STILLWATER, Okla. (The Oklahoma Post) August 12, 2025
Picture this: Two rare earth companies walk into a bar. One leaves with a $400 million Pentagon investment, a billion-dollar credit line, and a half-billion Apple contract. The other stumbles out with a warning, negative $131.9 million in shareholder equity, and Oklahoma taxpayers holding the bag. If this sounds like the setup to a bad joke, welcome to Stillwater’s rare earth reality, where USA Rare Earth is broker than Uncle Rico after a weekend at the 7-Clans Casino over in Red Rock, while MP Materials is making it rain Pentagon dollars like they’re printing money in the basement.
The July 2025 announcements tell you everything you need to know about who’s winning this game. On July 10, the Department of Defense handed MP Materials a $400 million equity investment that would make a Saudi prince blush. By July 11, the deal was done faster than you can say “national security imperative.” Four days later, Apple joined the party with a $500 million contract. Meanwhile, over in Stillwater, USA Rare Earth was busy filing SEC documents warning they might not survive the next twelve months. It’s like watching the Harlem Globetrotters play your nephew’s middle school team, except your tax dollars are betting on the kids.
Let’s examine the legal structures here with the cold precision of someone who’s read every footnote in every filing. The Pentagon didn’t just hand MP Materials $400 million they structured it as Series A convertible preferred stock with a 7% cumulative dividend, positioning themselves to become the largest shareholder with a 15% stake. They added a ten-year price floor guarantee at $110 per kilogram for neodymium-praseodymium, essentially creating a government-backed monopoly with guaranteed profits.
Now look at Oklahoma’s deal with USA Rare Earth. The Stillwater Economic Development Authority approved $7 million in direct incentives. The state threw in Quality Jobs Program benefits worth up to 5% of payroll for a decade. Tax Increment Financing districts were established. And what protection did Oklahoma demand in return? A first lien on a building. That’s like securing a loan on the Titanic with a claim to the deck chairs.
The disparity in these arrangements suggests either gross negligence or willful blindness on the part of Oklahoma negotiators. The state provided taxpayer support to a company that, in its own SEC filings, expressed “substantial doubt regarding its ability to continue as a going concern.” In legal terms, that’s not just a red flag, it’s a crimson banner the size of a football field, on fire, with air horns blaring. Oh…but the Governor appointed you. Got it. Noted.
The guide to the rare earth hustle
Now let’s switch gears and look at this through a cons’ eyes, she would say, spinning around in his office chair, “I’ve seen this movie before. It’s called ‘Private Profits, Public Losses,’ and spoiler alert: the taxpayers don’t get a happy ending.”
The timing of these announcements? Chef’s kiss for theatrical manipulation. MP Materials had been working the Pentagon angle for months, probably years. They knew exactly when that $400 million was coming through. So what happens? July 10: Pentagon announcement. Stock surges 50%. July 11: Deal closes. July 15: Apple announcement. Stock jumps another 20%. By August 8, they hit an all-time high of $79.36 per share. Market cap? North of $13 billion.
Meanwhile, USA Rare Earth hit the public markets in March 2025 through a SPAC merger, because nothing says “solid investment” like a blank-check company reverse merger, right? The stock immediately tanked 68% by the end of March. Sure, it bounced back 76.9% in April on rare earth policy hype, but here’s the thing about bouncing: you’re still on the floor.
“It’s beautiful, really,” the con-woman would admire, ” in that morally bankrupt, late-stage capitalism kind of way. Wall Street extracts value through financial engineering while Main Street, that’s you Stillwater, provides the real assets and assumes the real risk.”
The chemistry of failure: Why rare earths are harder than Parkers Gold Rush
Here’s something most people don’t understand about rare earth processing, and it’s crucial to understanding why USA Rare Earth faces such long odds. The seventeen rare earth elements have nearly identical chemical properties. Separating them is like trying to sort seventeen shades of beige paint after they’ve been mixed together, technically possible, but requiring precision, patience, and massive amounts of capital.
China spent forty years perfecting this process. They developed proprietary “cascade extraction” technology that achieves separation factors 6.7 times better than traditional Western methods. They built an entire workforce of chemical engineers who eat, sleep, and breathe rare earth chemistry. USA Rare Earth claims they have proprietary “Continuous Ion Exchange” technology that will revolutionize the industry. Their Colorado R&D facility is supposedly cracking the code. But here’s the thing about revolutionary technology in the rare earth space: Molycorp said the exact same thing.
