MP Materials Corp

ITEM 1A. RISK FACTORS

The Companys business, reputation, results of operations and financial condition, as well as the price of the Companys common stock, can be affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024 (the Form 10-K).  and in Part II, Item 1A. Risk Factors in our Form 10-Q for the quarterly period ended March 31, 2025. When any one or more of these risks materialize from time to time, the Companys business, reputation, results of operations and financial condition, as well as the price of the Companys common stock, can be materially and adversely affected. There have been no material changes to the risk factors disclosed in our Form 10-K, except as noted below.

Risks Related to our Business and Industry

Our business has been materially negatively impac and in our Form 10-Q for the quarterly period ended March 31, 2025, except as noted below.

While we have executed by recent the DoD Transactions by Agreements with the U.S. governnited States Department of Defense and China, inclureceived funding the implementation of tariffs and the taking of other actions with respecreunder, there can be no assurances that to their trade policies,he authorization of and may continue to be impacted in the future by d support for these and other a transactions, including contemplated by other countries; however, the significance, extent and duration of the  DoD Transaction Agreements will not be modified, challenged or impact, particularlyired in the longer-term, remain largely uncertain and dependenfuture, which would have a material adverse effect on future developments that cannot be accurately predicted at this time.

During March and Aprilour business, results of operations and financial position.

In July 2025, the U.S. we and China made a number of changes to their trade policies, including the implthe DoD executed the DoD Transaction Agreementation by China of increased tariffs that impacted the Companys business and its products and resulted in s and satisfied all conditions required thereunder, including the receipt by the Company makingof the strategic decision to cease shipmentsproceeds from the sale of rare earth concentrate to China.

President Trump signthe Series A Preferred Stock. We have received an Executive Order, titled Immediate Measuresssurances from the DoD that it has, pursuant to Increase American MineralTitle III of the Defense Production, to encourage domestic production of c Act (DPA), 50 U.S.C. 4531 et seq., as well as other authoritical minerals andes, all reduce reliance on foreign imports. President Trump also ordered a probe inquisite authority to enter into the DoD Transaction Agreements and to potential new tariffconsummate its on all U.S. critical minerals imports,bligations thereunder, including with the Secretary of Commerce set to begin a national security review under Section 232 ofrespect to appropriation of the funds used to purchase the Series A Preferred Stock and to fund the Trade Expansion ASamarium Project of 1962 and provide a report within 180 days.

In additionLoan. However, given the unconventional use of DPA Title III authority, the U.S. implemented and increased tariffs on a wide array of imports from around 90 countries. Tneed for the DoD to secure additional funds in the future in order to meet its obligations in these new and increased tariffDoD Transaction Agreements, along with other U.S. trade actions, precipitated retaliators well as the heightened sensitivity actions by foreign nd complexity of contracting with a governments, including

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Ch entity, particularly ina, which imposed an escala a high profile industry implicating series of tariffs on U.S. productnational security, there can be no assurances that culminated in a 125% tariff on U.S. impthe authorization of and continued supports into China. While President Trump recently announc for the DoD Transactions will not be modified, challenged a temporary 90-day pause on many of or impaired in these tariffs, resulting in future, which could have a parallel reprieve of many retaliatory tariffs, many of the tariffs imposed on U.S. exports to, material adverse effect on our business, results of operations and imports from, Chfina remain in place. The tariffs imncial posed by China includeition and the 125% tariff on REE we produce and hiprice of our common storically have suppck. We belied to the Chinese market. In addition, China imposed export restrictions on seven REEs and ve there are multiple factors that may contribute to this uncertain magnets, the market and geopolitical impact of which remains uncertain.

