Assessment · Capital

The Pentagon's equity stakes concentrate on minerals, metals and magnets

Minerals, metals and magnets: all but one of 13 since July 2025. Three of the four largest disclosed come with a price floor, stockpile contract or seven-year rocket-motor framework agreements.

October 8, 2026

Since July 2025, the Department of War has taken or agreed to take 13 equity stakes. That counts shares, preferred stock, units, warrants and joint-venture interests that the department or the company announced through Oct. 5, 2026. Twelve are in businesses that mine, refine or make rare earths, magnets, tungsten, zinc, alumina, gallium, bauxite, copper and iron. The largest disclosed is a $1.4 billion equity contribution that Korea Zinc lists for the department, in a joint venture that bought 10.59% of Korea Zinc to fund a U.S. smelter.¹ Deputy Secretary of War Steve Feinberg called it a "conditional investment".² The one stake outside those businesses is $1 billion of convertible preferred stock in L3Harris' Missile Solutions business, which makes solid rocket motors.³

At three of the four largest disclosed stakes, the department is on the demand side too. L3Harris has since signed seven-year framework agreements with the department to expand production of rocket motors and other components for PAC-3 MSE and THAAD interceptors.⁴ An Elmet subsidiary was separately awarded a Defense Logistics Agency stockpile contract with a ceiling of up to $2 billion, $150 million of it guaranteed.⁵ MP Materials has a 10-year floor of $110 a kilogram on its NdPr, and the department agreed to ensure that every magnet from MP's next plant is bought.⁶ At Korea Zinc, the department is set to lend to the smelter instead.¹

At MP, the price floor already contributes to reported income. Each quarter the department pays MP the shortfall when the NdPr price falls below $110 a kilogram.⁷ In the second quarter of 2026, MP reported $17.6 million of income from that agreement.⁸

Twelve of 13 stakes went to minerals, metals and magnets

The disclosed amounts add up to $3.9 billion. Of that, $1.9 billion was paid at closing, and the rest is announced, conditional or optional. Elmet's remaining money, up to $250 million, comes in tranches whose conditions the department can deem met or waive "in its sole discretion".⁹ Three stakes carry no disclosed dollar value. Two are warrants that come with conditional loans of $620 million to Vulcan Elements and $80 million to ReElement Technologies.¹⁰ The third is a stake, held jointly with MP, in a planned Saudi rare earth refinery venture that Maaden will majority-own.¹¹

Eight of the 13 went through the department's Industrial Base Analysis and Sustainment (IBAS) program. In its Strategic Bauxite release, the department said IBAS equity targets critical supply chain bottlenecks, particularly "where private venture capital has historically been hesitant to invest due to long developmental timelines".¹² MP's stake came under Defense Production Act Title III, which MP's 8-K called an "unconventional use of DPA Title III authority".⁷

Preferred stock carries 54% of the disclosed money

Five of the stakes are preferred stock or preferred units: MP, L3Harris, Elmet and both Atalco rounds. Together they hold 54% of the disclosed dollars. The stated dividends run from 5.5% a year at Elmet to 7% at MP and L3Harris.^{7, 9, 13}

"By pairing targeted Department support with a disciplined preferred equity structure, we are strengthening the supply chain behind more than 100 defense programs while protecting taxpayers and delivering for the joint force," said George K. Kollitides II, director of the department's Economic Defense Unit, announcing the Elmet stake.¹⁴

At MP, Elmet, Trilogy and L3Harris, the terms reach into a sale of the company or its assets. While the agreements are in force, MP needs the department's consent to sell 15% or more of its voting stock, or substantially all its assets, to a buyer outside certain permitted jurisdictions. It also needs consent to sell any equity or material assets of the company building its 10X plant.⁷ A merger or change of control at Elmet entitles the preferred holders to "a cash amount per share of Class A Preferred Stock equal to the then-current stated value". Payment comes from legally available company assets, subject to Delaware law and senior securities’ rights.⁹ At Trilogy Metals, the department holds "consent rights restricting investments in, and asset and product sales by, Ambler Metals," the 50/50 venture with South32 that holds Trilogy's Alaska projects.¹⁵ If Missile Solutions is sold before an IPO, the department is entitled to cash equal to "the greater of the Liquidation Preference or the if-converted value".¹³

L3Harris' preferred converts to common stock at 80% of the IPO price if Missile Solutions lists by Dec. 31, 2027.^{13, 16} Without that IPO, the redemption price carries a contractual premium of 110% to the liquidation preference if agreed milestones were missed. If they were met, the redemption price is set on or after April 16, 2031, at the greater of that preference or fair market value.¹³

Most of the money builds plants and mines

Stakes with no money stated for running or buying an existing operation, or existing shares, hold 56% of the disclosed dollars. MP plans to expand separation, processing and magnet production.⁶ L3Harris named solid rocket motor plants in Camden, Arkansas; Huntsville, Alabama; and Orange, Virginia.¹⁷ Elmet will expand tungsten manufacturing, mining and processing.⁵ Hertha Metals' money will build Hertha Chalyx, a plant for steel-grade and magnet-grade high-purity iron.¹⁸ The gallium stake funds a new plant at Alcoa's Wagerup refinery in Australia, and the bauxite stake buys and expands a mine in Guyana.^{12, 19–20}

Three stakes also pay to run or buy an existing operation, buy existing shares or fund exploration. Korea Zinc's contribution funds new smelter construction, and the smelter company also plans to buy Nyrstar USA, which "operates two mines (ETN and MTN) and one smelter".¹ Atalco's January partnership aims "to sustain and increase domestic alumina production," and its August units provide "the liquidity necessary to sustain operations" as well as capital spending.^21–22 At Trilogy, half of the $35.6 million went to South32 for existing shares, and both companies committed the money to exploring and developing the Alaska projects.¹⁵

Without L3Harris, the stakes are all minerals, metals and magnets

L3Harris is 26% of the disclosed dollars, so minerals, metals and magnets hold the other 74%. Take L3Harris out and the remaining $2.9 billion is all in those businesses.

The department's public list of IBAS and Defense Production Act investments labels one record an equity purchase: MP's, dated July 10, 2025.²³

The count could grow. Hertha announced the department's stake, and Korea Zinc the department's contribution to the joint venture.^{1, 18} The department has announced neither in a release.²⁴

For scale, a Senate resolution submitted by Sen. Jacky Rosen (D-Nev.) counts more than 35 federal transactions for equity or equity-like interests since January 2025, across all agencies.²⁵

Sale terms give the Pentagon consent and cash rights

A buyer of MP from outside certain permitted jurisdictions, or any buyer of its 10X plant, needs the department's consent.⁷ A qualifying sale at Elmet entitles preferred holders to cash from legally available company assets, subject to Delaware law and senior securities’ rights.⁹ A sale of Missile Solutions before an IPO entitles the department to cash at the greater of its liquidation preference or if-converted value.¹³ L3Harris said in April that it plans the Missile Solutions IPO for the second half of 2026, "pending market conditions," which would convert the department's preferred into common stock.^16–17 Elmet's first optional tranche opens six months after its Sept. 14 closing.⁹