Concentrating Risk Without Promoting Resilience: What the MP Materials Deal Means for U.S. Critical Mineral Strategy
Brian Deese, Zehra Khan, and Robert Reese
April 2026
Recent Chinese export controls on rare earth elements have sharpened concerns about the resilience of U.S. critical mineral supply chains. With processing capacity highly concentrated abroad, strengthening domestic production has become a bipartisan national security priority. In response, the federal government has begun deploying an expansive set of industrial policy tools to catalyze domestic capacity. This report evaluates one of the most significant recent interventions: the U.S. Department of Defense’s deal with MP Materials, the only commercial rare earth miner and processor in the United States.
Using data and methodology from the Clean Investment Monitor, we decompose the MP agreement into its constituent subsidy instruments and estimate their combined net present value under multiple market scenarios. We model Neodymium-Praseodymium prices using a stochastic, mean-reverting framework with a time-varying long-run equilibrium, incorporate projected production ramps and contract mechanics, and discount expected cash flows at a risk-free rate. We find that total federal support ranges from $0.9 billion to $2.7 billion, equivalent to as much as 45 percent of the expected value of output over the life of the agreement. Therefore, in a low-growth case corresponding to the highest subsidy exposure across our modeled scenarios, we estimate the federal government is effectively underwriting nearly half of the project’s anticipated market value.
Further, while the deal reduces risk of supply disruption by preserving a domestic producer, it concentrates an outsized level of public support on a single firm with tools that are not readily scalable or accessible to new entrants. Including a direct equity stake alongside price and revenue guarantees further muddies the policy design by blurring whether the government’s role is to insure strategic capacity or to seek financial upside as a shareholder.
We conclude that U.S. rare earth strategy would be better served by a Congressionally authorized, market-wide price insurance program for oxide production. This approach could be designed to include clear fiscal guardrails and be competitively awarded and volume-limited. Such a framework would preserve the insurance function of the MP intervention while reducing taxpayer risk, encouraging competition, and building more durable domestic resilience over time.
