The Pentagon’s equity stake in critical minerals company MP Materials seems to be paying off.
“We were on the verge of an economic shutdown” last year as China restricted rare earth magnetics exports to the U.S. said James Litinsky, the CEO of MP Materials, during the Hill & Valley Forum on Tuesday.
“At that time, we were beginning the process of our deal with the Pentagon…we ultimately got that deal done in July, that public-private partnership. And so fast forward a year, and the good news is…we’ve been really maniacal in getting this supply chain home.”
Last year, the Defense Department became MP Materials’ largest shareholder with a $400 million stock buy. Less than a year later, the company has made progress bringing its rare earth magnetics supply chain to the U.S.—though there’s still more to do.
The company is now producing “at scale” in its Fort Worth, Texas, factory and is looking to expand, Litinsky said. The goal is to speed up production tenfold as part of a $1.25 billion investment to build what they refer to as the 10X manufacturing campus.
“We’ve done the vast amount of the long-lead procurement for our 10X magnetic factories we’re doing in partnership with the Department of War…We’ve got a long way to go, but it is certainly night and day from an industry perspective,” Litinsky said.
The Pentagon has made it clear that it will use every financial lever it can to improve defense supply chains, including equity stakes.
“Even before the transformation strategy rolled out, I think the MP Materials deal was the first of several deals that we rolled out…where we’re attempting to stabilize the demand signal over a sustained period of time so that corporations and investors [can] have the confidence to make an investment that will provide a return on that investment,” Michael Duffey, the Pentagon’s top weapons buyer said on stage Tuesday.
So far, that strategy seems to be working for MP Materials, and for the plan to reshore critical minerals to the U.S.
“We are underway in solving it; we don’t need to convince anyone anymore,” Litinsky said.
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Hill + Valley vibes. The Hill & Valley Forum started as a large dinner event to bring policymakers and tech builders together. It now boasts more than 1,000 attendees. This year, the stunning but hard-to-drive-to Andrew W. Mellon auditorium was buzzing with lots of hurried men in dark suits. The aesthetics were gilded, the mood was collegial with fist bumps and bro hugs, and the panels were chill. Even the fireside chat with JPMorgan Chase CEO Jamie Dimon, who was a major draw, felt very relaxed. House Speaker Mike Johnson also dropped by to speak as a last-minute addition.
Takeaways: When asked which U.S. alliances needed more attention, Dimon said:“I think the one we need to strengthen more is Europe,” including through NATO and the overall economic relationship.
- “They’re trying to spend money. They’re starting to look at their own defense industrial base, which needs a lot of work, by the way,” he said.
- Dimon argued that European policies, such as clean energy commitments, have hampered their economic growth, including a widening GDP gap with the U.S., which could have repercussions.
- “That’s gonna hurt us one day…when the economy can no longer afford the military they need. That’s the problem. And Europe is kind of there right now,” he said, “they need our help.”
- On a separate panel, Rep. Riley Moore, R-W.V., and former welder, said AI could help extend blue-collar workers’ careers, particularly in manufacturing.
- Artificial intelligence is “going to be a big part of the future of manufacturing in the United States because “its going to make people safer, it’s going to make them more productive and bring longevity to their careers,” especially since injuries can be common, Moore said. “You tend to get injured. You’re going to get hurt. I’ve been hurt…AI has the ability to mitigate, minimize those and really create efficiencies.”
Making moves
- C.Q. Brown, former chairman of the Joint Chiefs of Staff, joined Powerus, which produces autonomous systems and software for the military, as a senior adviser and resident executive. In a LinkedIn post announcing the move, Brown said he would focus on “defense strategy, autonomous systems deployment, and national security partnerships.”
- John Luddy, former vice president of Aerospace Industries Association, was named interim executive director of the U.S. Partnership for Assured Electronics, which focuses on the defense electronics industrial base.
In other news
The Army has an Amazon-powered drone store. The service now has a one-stop marketplace where drone shoppers can “compare system functionalities, provide direct feedback, and place orders with ease,” the service announced Tuesday.
- The online store is key to Army Aviation’s modernization strategy and “allows us to equip our soldiers with the unmanned technologies they want and need to maintain overmatch on a complex battlefield,” Maj. Gen. Clair Gill, the portfolio acquisition executive for maneuver air said in a news release.
Flight test. Northrop Grumman successfully tested Shield AI’s Hivemind software—which is also paired, and has flown, with Anduril’s CCA offering
AI funding round. Striveworks announced a Series B funding round, but is keeping the dollar figures close. The company focuses on validating algorithms used in the defense and intelligence missions to ensure they can be trusted—a function that will become increasingly important as the Pentagon and military services proliferate AI throughout their processes and systems.
- CEO Jim Rebesco told Defense One the round would be used to expand engineering and research and development.
- “We’re seeing this big, big bow wave demand for agentic AI generally and, bluntly, how we make that agentic AI work in the defense space specifically,” he said. “This is a chance for us to get ahead of that demand signal…and expand our ability to serve more defense and intelligence customers.”
The CIA could lose oversight of In-Q-Tel. The Office of the Director of National Intelligence plans to subsume In-Q-Tel—a venture capital firm backed by the CIA, Politico reported. The organization has been a key factor in early investments into companies focused on emerging technologies imperative to national security. It’s also been heralded as a model to emulate, according to the Federation of American Scientists. Bonus: here’s a vintage Defense One look at what In-Q-Tel has to offer.
One last thing: Epirus, General Dynamics, and Kodiak AI are teaming up on an autonomous ground vehicle counter drone system.
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