The U.S. government has stirred global mineral markets with a $400 million investment in MP Materials, the country’s only rare earth mining company. The move is meant to boost domestic production of strategic elements used in defense, but it’s also drawing sharp criticism – some say it mirrors China’s market intervention tactics.


Government Deal Includes Price Guarantee Nearly Twice the Market Rate

The agreement includes a guaranteed purchase price for neodymium-praseodymium (NdPr) oxide of $110 per kilogram – almost double the current market price of around $60. The Pentagon has also committed to purchasing up to 7,000 tons of magnets annually for ten years, becoming the largest shareholder in MP Materials in the process.

MP Materials will also cut ties with its former main customer, Shenghe Resources, a Chinese company that still holds a minority stake in the firm.


Critics Warn of Market Distortion and Artificial Advantage

Global trade experts argue the deal disrupts free-market competition and gives MP Materials an unfair advantage. David Abraham, a former White House official, called the move “unusually heavy-handed government involvement” in a relatively small market, warning of destabilizing effects.

Gracelin Baskaran, Director for Critical Minerals Security at the Center for Strategic and International Studies, said the deal resembles China’s price control model. The price floor allows MP to undercut commercial competitors while avoiding real financial risks, she added.


Inspired by China – or Necessary Defense?

The Pentagon defends the strategy as a national security measure to break U.S. dependence on China, which dominates global rare earth supply chains. The Trump administration considers this approach essential for ensuring long-term domestic resilience.

Despite the backlash, the deal has strong support in Congress, where lawmakers see it as a bold step toward securing U.S. supply chains. Erik Raven of Beacon Global Strategies noted the Pentagon’s evolving strategy: “Leaders with business backgrounds are finding new ways to get results.”


MP Materials Has Yet to Mass-Produce Magnets

There are also concerns about MP’s actual production capabilities, as the company has yet to manufacture magnets at scale. Critics argue the 10-year order is premature and gives MP a safety net that could limit innovation or competition.

A Defense Department official defended the approach, calling it a “tailored solution” to a complex challenge. “We chose a unique model that balances national security needs with the risks of a commercially driven market,” the official said.

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