Since the recety, including, but not limited to, the interpretation of current policy changes, our engageand future, and enactment withof future, federal leadand

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inters, as well as with manufacturersnational laws, regulations, administrative across critical industries that use rare earth materialtions and rulings, and interpretations and magnets, has greatlychanges to intensified. This has exposed greatrpretations thereof, whether opportunities for supportive policies iby a court or within the short-legislative or long-term and greater business development potential. Howeexecutive branches of the federal gover, there can be no assurances that we will receivenment; our ability to comply with any support or business from anconditions or other requirements imposed by such parties. Even if we wlaws, regulations, actions and rulings, and changes there to negotiate an arrangement with any such parties to purchase our REE, there can be no assuto; a determination by the legislative, judicial, or executive branches as toof the timing, condifederal government that any aspect of DoD Transactions, requir Agreements, duration was unauthorized, void, or other terms of any such arravoidable; future changement.

The events described above have had, as in federal administration and arerelated expected to continue to haecutive atnd least ingislative priorities; the near-term, a material negative impact on our business, operating continued availability of Congresults, financial performancesional appropriations and financial condDoD funding; geopolition, cash flowscal developments; and liquidity. However, whether such negative impact continues, and the legal and strategic challenges associated with enforcing the significance, extent and duration of the impact, particularlobligations of and seeking performance from a government counterparty, especially in the longer-term, remainconjunction with the uncertain and dependent on future developmentsique defenses and remedies available to that cannot be accurately predicted at the federal government. Furthermore, while the DoD is time, such as: furcontractually bound under ther a DoD Transactions that the U.S. govern Agreement may take in encouraging domestic productions, no other agency, office or branch of criticthe federal minerals and reducing religovernment has made any assurance on foreign imports (including whes or has any obligations under ther or not we receive any direct DoD Transaction Agreements to actively support from the U.S. government); further, accede to or refrain from changes in trade policies in the U.S., Chinallenging, investigating or other countries, incluwise impeding the implementacommitments and obligations of new and retaliatory tariffs, increases inthe parties to the DoD Transaction Agreements, whether now or reductions of existing tariffs, or the taking ofin the future. The DoD Transactions may also be challenged by other actions; if, whenthird parties and to what extent weare subject to the risk of litigation, both the cost and resume shipmentslt of our rare earth concentrate to Chwhich could materially adversely affect our business, prospects, fina; our ability to find,ncial condition and enter into aresults of operations. The DoD Transaction Agreements with, additional or replacement customers for our rare earthcontain affirmative covenants requiring us to take certain actions and negative concentrate; andvenants restricting our ability to accelerate our downstream operations and expansiontake certain actions, which the failure to comply with could give rise to and achi eve our business milestones.

Any continued longer-term impactsnt of default under the applicable DoD Transaction Agreements and if any such event of tariffs, export controls and odefault is not waived by ther trade policies may als DoD, the DoD would have the right to exacerbate other risks discussed in this Risk Factors secercise certain remedies or damages including but not limited to termination and of one or more of the risks discussed in Part I, Item 1A. Risk FactorsDoD Transaction Agreements and/or acceleration of our Form 10-K, anmaturity of the Samarium Project Loan any of which could have a material ely adversely affect on our business, operating rresults, financial  of operformanceations and financial condposition, cash flows and liquidity.

We currently have ceased shipments of rare earth concentrate to China, and, as a . Any of these adverse effects may also result, have lost a principal source of revenue.

In response to Chinas retaliatory tariffs and export in volatility in or adverse effects on the price of our controls, on April 17, 2025, we announced the strategic decisimmon stock.

The DoD Transaction to cease shipAgreements of rarequire earth concentrate to China. Historically, throughthe Company make substantial investments in and commitments to specific aspects of our Materials segment, we soldbusiness, namely the vast majorityexpansion of our rare earth concentrate to Shenghemidstream separation capabilities and development of our 10X Facility. Furthermore, under the terms of the DoD Offtake Agreement, and Shenghe typically sold we anticipate that product to refiners in China. Demand for rare earth concentrate is currently constrained to a relatively limited number ofthe DoD will become our largest customer of magnets and that the obligations of the DoD under the PPA and DoD Offtake Agreement will refiners,present a significant majoritysource of which are based in China.

