Founder, Chairman, President & Chief Executive Officer, MP MATERIALS CORP
MP Materials CEO on U.S. government deal: We can truly solve the rare earths magnetics crisis
James Litinsky, MP Materials chairman and CEO, joins 'Squawk Box' to discuss the company's deal with the U.S. government, ...
About James Litinsky
James Litinsky, founder and CEO of MP Materials, appeared on a podcast on June 1, 2025, where he discussed the company's role in the rare earth supply chain and its connection to artificial intelligence. He described rare earth magnets as "the feed stock to physical AI" and stated that "electrified motion requires rare earth magnets." Litinsky noted that the Department of Defense is becoming MP Materials' "largest economic investor" and is providing a price floor for the company's commodity to protect against Chinese competition. He also mentioned a recent $400 million public-private partnership with the DoD and a deal with Apple. In a 2022 talk, Litinsky predicted that within five years, a major household-name OEM would "fail or need a bailout" due to lack of access to a critical material. He also advocated for a "grand bargain" between environmentalists and industry, suggesting that environmentalists should accept the need for domestic mining and loosen permitting, while industry should accept tough environmental standards. Litinsky, a former hedge fund manager, acquired the Mountain Pass mine out of bankruptcy and built MP Materials into what he described as the only U.S. supplier and refiner of rare earth materials and maker of magnets.
Transcript (36 segments)
H
Host0:04
Welcome back to Squawk Box. Shares of U.S. rare earth producer MP Materials more than doubled since the company inked a deal with the U.S. government back in July. As part of that agreement, the Department of Defense became the company's largest shareholder. Joining us now in an exclusive interview is MP Materials chairman and CEO Jim Litinsky. Good morning.
J
James Litinsky0:23
Thank you, Andrew. Good morning.
H
Host0:25
It's fascinating because you were actually one of the early examples of a situation where the government backed you, but also took a stake in the business. We've been having lots of conversations about the government's role and what it means to effectively be independent, be connected to government. I'm so curious if you could go back in time, just tell us about how that deal came about and how you thought about it.
But I do want to distinguish MP because I think there's a lot of noise in the media. But if we think about Intel or Lithium Americas that were, you know, rumored this morning, those are scenarios where you had commitments from a past administration where the Trump administration has come in and said, wait a second, we have no strings attached commitments to companies. We think we should get a piece of the action.
They didn't have to do this.
J
James Litinsky1:12
They didn't have to do this. Ours is a really different situation, which is we were executing well. There was a crisis and the Department of War came and said, we want a true public private partnership with you, so let's do a deal. And so our deal is very different. And our deal, we can get into the politics. But there's actually a long tradition of public private partnerships in times of national security crisis in the country. And so our deal is very different than some of the other deals.
H
Host1:39
But the audience may not know. Explain what MP Materials is doing.
J
James Litinsky1:42
So we are a vertically integrated rare earth magnet producer. So we mine and refine materials in Mountain Pass, California. We send them to a factory in Fort Worth, Texas. And so we have the vertically integrated supply chain to truly solve the rare earth magnetic crisis that we have, which is critical for essentially, it's the feedstock to the future of warfare and physical AI. So it's mission critical for our national security and our national security infrastructure and economic infrastructure.
H
Host2:09
And by the way, it's exactly what China used as leverage just a couple of months ago.
J
James Litinsky2:13
That's exactly when we went into Geneva. Becky, you know, our economy, I don't think people fully appreciated the first trade talks in Geneva. We were on the verge of factory shutdowns across auto aerospace. It was really, really close.
H
Host2:26
So how much can you produce? Is it enough to make up what we are getting supplied by China at this point?
J
James Litinsky2:32
So as part of our partnership with DOD, the goal is to accelerate everything that we've been doing to 10x our capacity, which will essentially solve the American imports as of today. Now, obviously the industry is growing, but it'll take this issue off the table.
H
Host2:49
Yeah. How long will it take to get to that point and how much do you produce today in terms of the? So we're going to here in the United States.
J
James Litinsky2:58
So we're going to triple our existing factory. And we expect that to be online in the tripling in 27. And then we're going to do another 7,000 tons, which is taking it to 10,000 tons. And that should be online in 28.
H
Host3:09
What is the average? What is the daily demand in the United States right now? The annual demand.
J
James Litinsky3:14
Well, we import it's a complex question because we import a little over 7,000 tons of actual rare earth magnets. But then there are about triple that in magnets in things that we import, like motors or actuators that are actually coming in as an import as part of a product.