Remember Molycorp? Of course you don’t, because they went bankrupt in 2015 after burning through $1.7 billion trying to challenge Chinese dominance. They had Mountain Pass, the same mine MP Materials now operates and dominates the landscape. They had Wall Street backing with a $400 million IPO for a reason. They had proprietary technology that would change everything. What they didn’t have was a viable business model when China decided to flood the market and crush prices. We believe that this was done intentionally prior to Trump taking office.
The Pentagon’s rare earth monarchy: Creating winners by decree
The Department of Defense isn’t just investing in MP Materials; they’re anointing them as America’s rare earth champion. This isn’t free market capitalism, it’s industrial policy dressed up in camouflage. And there’s an argument to be made that it’s necessary. China controls 60-70% of global rare earth mining and 90% of processing. Every F-35 fighter jet, every Patriot missile, every advanced radar system depends on rare earth magnets. From a national security perspective, we need domestic production.
But here’s where it gets interesting, in that Kim Wexler “follow the money” way. The Pentagon structured their deal with MP Materials to include:
- A ten-year price floor at $110/kg for NdPr (current Chinese price: $60/kg)
- 100% purchase guarantee for output from MP’s planned “10X Facility”
- Minimum guaranteed EBITDA of $140 million annually, adjusted for inflation
- Additional $150 million loan for Mountain Pass expansion
- Up to $350 million in additional funding available.
This isn’t investment; it’s subsidy with an equity wrapper. The Pentagon is essentially guaranteeing MP Materials can’t fail, at least not in any way that matters to Wall Street. They’ve socialized the risk and privatized the profit, with JPMorgan and Goldman Sachs arranging the $1 billion credit facility to capture their piece of the guaranteed returns.
Oklahoma’s renewable energy déjà vu
If this feels familiar to Oklahomans, it should. We’ve been down this road before with wind energy. In the 1990s and 2000s, Oklahoma rolled out the red carpet for wind developers. Zero-emission tax credits, accelerated depreciation, property tax abatements—the works. The pitch was always the same: jobs, economic development, energy independence.
By 2016, those wind incentives were costing the state $74 million annually. When budget pressures hit, what happened? The statecapped the credits at $18 million, an 80% reduction overnight. Companies like EDP Renewables canceled projects. Enel was forced to dismantle $300 million worth of turbines on Osage lands. The jobs disappeared, but the tax revenue never materialized in the first place.
Now we’re watching the same movie with rare earths. USA Rare Earth promised 100+ jobs at $50,000-$60,000 salaries. Production was supposed to start in 2023. It’s now 2025, and they’re still in the “prototyping phase” with commercial production pushed to early 2026 if they survive that long.
The going concern time bomb
Let’s talk about what a “going concern warning” actually means, because USA Rare Earth’s Q2 2025 filing contains this financial explosive device. When a company’s auditors include going concern language, they’re essentially saying: “We’re not sure this company will exist in twelve months.”
This isn’t a casual observation. Under accounting rules, auditors must evaluate whether there’s “substantial doubt” about a company’s ability to continue operations. For USA Rare Earth, despite having $128.1 million in cash (as of August 2025), they still triggered this warning. Why? Because they know something we can only guess at:
- Their burn rate is accelerating ($142.7 million loss in Q2 alone
- The Stillwater facility requires massive additional investment
- Commercial production timeline keeps slipping
- Competition from MP Materials is now Pentagon-backed
Kim Wexler would point out that Oklahoma officials either didn’t read these filings or didn’t understand them. There’s no third option that reflects well on the state’s due diligence. “When a client comes to me with a going concern warning,” she’d say, adjusting her papers with surgical precision, “I advise them to stop spending immediately and prepare for bankruptcy. I certainly don’t advise them to seek taxpayer subsidies.”
The magnificent seven million dollar question
Stillwater approved $7 million in direct incentives for USA Rare Earth. That might not sound like much compared to the Pentagon’s $400 million for MP Materials, but let’s put it in perspective. Stillwater’s annual budget is around $200 million. That $7 million represents 3.5% of the city’s entire annual budget, for a company that admits it might not survive the year. If they can, they taxpayer did not benefit….like wealthy few.
