Rare Earth Directory

Government support

MP Materials and the Pentagon deal explained: equity, price floor and offtake

The Pentagon deal is a package of agreements dated Jul 9, 2025 in which the Department of Defense, now the Department of War, bought $400M of MP Materials preferred stock and a warrant, set a $110/kg NdPr price floor, agreed to buy the output of the 10X magnet plant for 10 years and lent $150M. Together the stock and the warrant equal 15% of MP's shares as of Jul 9, 2025, if fully converted and exercised.

The terms below come from the agreements filed with the SEC and MP's 2025 annual report. The $400M and the $150M were paid in 2025, the price floor has produced income since Q4 2025, and the 10X offtake starts when the plant begins operating, with commissioning planned from 2028.

Verified through Oct 1, 2026

See the term sheetHow the price floor works

At a glance

Signed
Agreements dated Jul 9, 2025; announced Jul 10, 2025
Stock
400,000 Series A preferred shares for $400.0M, convertible into 13,320,013 shares at $30.03
Warrant
Up to 11,201,659 shares at $30.03, exercisable for 10 years
Price floor
$110 per kg of NdPr, Oct 1, 2025 to Dec 31, 2035
Offtake
The 10X plant's magnets, for 10 years from the first day it can make any magnets
Loan
$150.0M promissory note, 12 years, 10-year Treasury rate plus 1.00%
Preferred stock
$400MPlus a 10-year warrant
Stake, fully converted and exercised
15%Of shares outstanding on Jul 9, 2025
Minimum yearly EBITDA on 10X
$140MAfter full production, with 2% annual escalation
Loan
$150MDue Aug 1, 2037 at 5.38%

What is the MP Materials Pentagon deal?

The MP Materials Pentagon deal is a package of agreements dated Jul 9, 2025 between MP Materials and the Department of Defense: a $400M preferred stock purchase with a warrant, a $110 per kg NdPr price floor, an offtake of the 10X magnet plant's output and a $150M loan. MP also agreed to use up to $600M of its own cash on the projects.

The term sheet, from the agreements filed with the SEC and the 2025 annual report
InstrumentAmount and termsDatesStatus
Series A preferred stock400,000 shares for $400.0M of cash. Convertible at the department's option into 13,320,013 MP shares at $30.03. A 7.0% cumulative dividend, compounding quarterly, is paid in kind: it raises the liquidation preference and does not change the share count.Issued Jul 2025Paid in
WarrantUp to 11,201,659 MP shares at an exercise price of $30.03, exercisable for 10 years. With the preferred stock it equals 15% of shares outstanding on Jul 9, 2025.Issued Jul 2025Issued
NdPr price protectionA $110 per kg floor on NdPr, settled quarterly, with 30% of any excess paid back once 10X is at full production. How it works.Oct 1, 2025 to Dec 31, 2035In effect
10X magnet offtakeThe department buys the 10X plant's magnets at production cost plus a guaranteed EBITDA of at least $140M a year after full production, adjusted 2% a year after 2025. It pays 25% of that threshold each quarter. If MP sells magnets to others, the department takes the first $30M of EBITDA above the threshold and 50% of the rest. MP may sell up to 100% of output to others at the department's request, or at its own request with consent.10 years from the first day 10X can make any magnetsSigned; plant not yet operating
Offtake supportReimbursement of certain start-up and design costs before operation, capped at $30M in any calendar year. The department helps procure heavy rare earth feedstock for 10X and reimburses stockpiling working capital with no annual cap until operation.Until the plant operatesSigned
Samarium Project LoanA $150.0M unsecured promissory note from MP to the department: 12 years, 5.38% a year (10-year Treasury rate plus 1.00%), cash interest quarterly, prepayable without penalty. It was issued to extend heavy rare earth refining at Mountain Pass to samarium oxide separation.Issued Aug 2025; due Aug 1, 2037Paid in
Private financingJPMorgan Chase and Goldman Sachs committed at least $1B of secured financing alongside the deal. The commitment expired undrawn on Aug 26, 2025, after MP raised equity and signed a credit facility.Jul 2025Expired undrawn

Sources: MP Materials' Form 8-K exhibits (Jul 2025) and its 10-K for 2025. The directory shows the terms as the company reports them and does not see non-public side letters.

How much of MP Materials does the US government own?

The Department of War holds Series A preferred stock convertible into 13,320,013 MP shares plus a warrant for 11,201,659 more shares. Together they equal 15% of the shares outstanding on Jul 9, 2025, if fully converted and exercised, and both use a $30.03 price. This directory has not found a report of conversion or exercise.

The preferred stock accrues a 7.0% dividend paid in kind, which adds to the liquidation preference but not to the number of shares it converts into. The accumulated amount is payable in cash or other assets only on certain insolvency events, including a deemed liquidation.

The percentage is the company's figure for the Jul 9, 2025 share count before any new issuance. Later share issues change the share of the company the same securities would represent.

What does each side get in the Pentagon deal?

The government gets equity, a share of upside and first call on 10X magnets. MP Materials gets $550M of financing, protection against low NdPr prices and a guaranteed minimum return on the 10X plant. Each side also carries obligations, including MP's restrictions on sales to China-linked buyers.

