MP Materials plans $1.25bn Texas rare earth magnet factory
US miner aims to challenge China's dominance with 10,000-tonne annual capacity for EV and defence markets
MP Materials is investing more than $1.25bn in a new manufacturing facility in Northlake, Texas, as the United States accelerates efforts to build a domestic supply chain for critical minerals currently dominated by China.
The facility, dubbed the '10X campus', will produce 10,000 metric tonnes of neodymium-iron-boron (NdFeB) rare earth magnets annually when fully operational in 2028. These magnets are essential components in electric vehicles, robotics, defence systems and semiconductors—sectors that the Biden administration has identified as strategic priorities for national security.
The project is backed by a $200m incentive package from Texas, including a $12.9m grant from the Texas Enterprise Fund and $53.5m from the state's semiconductor fund. Groundbreaking is set to begin immediately, with commissioning scheduled for 2028. The factory is expected to create 1,500 jobs, adding to the economic transformation of the Northlake area.
MP Materials, which owns and operates the Mountain Pass rare earth mine in California, has been positioning itself as America's answer to China's near-total control over rare earth magnet production. China currently accounts for approximately 90% of global rare earth magnet manufacturing capacity, a vulnerability that has become increasingly apparent as tensions between Washington and Beijing intensify over trade and technology.
The company's stock, which traded at $58.65 on Wednesday, has experienced significant volatility this year, swinging between a 52-week low of $18.64 and a high of $100.25. Despite a market capitalisation of $10.4bn, MP Materials has yet to achieve profitability, reporting negative earnings per share of $0.70 over the trailing 12 months on $232.7m of revenue.
Yet analysts remain bullish on the company's long-term prospects. Of the 15 analysts covering the stock, all have issued buy or strong buy ratings, with an average price target of $78.86—suggesting potential upside of more than 34% from current levels. The high forward price-to-earnings ratio of 81.30 reflects investor expectations that the company will achieve profitability as production scales and government support materialises.
The Texas investment represents a critical step in MP Materials' strategy to integrate vertically across the rare earth supply chain. Currently, the company mines rare earth oxides at Mountain Pass but ships them to China for processing into magnets—a circular arrangement the company aims to break by bringing magnet manufacturing capabilities to American soil.
The timing aligns with broader geopolitical efforts to reduce dependence on Chinese supply chains. The Inflation Reduction Act, passed in 2022, created tax incentives for electric vehicles that use domestically sourced critical materials. Meanwhile, the Defence Production Act has been invoked to support domestic rare earth production, and the CHIPS and Science Act includes provisions for strengthening US semiconductor supply chains.
MP Materials' expansion also comes amid heightened scrutiny of rare earth deals involving Chinese interests. Democratic senators, including Elizabeth Warren and Chris Van Hollen, have pressed Commerce Secretary Howard Lutnick for greater transparency regarding the USA Rare Earth transaction, reflecting growing political consensus on the strategic importance of critical minerals.
The 10,000-tonne annual production capacity, while significant, represents only a fraction of global demand. Industry estimates suggest worldwide consumption of NdFeB magnets could exceed 200,000 tonnes by 2030, driven primarily by the electrification of transport and the expansion of renewable energy infrastructure. This leaves substantial room for growth if MP Materials can successfully execute on its manufacturing ambitions.
Investors will be watching closely for updates on construction progress, customer contracts, and the company's path to profitability. With 2028 still several years away, MP Materials faces execution risks including potential cost overruns, technical challenges in scaling magnet production, and competition from established Chinese manufacturers who benefit from lower operating costs and decades of experience.
Nevertheless, the company is betting that geopolitical imperatives and government support will outweigh these challenges, positioning itself as a cornerstone of America's industrial renaissance in critical minerals.