations with China. He also wants to seize Greenland, which contains 36.1 million tons of rare earth resources, according to the National Geology Service of Denmark and Greenland (GEUS).
Source: BFM TV
