Pentagon takes stake in Rinehart-backed rare earths play

The United States Department of Defense will join Gina Rinehart on the share registry of US-listed rare earths producer MP Materials, in a bid to secure its critical supply chains.

The Pentagon will invest $US400 million in a move which gives it the ability to become the largest shareholder in MP, allowing it to build up a major stake in one of only two significant rare earths producers outside of China.

It has been issued a new class of convertible preferred shares and a warrant convertible at $US30.03 per share for 10 years, which would leave it with around 15 per cent of the overall company if exercised now.

Mrs Rinehart owns 8.5 per cent of MP, as well as an 8.2 per cent stake in Lynas Rare Earths – the other major rare earths producer outside of China – which mines in Australia and produces material in Malaysia.

The Department of Defense backing will allow MP to accelerate its growth strategy in a move to “reduce foreign dependency”, including the construction of a second domestic magnet manufacturing facility for defence and commercial customers.

The facility will lift the US rare earth magnet manufacturing capacity to 10,000 metric tonnes by 2028, according to MP.

“This initiative marks a decisive action by the Trump administration to accelerate American supply chain independence,” MP Materials chief executive James Litinsky said.

“We are proud to enter into this transformational public-private partnership and are deeply grateful to President Trump, our partners at the Pentagon, and our employees, customers and stakeholders for their unwavering support and dedication.”

The investment comes with several other commitments by the Pentagon, including a 10-year commitment to buy neodymium-praseodymium (NdPr) at a price floor of $US110 per kilogram.

All magnets produced at the new facility will be bought by the American government for 10 years following its construction, and the Department is expected to loan MP $150 million for an expansion of its heavy rare earth separation operations at the Mountain Pass mine.

MP has also secured a $US1 billion funding package from Goldman Sachs and JPMorgan Chase to fund its new facility.

The move by the Pentagon echoes an election pledge by the Australian government to buy up a stockpile of locally sourced critical minerals as part of a $1.2 billion reserve in a bid to curb China’s dominance in the space.

Federal Resources Minister Madeleine King said in May that any such stockpile would be “small and temporary” in most cases.

The US move is more committal and puts Australia’s richest person on the same register as the US government.

Mrs Rinehart’s support of the Trump administration is well known, and she has built up her rare earths portfolio to a value of more than $800 million across Lynas, MP and developer Arafura Rare Earths.

Talks took place during 2024 over a mooted $10 billion merger of the two companies she backs, Lynas and MP, but broke down as the two companies failed to agree on terms.

In a recent appearance at the WA Mining Club, Lynas managing director Amanda Lacaze reiterated her view that a deal would have been beneficial for her company.

“I make no bones about the fact that I think it would have been an excellent deal for us to have done,” she said.

“For whatever reason, it was leaked in a way that was unhelpful – and the deal was not done.”

Hancock Prospecting has been contacted for comment.

Shares in MP soared 50 per cent on the New York exchange. Rare earths stocks on the ASX also saw gains in early trade.

Lynas shares rose 15.7 per cent, shares in Iluka Resources were up 21.1 per cent, Northern Minerals shares shot up 6.9 per cent and Arafura shares climbed 5 per cent.