Credit: Reuters (Reuters) -Apple has signed a $500 million deal with MP Materials for rare earth magnets, mitigating supply risks after China curbed exports this year and representing a major coup for MP that sent its shares soaring by a fifth.
The backing from one of the world’s most valuable companies comes after MP, which operates the only U.S. rare earths mine, last week agreed to a multibillion-dollar deal with the U.S. Department of Defense that will see the Pentagon become its largest shareholder.
The Las Vegas-based company’s stock price has nearly doubled since the government deal was announced. It has had remarkable turnaround since last year when it contemplated merging with an Australian rival as profits plunged in what CEO Jim Litinsky called a “very frustrating” pricing environment for rare earths.
The deal, announced on Tuesday, guarantees Apple a steady flow of rare earth magnets free from China – the world’s largest producer.
For Apple, the cost to support U.S. magnet production pales in comparison to the long-term risk that it could lose access entirely to the critical components, analysts said.
“We’re in an era where executives are willing to pay a significant premium for a reliable supply chain. They don’t want stoppage,” said Gracelin Baskaran, director of the critical minerals security program at the Center for Strategic and International Studies.
China placed export restrictions on rare earths in April in response to U.S. President Donald Trump’s tariffs. Though the U.S. and China reached a deal in June that has resolved much of the rare earth dispute, broader trade tensions continue to underscore demand for non-Chinese supply.
As part of the agreement, Apple will prepay MP $200 million for a supply of magnets slated to begin in 2027.
The companies did not disclose the length of the deal nor the volumes of magnets to be provided.
The agreement calls for magnets produced from recycled material, in keeping with Apple’s long-standing goal of ending its reliance on the mining industry. They will be produced at MP’s Fort Worth, Texas, facility using magnets recycled at MP’s Mountain Pass, California, mining complex.
“Rare earth materials are essential for making advanced technology, and this partnership will help strengthen the supply of these vital materials here in the United States,” Apple CEO Tim Cook said in a statement.
Bob O’Donnell, president at market research firm TECHnalysis Research, said Tuesday’s move “makes complete sense” given that Apple requires significant amounts of rare earth magnets for its devices.
“Plus, by focusing on a U.S.-based supplier, it does help position Apple more positively in Washington,” he said.
Apple, which said the deal is part of its $500 billion four-year investment commitment to the U.S., has faced threats from Trump over iPhones not made in the U.S. But many analysts have said making the iPhone in the U.S. is not possible, given labor costs and the existing smartphone supply chain.
Apple did not disclose which devices in which it will use the magnets. MP said the deal will supply magnets for hundreds of millions of devices, which would constitute a significant share of any of Apple’s product lines.
MP produces mined and processed rare earths and has said it expects to start commercial magnet production in its Texas facility by the end of this year.
Last week’s deal between MP and the U.S. government includes a price floor for rare earths designed to spur investment in domestic mines and processing plants, which has been lagging partly due to low prices set in China.
The company also has magnet supply deals with General Motors and Germany’s Vacuumschmelze.
Rare earths are a group of 17 metals used to make magnets that turn power into motion, including the devices that make cell phones vibrate. They are also used in weapons, electric vehicles and many other electronics.
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