H
Host3:30
You know, you look at the stock, I think you were on the show five years ago when this was originally a SPAC. Stock's up about 380% since then, which is a remarkable thing. So congratulations to you. Thank you. Yeah. I'm curious, when you were discussing this with the government, how you chose or how they chose to do a deal like this, and what was going through your head about it all?
J
James Litinsky3:52
Well, and remember, Andrew, we actually had two things announced in July. We had the public private partnership with the Department of War. And then we also had a big deal with Apple where we are now. Apple is going to be the foundational customer for our recycling business. So we're going to have the full closed loop of rare earth magnetic. So I think the market's obviously excited about both of those things. But the DOD deal really transforms us from what was historically a volatile business based on commodities prices and essentially subject to Chinese risk, mercantilism risk, to we now have contracted cash flows for the next decade plus. And so obviously you can see those numbers. But the entire nature of our economics have changed dramatically.
H
Host4:33
How did you think about the equity piece of it? And the good news is, look, to the extent that you're successful, the American taxpayer will get to participate in this. But how did you think about that? Because there's probably other people who say, you know what, I want to be independent. I don't want the government to be a customer, but I may not want them to be an owner.
J
James Litinsky4:54
Right. And by the way, DOD is now our largest shareholder. I was and now they're our largest shareholder. They're also our business partners. So they have an economic interest in our magnetics factory separate from their ownership. And they're our largest customer. And so it's an honor. I mean, it's a really humbling relationship that we have to execute for.
H
Host5:11
Did it feel like it was a deal you couldn't refuse? Because if you did, they would go to somebody else like USA Rare Earth.
J
James Litinsky5:19
Well, I think we were in the position to get the deal because we had embarked on this vertically integrated strategy and executed it. And I think they came to the conclusion that we were the only ones who could execute this in a timely manner and in a thoughtful way.
H
Host5:32
But could you not get other investors to help you do this? Like you really need the government to step in and do this?
J
James Litinsky5:38
Well, what the government wanted is a massive acceleration of what we were already doing. So this was different again, from these other situations where you have companies that are sort of at risk or have, frankly, needed a quasi bailout. This was we like what you're doing, accelerate it. So there's a long tradition in this country going back to the railroad.
H
Host5:56
Boom, no question.
J
James Litinsky5:57
Shipbuilding in World War One.
H
Host5:58
And this has been bombers.
J
James Litinsky6:00
In World War Two.
H
Host6:02
So this is a national.
J
James Litinsky6:04
One of those. And I think what's unprecedented, Becky, though, is that the way the Trump administration thoughtfully fought for the American people, I mean, this is a home run for the taxpayer, right? So they're going to get what they want from a national security standpoint. But then there's economic.
H
Host6:18
Do you feel the same way about what may be happening to Lithium Americas or what happened with Intel?
J
James Litinsky6:22
Well, I think those are different because those are, I know I don't want to use the extreme word, but those are quasi bailouts or something along the lines of that. And I think it is appropriate for the Trump administration to say, hey, wait a second. The United States government made a commitment here. There shouldn't be no strings attached capital. If we're going to give you this capital, I think they should, but they should also make sure that the taxpayers are protected.
H
Host6:45
And maybe you'll think this is unrelated. And I know we have to go. The sort of larger thing that's happening right now is what I would describe as a sort of vendor financing arrangement, where the customer is often now either paying or financing the suppliers, and the suppliers are financing the customers. It's a very or taking stakes in them and doing. And look, we just talked about this with Nvidia the other day.
There are shades of Cisco 2000.
With OpenAI and how you think the investing public should think about that.
J
James Litinsky7:12
Yeah. Well, I think that if you use that analogy of the vendor financing and the Cisco boom bust collapse, I do think that the AI boom is playing out similarly in the sense that, you know, if you think to the Magnificent Seven today, right, there's just a couple of them that were around in the late 90s. The thousands of other companies essentially lost all of their capital or most of their capital. I think we will see something similar in the AI boom, where you'll see trillions of dollars of capital spent with very low return, and then there'll be a lot of failures. But then out of that, there'll be great successes that emerge. We obviously think that AI is going to be similar to how mobile emerged as the true use case out of it. And I think you're going to see something similar where the excitement right now that we see, where's the revenue, where's the ROI. And so now we're getting to this stage where essentially Nvidia is taking equity because there isn't a proven business case. There may be, you know, nobody knows. But it's later cycle from that return on capital standpoint. And so from an investor standpoint, you know,