What each side gets and gives
What The government MP Materials
Money Pays $400M for the stock and warrant and lends $150M, which MP repays with interest. Receives $400M and a $150M loan, and commits up to $600M of its own cash to the projects.
Prices Pays the shortfall when MP's realized NdPr price is below $110 per kg; receives 30% of the excess once 10X is at full production. Is protected against NdPr below $110 per kg until Dec 31, 2035, and gives up 30% of the excess later.
Magnets Buys 10X magnets for 10 years, and shares EBITDA if MP sells them elsewhere. Has a guaranteed EBITDA of at least $140M a year after full production, and reimbursed start-up costs.
Ownership Holds preferred stock and a warrant equal to 15% fully converted and exercised. Raised capital without a bank loan and gave the department an equity stake.
Supply chain Gets a domestic magnet source for defense programs. Gets help sourcing heavy rare earth feedstock for 10X; stopped all sales of its products to China in Jul 2025 (company-reported) and may not sell NdPr under the floor to restricted buyers.

What has the Pentagon deal paid and delivered so far?

The $400M and the $150M were paid in 2025, the price floor produced $51.0M of income in 2025 and $17.6M in Q2 2026, and the 10X plant is under construction with commissioning planned from 2028. The offtake's guaranteed EBITDA applies once 10X begins operating.

Dated events and what comes next
  1. Jul 9, 2025 Agreements dated Signed The transaction agreement, preferred stock subscription, warrant, offtake and price protection agreement carry this date. The deal is announced on Jul 10.
  2. Aug 2025 Samarium Project Loan issued Paid in MP issues the $150.0M note to the department. The JPMorgan and Goldman Sachs commitment expires undrawn on Aug 26.
  3. Oct 1, 2025 Price floor starts In effect The first full calendar quarter after closing opens the agreement's term.
  4. 2025 $51.0M of price protection income recognized Reported Recorded as a receivable at year end; relates mainly to NdPr in stockpiled concentrate and to third-party sales.
  5. Feb 26, 2026 10X site selected in Northlake, Texas Reported State and local incentives of about $200M are announced; they are not federal money.
  6. Q2 2026 $17.6M of price protection income Reported Reported in MP's second quarter results.
  7. 2028 10X commissioning begins Next The offtake's term runs 10 years from the first day the plant can make any magnets.
  8. Dec 31, 2035 Price floor term ends Next The end of the quarter containing the tenth anniversary of the Oct 1, 2025 start.
  9. Aug 1, 2037 Loan matures Next The note is prepayable at any time without penalty.

What are the conditions and risks in the Pentagon deal?

The deal depends on the Department of War continuing to honor it. MP's 10-K says the department relies on Title III of the Defense Production Act and other authorities, calls that use unconventional and warns the department would need additional funds in future to meet its obligations. MP also takes on restrictions on selling to China-linked buyers.

The price floor only counts NdPr that MP produces at Mountain Pass and does not count NdPr from third-party feedstock bought above $110 per kg or sales to restricted buyers. The 10X offtake depends on the plant being built and operating, which MP expects from 2028.

This directory reports the terms and the company's own risk statements and gives no investment view.

Which US projects, companies and states does this touch?

The pages below carry the figures, the sources and the dates for each project or company named here.

Questions about the MP Materials Pentagon deal

Does the US government own part of MP Materials?

The Department of War holds $400M of preferred stock convertible into 13,320,013 shares and a warrant for 11,201,659 shares, together equal to 15% of the Jul 9, 2025 share count if fully converted and exercised. Both use a $30.03 price.

How much did the Pentagon invest in MP Materials?

$400.0M for preferred stock in Jul 2025 and a $150.0M loan in Aug 2025, for $550M of financing. The deal also includes a $110 per kg NdPr price floor and a 10-year offtake of the 10X magnet plant, which carry no upfront payment.

What is the $110 per kg price floor?

A Price Protection Agreement under which the department pays MP the shortfall when its realized NdPr price is below $110 per kg, from Oct 1, 2025 to Dec 31, 2035. After 10X is at full production MP pays 30% of any excess.

What does the 10X offtake mean?

The department agreed to buy the magnets from MP's 10X plant for 10 years, at production cost plus a guaranteed EBITDA of at least $140M a year after full production. MP may sell to others at the department's request or with its consent.

Did MP Materials stop selling to China?

MP says it stopped all sales of its products to China in Jul 2025 under its agreement with the Department of War. The price floor also excludes sales to restricted buyers, a group that includes China and its owned or controlled entities.

When do the parts of the deal end?

The warrant runs 10 years, the price floor ends Dec 31, 2035, the offtake lasts 10 years from the 10X plant's first operation and the loan matures Aug 1, 2037. The preferred stock has no stated end date in the sources checked.

Sources and verification

Each profile lists its sources, a confidence grade and a verification date. Order of authority: official records (SEC filings, agency documents), company documents and technical reports, research papers, then independent press. Syndicated copies and reference works are labeled and are never the only source for a number. Company-reported figures are labeled as such, and non-binding deals are labeled "letter of intent" or "conditional".

Tags show what kind of source each link is. How sources are ranked

Policy and funding

Which other policy explainers are there?

Nine explainers cover the foreign controls, defense rules, permitting steps and funding programs behind the projects in this directory.