As a result ofour revenue. As such, we will be heavily reliant upon the cessation ontinued availability of shipmenfinancing provided by the DoD (including its to China, we have temporarily lost a principal sability to secure sufficient funding from the legislative branch), as well as the DoDs long-term pricing and offtake commitments in planning ource of revenue. Sales of rare earth operations and formulating our strategic plan. If for any reason concentratectually agreed to Shenghe accounted for (but currently unavailable) funding is not timely approximpriately 50% and 70% of our consolidatedd by the legislative branch or otherwise becomes unavailable, revenue for the three months ended March 31, 2025, duced, restricted, or delayed, we may need to seek alternate financing arrangements, and forthere can be no assurance the year ended Deat we would be able to secure replacember 31, 2024, respectivent financing on acceptable terms, at favorable pricing, in a timely. Even though  manner or at all. If we have ceased shipments to China, the Offtake Agreement continues are not successful in generating alternate financing from operations or in effect; howeverquity or debt capital raising transactions, we may need to reduce our costs, we will not receive any future payments under the Offtake Agreehich measures could include selling or consolidating certain operations or assets, and delaying, canceling or scaling back our development unless and until we resume shipments to Shenghe. In addition, the Offtake Agreement with Shenghe expires on January 16, 2026 (subjectprojects. Further, historically, market prices for rare earth metals and their downstream products have been subject to a high degree of volatility. If the DoD were to our opfail to meet its obligation in our discretions with respect to extend the term fits pricing and offtake commitments, or an additional one-yeato be delayed in doing so, our period). In the eventroducts may not be cost-optimized to compete in that we are unable to renew our Offtake Agreement, and we are unable e market, and our profitability may be materially adversely impacted if we choose to offer our products at a reduced price. Additionally, because many of our products may be designed to find,satisfy DoD specifications and enter into agreerequirements with, replacement , our products may not find customers to rein the commercial marketplace the refin, and our profitability may be materially advers in China that haely impacted if we are unable to identify alternative historically pursales chased our concentrate from Shenghe, it may nnels. Failure by either or both of the Company and the DoD to perform its obligations under the PPA and DoD Offtake Agreement would have a material adverse impact on our business, operatingprospects, results, financial  of operformanceations and financial condposition, cash flows and liquidity.

There can be no assurances that we will be able to find, and enter inand may result in increased volatility in and an adverse effect on the price of our common stock.

Our operations are subject to agreements with, additional orextensive regulatory replacquirement customers s enfor our rare earth concced in part by the federal government. If governmentrate in the near-term or at all, o regulations are interpreted or enforced in a manner asdverse to any supportus, we may receive from, or any arrangement we may enter intobe subject to enforcement actions, penalties, exclusion, and other material limitations on our operations. Any change in our relationship with, the U.S.federal government ocould impair others that are in need of a source ofur ability to operate our existing business and pursue our strategic plans. Furthermore, materny of the potentials and magnets, or whe opportunities presented by our strategic relationship with ther or when we resume shipments of DoD cannot be replaced, including the governments unique position to assist and facilitate our rarsourcing of heavy rare earth concentratefeedstock and securing necessary environmental permits and approvals, and with respect to China, or that we will be able to renewthe designation with the highest priority DX Rating under the Offtake Agreement after its expirDefense Priorities and Allocations System of our contracts relation on terms acceptable to us or at all, ng to the DoD Transactions. In the event of any termination or that frustration of there wi DoD Transaction Agreements, in full not be accounting charges or other implicationor in part, we may have limited recourse and remedies available against the DoD and the federal government.

The Companys as a result ofgreement to the cessaDoD Transaction of sales to China and Agreements also subjects it to various laws, regulations, and othe stockpiling of rare earth r policies and considerations that may concenstrate. Any of in our future business or othe foregoing would rwise have a material adverse impact on our business, operating results, financial performance and financifuture financial results. The Company may be subject to heightened scrutiny of our business activities with both government and non-government customers, government audits, investigations, congressional condition, cash flows and liquidity.

