The Defense Department will become the largest shareholder in rare earth miner MP Materials after agreeing to buy $400 million of its preferred stock, the company said Thursday.
MP Materials said it will use the proceeds to invest in expanding its rare earths processing capabilities and its magnet production capacity.
Shares of MP Materials jumped more than 40% premarket on the news.
The Pentagon is buying a newly created class of preferred shares that are convertible into MP Materials’ common stock. It is also buying a warrant that allows it to purchase additional common stock in the rare earth miner. The convertible shares and the warrant for common stock represent about a 15% in MP Materials as of July 9.
Interior Secretary Doug Burgum said in April that the Trump administration was considering making direct equity investments in critical mineral companies to break U.S. dependence on China.
This is a developing story. Please check back for updates.
This post was originally published on CNBC Markets
