Key Takeaway: The Pentagon’s 15% investment in MP Materials Corp (NYSE:) represents a strategic shift toward domestic rare earth production amid escalating U.S.-China trade tensions and export restrictions on critical minerals. This move has boosted rare earth stocks, with MP Materials surging 50.62%, Energy Fuels (NYSE:) (UUUU) up 16.46%, and NioCorp Developments (NASDAQ:) (NB) gaining 26.97% as investors recognize the sector’s strategic importance. The investment addresses national security vulnerabilities while creating potential opportunities for investors in companies developing domestic alternatives to China’s 70% dominance of global rare earth supply.
The Department of Defense (DoD) has made a strategic move that signals the critical importance of rare earth minerals to national security. By acquiring a 15% stake in MP Materials Corp., the Pentagon has become the company’s largest shareholder, highlighting the urgent need for domestic rare earth production capabilities.
This unprecedented investment comes as the U.S. grapples with its heavy dependence on China for these essential materials, which are crucial components in everything from smartphone cameras to advanced military defense systems. The timing couldn’t be more significant, as escalating trade tensions and export restrictions have exposed vulnerabilities in America’s supply chain for these strategic resources.
Pentagon’s Strategic Investment, a Key to Securing America’s Rare Earth Future
The Defense Department’s decision to invest in MP Materials represents more than just a financial transaction—it’s a national security imperative. MP Materials will use the capital to construct a second manufacturing facility called “10X,” with operations expected to begin by 2028. Under the arrangement, the DOD has committed to purchasing 100% of the magnets produced at this facility for a decade after it becomes operational, guaranteeing a minimum price of $110 per kilogram for Neodymium-Praseodymium oxide minerals.
This partnership addresses a critical vulnerability in America’s defense supply chain. Rare earth minerals serve as underlying ingredients for complex military platforms and advanced technologies, making their availability essential for national defense. The Pentagon’s investment ensures a reliable domestic source of these materials while reducing dependence on potentially hostile foreign suppliers.
As MP’s CEO James Litinsky noted, Western buyers now face a “binary choice” between the Chinese sphere of influence and MP Materials, positioning the company as a “national champion” in this strategically vital sector.
The investment also reflects broader concerns about supply chain resilience. With China representing approximately 70% of U.S. rare earth imports in 2023, the Pentagon’s move acknowledges the risks of over-reliance on a single source.
This domestic production capability will serve not only military needs but also support the scaling of a broader domestic rare earth industry that can serve commercial markets.
Why Rare Earth Control Matters Now
The escalating trade conflict between the U.S. and China has transformed rare earth minerals from a niche commodity into a geopolitical weapon.
President Trump’s cumulative tariffs of 54% on Chinese goods, including a specific 25% tariff on Chinese rare earth magnets beginning in 2026, have prompted swift retaliation from Beijing. China has announced tight export controls on seven critical rare earth minerals: samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium.
These export restrictions represent a significant escalation that will impact defense and renewable energy supply chains globally. China’s dominance in rare earth production—controlling roughly 70% of global supply—gives it considerable leverage in this trade dispute.
The country has also banned the export of technology for extracting and separating rare earths and for making rare earth magnets, further tightening its grip on the supply chain.
Beyond immediate trade concerns, the strategic importance of rare earths extends to clean energy transitions and technological advancement. Neodymium and praseodymium are essential for the permanent magnet synchronous motors used in electric vehicle drivetrains, while other rare earth elements are crucial for wind turbines and advanced electronics.
Control over these materials effectively means control over the future of green technology and military capabilities, making the Pentagon’s investment a matter of both economic and national security.
MP Materials: The Pentagon’s Chosen Partner
MP Materials has emerged as America’s rare earth champion, with its stock experiencing dramatic volatility that reflects both opportunity and uncertainty. The company closed at $45.23, representing a remarkable 50.62% single-day gain of $15.20 following news of the Pentagon partnership. However, pre-market trading showed some pullback to $45.14, down 0.31%, suggesting investor caution despite the positive development.
With a market capitalization of $7.39 billion and a 52-week range of $10.02 to $48.12, MP Materials commands significant investor attention. The company operates the Mountain Pass mine in California, currently the only operational U.S.-based rare earth mining and processing facility. MP’s focus on high-purity separated neodymium and praseodymium oxide positions it perfectly for the growing demand from electric vehicle and renewable energy markets.
The company’s financial metrics reflect its growth trajectory, with record production of 1,294 metric tons of NdPr oxide and 45,455 metric tons of rare earth oxides in concentrate for 2024. MP’s recent completion of its Fort Worth, Texas, magnet manufacturing facility, which began producing crucial NdFeB magnets in January 2025, demonstrates its commitment to creating an integrated domestic supply chain from mine to finished product.
Energy Fuels (UUUU): Uranium and Rare Earth Diversification
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} presents a compelling dual-exposure investment opportunity, combining uranium production with emerging rare earth capabilities. The stock closed at $6.51, up $0.92 or 16.46%, though pre-market trading showed a decline to $6.26, down 3.84%. With a market cap of $1.47 billion and a beta of 2.01, UUUU offers higher volatility that appeals to growth-oriented investors seeking exposure to critical minerals.
The company’s strategic advantage lies in its White Mesa mill in Utah, where it has successfully achieved commercial-scale rare earth separation from monazite—reportedly the first U.S. company to do so in decades.
Energy Fuels produced approximately 38,000 kilograms of separated NdPr in 2024, with its Phase 1 REE separation circuit now operating at full capacity. The company’s acquisition strategy, including the Bahia project in Brazil and partnerships with Australia’s Donald project, positions it to process up to 43,000 metric tons of monazite annually.
Energy Fuels’ memorandum of understanding with South Korea’s POSCO (NYSE:) for creating a non-China REE supply chain for electric vehicles demonstrates its commercial viability beyond government contracts. The company’s dual focus on uranium and rare earths provides diversification benefits as both commodities face supply constraints and growing demand from clean energy and national security applications.
NioCorp Developments (NB): Emerging Critical Metals Play
NioCorp Developments represents a smaller but potentially high-impact investment in the critical minerals space. The stock closed at $3.06, gaining $0.65 or 26.97%, with pre-market trading showing continued strength at $3.22, up 5.23%. Despite its modest $170.47 million market cap, NioCorp’s focus on niobium, scandium, and titanium addresses a different but equally important segment of critical minerals.
The company’s Elk Creek project in Nebraska features North America’s highest-grade niobium deposit under development, with significant scandium production capacity. Metallurgical testing has demonstrated the asset’s ability to produce high-purity magnetic rare earth oxides at recovery rates of 92% or higher. The project is fully permitted for construction, with NioCorp working to secure financing while the U.S. Export-Import Bank advances its financing application through due diligence.
NioCorp’s innovative approach includes plans to integrate permanent rare earth magnet recycling into its operations, potentially creating a circular economy for critical materials. The company’s focus on niobium—essential for high-strength steel alloys used in infrastructure and aerospace—provides exposure to different end markets than traditional rare earth companies.
While smaller and earlier-stage than MP Materials or Energy Fuels, NioCorp offers investors exposure to a broader spectrum of critical minerals that are equally important for industrial and defense applications.
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This article was written by Shane Neagle, editor in chief of The Tokenist.