What protections did the city get? According to legal filings, Stillwater is listed as “first lien holder” on the $9.9 million building purchase. Congratulations, Oklahoma, you might own a very expensive empty building in 2026. One that “now” is specifically retrofitted for rare earth magnet production, making it about as useful for other purposes as a chocolate teapot.
The state’s Quality Jobs Program adds another layer of exposure. This program provides cash payments up to 5% of new payroll for up to ten years. If USA Rare Earth actually hires those 100 workers at $55,000 average salary, that’s $275,000 annually in cash payments from the state. Over ten years, that’s $2.75 million more in taxpayer exposure. Of course, this assumes USA Rare Earth survives long enough to hire anyone.
The Wall Street wealth extraction machine
Here’s how the game really works, and I appreciate the audacity. Wall Street firms identify strategic sectors where government money is flowing; defense, energy transition, critical minerals. They package companies in these sectors for public markets through SPACs or IPOs. Retail investors and local governments provide the capital. When winners emerge (like MP Materials), Wall Street captures the gains through fees, carried interest, and equity stakes. When losers fail (like USA Rare Earth might), the losses are socialized through bankruptcy, leaving taxpayers and retail investors holding empty bags.
MP Materials’ trajectory illustrates this perfectly. The company went public via SPAC merger with Mountain Pass as its primary asset, the same mine that bankrupted Molycorp. But this time, with Pentagon backing, the outcome is different. JHL Capital Group, led by CEO James Litinsky, acquired Mountain Pass for a fraction of its previous value. Now, with government guarantees, it’s worth billions. Litinsky’s stake alone is worth hundreds of millions.
The SPAC sponsors, investment banks, and private equity firms all took their cuts along the way. JPMorgan and Goldman Sachs are now providing the billion-dollar credit facility, earning fees and interest on government-guaranteed loans. It’s wealth extraction disguised as patriotic industrial policy.
What Oklahoma should have demanded
lf someone else had negotiated for Oklahoma, the deal structure would look entirely different:
Performance Milestones: Incentive payments tied to specific, measurable achievements—facility completion, production startup, employment targets. Miss a milestone? No payment.
Clawback Provisions: If the company fails within five years, all incentives must be repaid, secured by parent company guarantees, not just building liens.
Equity Participation: If taxpayers are taking risk, they should share upside. Oklahoma should have demanded warrants or equity stakes proportional to their investment.
Independent Oversight: Quarterly financial reviews by independent auditors, with public reporting requirements. No surprises.
Competitive Protections: Non-compete clauses preventing the company from simultaneously developing facilities in other states while taking Oklahoma money.
Technology Transfer: Guarantees that any proprietary technology developed with state support remains accessible to Oklahoma institutions.
Instead, Oklahoma got promises and press releases. Governor Stitt called it a “once-in-a-generation announcement.” Three years later, it’s looking more like a once-in-a-generation transfer of wealth from Oklahoma taxpayers to Wall Street speculators.
The magnet manufacturing mirage
USA Rare Earth’s business plan centers on producing high-performance neodymium-iron-boron (NdFeB) magnets at their Stillwater facility. They’ve signed numerous memorandums of understanding and joint development agreements representing about 300 tons of annual production. Their first production line is designed for 1,200 tons annually, with ultimate capacity of 5,000 tons.
Let’s examine these numbers with Saul’s skepticism and Kim’s precision. Three hundred tons of committed orders against 1,200 tons of capacity means 75% of production is uncommitted. In a market where MP Materials has Pentagon guarantees for 100% offtake, who’s going to buy USA Rare Earth’s magnets?
The answer, presumably, is the limited commercial market, electric vehicle manufacturers, wind turbine producers, consumer electronics companies. But here’s the problem: these customers can buy Chinese magnets at $60/kg for NdPr oxide versus the $110/kg floor price the Pentagon is guaranteeing MP Materials. USA Rare Earth will need to match Chinese and competitor pricing to compete, but their cost structure, built on U.S. labor rates, environmental compliance, and massive capital costs, makes this virtually impossible.
The Oklahoma State University partnership paradox
One of the selling points for the Stillwater facility was its proximity to Oklahoma State University and the potential for research collaboration and workforce development. USA Rare Earth and OSU announced partnerships for developing rare earth expertise and training programs. It sounds great; academia and industry working together to build American capabilities. There are other choices, that do the same thing.
