One of the most prominent trends shaping global equity markets in 2025 is the sharp rise in investor interest in the defence sector.

This has been especially fuelled by mounting geopolitical tensions and an increasingly strategic view on supply chain security.

Nowhere is this more evident than in the US, where the Department of Defense (DoD) is moving aggressively to secure domestic access to critical materials, especially rare earth elements (REEs) essential for advanced weaponry, aerospace systems, and clean technologies.

DoD Partnership

In a landmark development this week, MP Materials announced a sweeping public-private partnership with the DoD to build out US-based rare earth magnet production capacity.

The deal includes:

• $1 billion in financing commitments from JPMorgan Chase and Goldman Sachs for a second U.S. magnet plant (dubbed the “10X Facility”) expected to commission in 2028.
• A $150 million DoD loan to expand heavy rare earth separation capabilities at the company’s Mountain Pass facility in California.
• A $400m DoD equity investment in preferred stock and warrants, potentially making the DoD the company’s largest shareholder.
• A 10-year price floor agreement of $110 per kilogram for neodymium-praseodymium (NdPr) products.
• A 10-year purchase commitment for 100% of the magnets produced at the new facility for use across both defence and commercial applications.

This is a defining moment in the US industrial policy pivot toward rare earth and critical mineral independence and also signals a significant opportunity for companies—particularly those outside the US—that can offer reliable, friendly, and strategic sources of critical minerals.

Australian Companies in the Spotlight

For ASX-listed explorers and developers, the implications are significant.

Australia’s stable jurisdiction, advanced mining industry, and close defence ties with the US place it in a privileged position as a partner of choice in future supply chain collaborations.

Some key ASX-listed companies that may stand to benefit:

• Hastings Technology Metals (ASX: HAS) – Australian-based developer of the Yangibana rare earths project in WA that has been exploring downstream processing and global offtake relationships, including with German and US partners.
• Iluka Resources (ASX: ILU) – Already a key global producer of zircon and rare earths. Its Eneabba refinery is being developed in conjunction with the Australian Government and is expected to become a significant strategic processing hub.
• American Rare Earths (ASX: ARR) – Holds multiple rare earth exploration projects in the US, including the Halleck Creek project in Wyoming, and its US exposure places it directly in the crosshairs of future funding support and procurement deals like the one announced for MP Materials.
• Indiana Resources (ASX: IDA) – While traditionally focused on African assets, Indiana recently shifted toward critical minerals with potential strategic relevance.
• Arafura Rare Earths (ASX: ARU) – Developer of the Nolans rare earths project in the NT, with strong government support and a focus on NdPr, the same magnet metals targeted in the MP Materials deal.
• Evolution Energy Minerals (ASX: EV1) and Syrah Resources (ASX: SYR) – While focused on graphite rather than rare earths, both are linked to downstream critical mineral supply chains in the US and could benefit from broader sector tailwinds.

Shifting Policy Landscape

US President Donald Trump’s recent pledge to impose 50% tariffs on imported copper and a possible 200% duty on pharmaceutical imports has added further momentum to the reshoring theme.

With national security and economic independence now at the heart of US policy, it is no surprise that materials central to electric motors, drones, hypersonics, and missile guidance systems are top of the agenda.

The MP Materials deal underscores how government capital is now flowing into critical mineral capacity with long-term visibility, including equity positions, offtake guarantees, and price support.

Additional Projects

Investors should expect more announcements from the US and its allies regarding rare earth, lithium, copper, and other critical mineral projects.

Australia is likely to play a key role in this evolving ecosystem.

For ASX-listed small caps operating in this space—particularly those with North American exposure or partnerships with US-aligned defence or energy players—this trend may provide material upside in both funding access and future demand visibility.