The Pentagon has issued its first direct loan under a new strategic capital program, providing $150 million to MP Materials to expand rare earth processing capabilities at its California facility.
The loan marks the inaugural deployment of funds from the Office of Strategic Capital, created to counter China’s dominance in critical minerals essential for defense systems.
The funding will enable MP Materials to add heavy rare earth separation capabilities at its Mountain Pass facility. The company already operates the only rare earths mine in the United States.
“I applaud the Office of Strategic Capital on this incredible milestone, and I am extremely proud of the focused, unified effort and support from Secretary Hegseth and Deputy Secretary Feinberg to make this agreement happen,” said Emil Michael, Under Secretary of Defense for Research and Engineering.
“Through this loan, we are taking decisive action to restore our domestic critical minerals supply chain, revive our industrial base, and rebuild our military to achieve President Trump’s goal of peace through strength.”
As previously reported by The Dallas Express, China recently halted the export of certain rare earth minerals, underscoring its willingness to weaponize its near-monopoly over materials critical to U.S. defense and technology. The United States refines only about 1,300 metric tons of rare earth metals annually, meeting less than 20% of domestic demand — most of which is filled by imports from China.
The loan draws from $500 million in credit subsidy funding authorized by the One Big Beautiful Bill Act. President Trump signed the legislation on July 4, 2025.
The subsidy creates up to $100 billion in available loans for critical minerals production and related industries. The MP Materials agreement represents the first disbursement from this pool.
“The Chinese Communist Party has implemented aggressive actions to endanger the global critical minerals supply chain and ultimately undermine American economic and national security,” said Patrick Witt, acting director of OSC.
Witt emphasized the administration’s strategic priorities:
“Since his first term in office, and for decades prior to that as a private citizen, President Trump has been clear that economic security is national security. To that end, the President directed the DoD to use its authorities and capital tools to confront the threat posed by the CCP.”
The loan forms part of a broader July 2025 agreement between the Department of Defense and MP Materials. Officials did not disclose additional terms of that arrangement.
“This loan is part of the Department’s answer to that call and demonstrates our commitment to defeat adversarial attempts at economic coercion and ensure the unmatched superiority of our industrial base and Armed Forces,” Witt added.
Rare earth elements are crucial components in military equipment ranging from guidance systems to communications gear. China currently controls approximately 90% of global rare earth processing capacity.