Mirror Review
July 14, 2025
What powers the F-35 fighter jet, the smartphone in your pocket, and the wind turbines generating clean energy?
The answer lies with a group of 17 obscure metallic elements known as “rare earths”.
The US Pentagon is investing over $400 million in MP Materials to build a second US-based rare earth magnet manufacturing plant, aiming to reduce dependency on China.
The deal includes a 10-year price floor and magnet purchase commitment, along with the Pentagon becoming MP’s largest shareholder (15% stake).
This is a direct response to a decades-old problem: China’s near-total control over the Real Earth Mining and processing industry, a vulnerability the U.S. can no longer afford to ignore.
What Are Rare Earths—and Why Do They Matter?
Rare earth elements (REEs) are a set of 17 metals on the periodic table that are crucial for modern technology.
Despite their name, rare earths aren’t actually that rare in the Earth’s crust.
The real challenge—and the source of immense geopolitical power—lies in mining and processing them.
These elements have unique magnetic and conductive properties that make them irreplaceable in high-performance applications:
- Military Tech: Neodymium and samarium are used to make powerful, lightweight magnets for missile guidance systems, drones, and the engines of F-35 fighter jets.
- Consumer Electronics: Your iPhone, laptop, and speakers all rely on tiny, rare earth magnets.
- Green Energy: They are essential components in the motors of electric vehicles (EVs) and the generators of wind turbines.
The problem is that separating these elements from their ores is a complex, costly, and environmentally toxic process.
How China Built a Rare Earth Mining Monopoly
Just a few decades ago, the United States was a global leader in the rare earth industry.
But in the 1980s and 1990s, facing environmental concerns and high operational costs, the U.S. began shutting down its domestic production, including the once-dominant Mountain Pass mine in California.
China saw an opportunity.
With lower labor costs, state-backed subsidies, and less stringent environmental regulations, it aggressively ramped up its production.
By the early 2000s, China was responsible for an astonishing 97% of the world’s rare earth output.
Today, while other countries have restarted mining, China still processes about 85-90% of the global supply.
More importantly, it has a virtual stranglehold on the manufacturing of rare earth magnets—the final, most valuable part of the supply chain.
The National Security Red Flag
This dependency has long worried U.S. defense officials, and China has shown its willingness to use this dominance as a political weapon.
In 2010, it cut off rare earth exports to Japan during a territorial dispute, sending fear through global markets.
For the Pentagon, the risk is clear.
If a major conflict were to erupt, particularly over an issue like Taiwan, China could impact the supply of these critical materials overnight, effectively grounding U.S. military assets.
As one industry analyst put it, “The mine is important, but the magnet is everything. Without a domestic source for magnets, you’re still dependent on your rival.”
The Pentagon’s Real Earth Mining Bet on MP Materials
This brings us to the Pentagon MP Materials deal.
MP Materials, which revived the Mountain Pass mine in California, is America’s best hope for a comeback.
While the company mines rare earth oxides, it currently ships them to China for the final processing and magnet manufacturing.
The Pentagon’s $400 million investment is designed to close this gap. The funds will help MP Materials build a cutting-edge magnet production facility in Fort Worth, Texas.
The goal is to create a fully American “mine-to-magnet” supply chain, ensuring the U.S. military has a secure source for its most advanced weapons systems.
This isn’t just a standard government contract; by becoming the largest shareholder, the Pentagon signals that this is a matter of urgent national strategy.
It’s a rare move that blurs the line between commercial enterprise and national security policy.
Challenges on the Horizon
Creating a parallel supply chain from scratch is a monumental task. Several hurdles remain:
- Time: Building and scaling a magnet factory takes years. MP Materials is still years away from fully ending its reliance on Chinese processing partners.
- Cost & Environment: Competing with China’s low costs without compromising on environmental standards remains a significant challenge.
- China’s Head Start: China isn’t standing still. It continues to innovate in processing technology and consolidate its control over the global market.
What This Means for the Future
The Pentagon’s rare earth mining investment is more than just a play for magnets; it’s a foundational move toward what many are calling “industrial sovereignty.”
This is about ensuring the U.S. can build what it needs without asking for permission from a geopolitical competitor.
This trend is likely to accelerate.
Expect to see similar government-backed investments in other critical mineral supply chains, including lithium, cobalt, and nickel.
The Pentagon’s Rare Earth Mining strategy signals that the era of relying on globalized supply chains for sensitive goods is ending.
A new chapter, defined by geo-economic competition and the race for resource independence, has officially begun!
