America’s only rare earth producer will receive boost from the Apple-Pentagon agreement

MP Material, which operates the only mine in American Rare Earths, announced a new $500 million agreement with Tech Giant Apple on Tuesday, producing more powerful magnets used in iPhones and other high-tech products.

The news follows the US Department of Defense investing $400 million in stake in the Las Vegas-based company, establishing a floor at the price of key elements, and ensuring that all magnets made in the new factory in the first decade will be purchased.

Its unusual direct investment in the company makes the government the largest shareholder of MP materials.

“This is a kind of long-term commitment needed to rebuild the global rare earth supply chain,” said Neha Moekerjee, a rare earth analyst with benchmark mineral intelligence, in a research notes for the Pentagon contract.

Rare earths are an important concern in the US’s ongoing trade consultations. China took control of the market and after President Donald Trump announced his extensive tariffs, it imposed new restrictions on exports. When shipments ran out, both sides sat in London.

Despite their name, the 17 rare earth elements are not actually unusual, but it is difficult to find them with enough concentration to create a mine worth investing in. These are important ingredients in everything from smartphones and submarines to turbines and fighter jets.

With an agreement with Apple, MP Materials can further expand its new Texas factory and use recycled materials to produce magnets that vibrate the iPhone. The company plans to start production of magnets for GM’s electric vehicles later this year, and the agreement will allow Apple’s magnets to begin production in 2027.

Apple’s deal represents the company’s pledge to invest $500 billion domestically during the Trump administration. And while this transaction will significantly improve MP materials, an agreement with the Department of Defense could make even more sense.

Analyst Mukherjee says the Pentagon’s 10-year promise to guarantee the lowest prices for neodymium and praseodymium key elements will guarantee stable revenues for MP minerals and protect it from potential price reductions by Chinese producers, subsidized by the government.

Apple’s deals to produce magnets from recycled materials are also useful, but it does not provide enough magnets to meet demand. That is, we still need more sources of these elements.

Steve Christensen, executive director of the Responsible Battery Union, an association representing battery manufacturers, automakers and battery distributors, said he is optimistic that these new investments in MP materials are part of a major trend to increase domestic production and processing of these key elements.

“Expanding the extraction is great and requires more that and investment along the value chain,” Christensen said. “Metals produced from MPs reduce their dependence on China.”

That’s a priority for Trump, and his administration is trying to support the MP’s material and encourage the development of new mines that will take years to come into effect. China has agreed to issue several rare earth export permits, but there remains a lot of uncertainty about supply, not military use.

The fear is that a trade war between the two biggest economies of the world can lead to a serious shortage that can disrupt the production of various products. MP materials cannot satisfy all of the US demand from the Mountain Pass mines in California’s Mojave Desert.

The transaction with MP materials arises when Beijing and Washington agree to return to non-tariff measures. China is granting rare earth magnet licenses to the US, and the US is relaxing its chip design software and jet engine export controls. The armistice aims to ease tensions and prevent catastrophic collapse in bilateral relations, but it rarely addresses fundamental differences as both governments take steps to rely on each other.

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