But here’s the paradox: if USA Rare Earth fails, what happens to these programs? OSU will have invested resources in developing curricula, hiring faculty, and training students for jobs that don’t exist. The students themselves will have specialized in a field with exactly one employer in the state, an employer with a concern warning.
This is the hidden cost of failed industrial policy. It’s not just the direct subsidies; it’s the opportunity cost of misdirected education and training, the stranded human capital, the dreams sold to young Oklahomans who thought they were entering a growth industry.
The twelve MOUs of Christmas (that may never come)
USA Rare Earth touts twelve memorandums of understanding and joint development agreements as evidence of commercial viability. They’ve announced deals with companies like ePropelled for drone magnets and Moog for data center cooling pumps. These agreements represent approximately 300 tons of annual demand; about 25% of their initial production capacity.
But here’s what MOUs actually mean in the business world, an MOU is like a promise ring in high school. It means ‘I really, really like you, and maybe someday we’ll do business together, unless something better comes along.. They’re non-binding expressions of interest, not purchase orders. They typically include multiple escape clauses and conditions precedent.
Given USA Rare Earth’s financial condition, these potential customers are likely watching nervously. Would you commit to a critical component supplier that might not exist next year? The going concern warning creates a death spiral: customers hesitate to commit, which worsens financial conditions, which makes customers more hesitant.
The Round Top heavy rare earth fantasy
USA Rare Earth’s supposed ace in the hole is their 80% interest in the Round Top deposit in West Texas. Unlike MP Materials’ Mountain Pass mine, which primarily produces light rare earths, Round Top contains heavy rare earths like dysprosium and terbium, critical for high-temperature magnets used in defense applications.
The problem? Round Top isn’t a mine really; it’s a mountain of hope. Developing it would require:
- Environmental permits that could take years
- Capital investment of $500 million to $1 billion
- Infrastructure development in remote West Texas
- Proving their proprietary extraction technology at scale
- Surviving long enough financially to see production
Even if everything goes perfectly, Round Top wouldn’t produce ore for five to seven years. USA Rare Earth needs to survive the next twelve months first.
What Wall Street knew that Oklahoma didn’t
The investment community has tools and information that Oklahoma officials apparently didn’t use. The SPAC merger documents, filed in August 2024, contained detailed risk factors that should have raised alarms:
- “We have no operating history in commercial rare earth production”
- “Our proprietary technology is unproven at commercial scale”
- “We face intense competition from established producers”
- “Chinese competitors have significant cost advantages”
- “We will require substantial additional funding”
By March 2025, when USA Rare Earth went public, the market rendered its verdict: the stock immediately crashed 68%. Yes, it recovered somewhat on policy enthusiasm, but institutional investors the smart money were notably absent from the buyer list.
Meanwhile, MP Materials had Hancock Prospecting (Gina Rinehart’s company), QVT Financial, and now the Department of Defense as major shareholders. When the Pentagon becomes your largest investor, Wall Street pays attention.
The art of the industrial policy deal
There’s an argument—a legitimate one—that the United States needs domestic rare earth production for national security. China’s dominance in this sector represents a strategic vulnerability. The Pentagon’s investment in MP Materials makes sense from this perspective.
But why did MP Materials get the golden ticket while USA Rare Earth got the going concern warning? The answer lies in industrial policy’s dirty secret: governments are terrible at picking winners, but they’re excellent at making winners out of their picks.
Once the Pentagon decided MP Materials was their champion, they structured a deal that virtually guaranteed success:
- Price floors that ensure profitability
- Purchase guarantees that eliminate demand risk
- Capital access that enables expansion
- Competitive moats that exclude rivals
USA Rare Earth, lacking this federal backing, is trying to compete in a market where their main rival has been made un-killable by government fiat. It’s like entering a boxing match where your opponent is wearing armor and you’re in your underwear.
Oklahoma’s pattern of industrial optimism
This isn’t Oklahoma’s first rodeo with ambitious industrial projects. The state has a pattern:
- Announcement Phase: Grand proclamations, ribbon cuttings, “game-changing” rhetoric
- Incentive Phase: Generous packages approved with minimal scrutiny
- Delay Phase: Timelines slip, excuses emerge, more money requested
- Reality Phase: Scaled-back operations or complete failure
- Amnesia Phase: Everyone forgets and the cycle repeats
We saw it with wind energy. We saw it with various manufacturing plants that promised hundreds of jobs and delivered dozens. We’re seeing it with USA Rare Earth. The pattern is so predictable that Saul Goodman could build a legal practice around it: “Industrial Incentive Recovery: When Promises Don’t Pan Out.”
