MP Materials Secures Major Defense Contract with New Texas Magnet Facility

MP Materials secures final approval for a Pentagon-backed $1.25 billion rare earth magnet plant in Texas, aiming to reduce U.S. reliance on China for critical defense and tech components.

In a strategic move to bolster domestic supply chains for critical components, MP Materials has received final approval for a $1.25 billion manufacturing plant in Northlake, Texas. The facility, slated to begin operations in 2028, is central to a landmark agreement with the U.S. Department of Defense.

A Pentagon-Backed Initiative

The project is directly supported by the Pentagon, which has taken a $400 million preferred equity position in the venture. Furthermore, a ten-year offtake agreement guarantees a fixed purchase price of $110 per kilogram for the plant’s entire output. This contract was finalized in July 2025 as part of a broader U.S. strategy to reduce reliance on Chinese suppliers, who currently control over 90% of the global rare earth processing and magnet production market.

In response to targeted export restrictions imposed by Beijing in late 2025, the United States and allied nations have mobilized more than $8.5 billion to establish independent supply chains. An additional $12 billion strategic reserve for critical minerals is also being created.

Production Scale and Economic Impact

The new Texas plant will have an annual production capacity of 7,000 metric tons of neodymium-iron-boron (NdFeB) magnets. These permanent magnets are essential for drones, robotics, artificial intelligence data centers, and semiconductor manufacturing. When combined with MP Materials' existing Fort Worth production site located just 16 kilometers away, the company's total annual capacity will reach approximately 10,000 tons—enough to supply magnets for an estimated 500,000 vehicle electric motors.

Construction begins immediately, with the 50-hectare site expected to create over 1,500 new jobs. The state of Texas, Denton County, and the city of Northlake have contributed an incentive package worth roughly $200 million, distributed over more than a decade. This includes over $66 million from the Texas Enterprise Fund and the Texas Semiconductor Innovation Fund.