MP Materials Expands Rare Earth Manufacturing in North Texas

The U.S. is boosting domestic rare earth production with federal support, including grants, loans, equity stakes, and purchase agreements. The Department of Commerce invested $1.6 billion in USA Rare Earth, while the Department of Defense agreed to a 10-year purchase deal and price floor with MP Materials. High production costs may slow some segments' growth, according to ING.

The Pentagon invested $400M in MP Materials (NYSE:MP) for rare earth production, becoming its largest shareholder. GM (NYSE:GM) is set to receive its first rare earth magnets from MP's Texas plant, with deliveries expected in Q4 2026. MP's stock surged post-deal but has since declined, trading at $46.98 on October 2, 2026.

China dominates rare earth element processing and production. New US defense rules will restrict supply chains starting in 2027. MP Materials and USA Rare Earth received significant US government funding. Investors should focus on qualified tonnage, not just plant capacity, as expertise and yields take time to develop.

General Motors (GM) invested in MP Materials five years ago to secure a domestic supply of rare-earth magnets. Commercial shipments are expected to begin by late 2026. GM's early investment aimed to reduce reliance on overseas production and strengthen its supply chain. MP Materials processes rare-earth elements in California and manufactures magnets in Texas for GM's electric vehicles.

The U.S. is investing heavily to reduce reliance on China for critical minerals. The government has backed over 180 projects, including loans and equity stakes, totaling $7.6B in 18 months. MP Materials, Lithium Americas, and Energy Fuels are among the beneficiaries. China still dominates, but market share losses are projected by 2030.

GM's five-year investment in rare-earth materials is yielding results, with MP Materials now supplying U.S.-made magnets for EV motors. This partnership reduces GM's reliance on China and strengthens a domestic supply chain.