The Boeing problem: When strategic industries become too big to fail
Here’s the long-term risk that should keep Oklahoma lawmakers awake at night: what happens if USA Rare Earth becomes “too strategic to fail”? The company is positioning itself as critical to national security, essential for defense supply chains, vital for American competitiveness. Sound familiar?
Boeing mastered this playbook. Despite repeated failures, cost overruns, and quality problems, they’re unbailable because they’re “critical to national security.” Once you achieve that designation, taxpayer support becomes infinite.
If USA Rare Earth survives long enough, perhaps through additional Oklahoma support, perhaps through federal intervention, they might achieve this status. Then Oklahoma won’t just be on the hook for $7 million; they’ll be permanent shareholders in a loss-making enterprise that can’t be allowed to fail.
The real economic benefits: Following the money trail
Let’s track where the economic benefits actually flow in these rare earth deals:
MP Materials Winners:
- CEO James Litinsky: Hundreds of millions in equity value
- Pentagon contractors: Guaranteed supply of critical materials
- JPMorgan/Goldman Sachs: Fees and interest on $1 billion facility
- Apple: Secured supply chain for millions of devices
- Wall Street investors: 383% annual returns
USA Rare Earth’s Theoretical Winners:
- SPAC sponsors: Already cashed out through merger fees
- Investment bankers: Collected advisory fees
- Law firms: Ongoing billing for restructuring advice
- Executives: Salaries paid regardless of company performance
Oklahoma’s Actual Benefits:
- Jobs: Maybe 100, if the company survives
- Tax revenue: Negative, given incentives provided
- Economic development: A specialized facility with limited alternative uses
- Technology transfer: Questionable value if company fails
The asymmetry is stark. Financial engineers and intermediaries profit regardless of outcome. Oklahoma taxpayers bear the risk with limited upside.
The house always wins (and it’s not in Stillwater)
As we watch this rare earth drama unfold, with MP Materials ascending to Pentagon-backed dominance while USA Rare Earth issues going concern warnings, the lesson is clear: in the modern American economy, proximity to federal power matters more than proximity to actual production.
Wall Street has perfected the art of extracting value from industrial policy. They identify sectors where government money is flowing, package companies for public markets, collect their fees, and move on. If the company succeeds (like MP Materials), they capture enormous returns. If it fails (like USA Rare Earth might), taxpayers and retail investors absorb the losses.
Oklahoma finds itself on the wrong side of this trade. The state committed taxpayer resources to a company that, by its own admission, might not survive the year. The promised jobs remain theoretical. The economic development remains aspirational. The technology remains unproven at scale.
If an attorney would file for recovery of improvidently granted incentives. A good attorney would create a class action for misled taxpayers. But in reality, Oklahoma will likely muddle through, hope for federal intervention, and eventually forget this expensive lesson, until the next “once-in-a-generation” opportunity comes along.
The rare earth wars aren’t really about rare earths. They’re about who gets to extract value from the intersection of national security and industrial policy. In this game, Wall Street holds the cards, Washington deals them, and places like Stillwater get stuck with the tab. USA Rare Earth might be broker than Uncle Rico after a weekend in Vegas, but it’s Oklahoma taxpayers who are really getting rolled.
The Pentagon made MP Materials un-killable with taxpayer guarantees. Wall Street made USA Rare Earth un-investable despite taxpayer subsidies. Somewhere between those two extremes lies a lesson about American industrial policy in the 21st century: the house always wins, and the house isn’t in Stillwater.
Robbie Robertson is The Oklahoma Post’s senior correspondent covering industrial policy, economic development, and the occasional rare earth element.
Disclaimer: The views and analysis presented in this article represent the opinion of Robbie Robertson and The Oklahoma Post editorial team. This content is intended for informational and educational purposes only and should not be construed as legal, financial, or investment advice. We are not recommending the purchase or sale of any securities. The analysis simply compares the current financial performance and business prospects of MP Materials versus USA Rare Earth based on publicly available information. Readers should conduct their own research and consult with qualified financial advisors before making any investment decisions. Past performance does not guarantee future results, and all investments carry risk of loss.
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