46scrutiny, inquiries about conflicts of interest, civil or

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Given our rececriminal enforcement by the Department decision to ceaof Justice (including actions under the False exports to China, the continued developClaims Act), exclusion or limitation on future government of our midstream-funded opportunities, suspension, debarment, and downother administream operaative remedies.

The DoD Transactions, including our separ Agreements contain affirmation capabilities, and ve and negative covenants that may restrict our ability to vertically integrate oand the ability of our value chain, tsubsidiaries to take on even greater significanceactions management believes are important to our business, opelong-term strating results, financegy, and therefore could have a material performance andadverse effect on our business, prospects, financial condition, cash flows and liquidity.

Since ceasing shipor results of operations.

The DoD Transaction Agreements of rare earthcontain affirmative concentrate venants requiring us to China, wtake continue to produce concentrate, and to the extent not further processed and sold as separated product, we will stockpile that concentrate for future use. In addition, we are prioritizing our midertain actions and negative covenants restricting our ability to take certain actions. The affirmative covenants impose obligations on us with respect to, among other things, (i) constreamucting and downstream operations, as well as focuseveloping the 10X Facility, (ii) expanding on generating sales of separated productsheavy rare earth elements (HREE) refining capacity at Mountain Pass, to customers outside of China. Our continued growth depends on our ability to reach anticipated produinclude, after the DoD extends the Samarium Project Loan to the Company in accordance with the DoD Transaction rates for Agreements, the separation of REE as part of the Stage II projectsamarium oxide, (iii) expanding/recommissioning the chlor-alkali facilities at Mountain Pass, as well as to establish Stage III downstream nd (iv) expanding capabilitiescity at the Independence to convertFacility to a portionrojected 3,000 metric tons of the REO produced at Mountain Passmagnets annually. The negative covenants into rare earth magnets and i the DoD Transaction Agreements precursor productsrestrict us with respect to be marketed directly to end us, among other things, (i) consummating certain fundamental events other than to pers.

Achieving these milestones is subject to numerous riskson(s) from certain permitted jurisdictions, (ii) selling any equity or material as fursets of ther describe Project Company (as such term is defined in Part I, Item 1A. Risk Factorthe DoD Offtake Agreement), (iii) selling assets of our Form 10-K. If we are not successful in rapidr products identified by the DoD as a priority to U.S. national security interests, (iv) knowingly acceleratiissuing the development and expansion of our downstream omore than 14.9% of the common stock to person(s) from foreign jurisdictions other than certain peratimitted jurisdictions, includ(v) consummating reaching and maicertain fundamentaining expected produl events subject to the jurisdiction rates at Mountain Pass, and finishingof the Committee on Foreign Investment in the buildUnited States (CFIUS) without of Independence, within the necessary timeframesbtaining CFIUS clearance prior to consummation or at all, it would have a material adverse impact on our business, o(vi) selling NdPr or magnets to any customer qualifying as a Restricted Buyer under the PPA or peratmitting results, financial performanceany customer to resell NdPr or magnets to a Restricted Buyer (other than and financial condition, cash flows and liquidity.

Risks Related to Our Common Stock

Our y NdPr or magnets that are included in another finished product sold by such custock primer).

Compliance has experienced (including recently), and may with the affirmative and negative covenants contained in the future experience, volatility, and you DoD Transaction Agreements could lose all or part of your investmerestrict our ability to take actions that management abelieves a result.

The re important to our long-term strading price of our common stock has historically (including recently) experienced, and may continue totegy. If strategic transactions we wish to undertake are prohibited by the DoD Transaction Agreements, our ability to execute our long-term strategy could be materially adversely affected.

The conversion or experience, significant volatility, which cercise of the Series A Preferred Stock and the Warrant into shares of common stock would cause you to lose all or partdilute the ownership of your investment. For example, ascommon stock, and the subsequent sale of a result substantial number of the decrease such shares of common stock in the public market price, or the perception of NdPr oxide in 2024, our NdPr Realized Price per KG decreased from $70 for such sales, could cause our stock price to fall.

The shares of common stock into which the year ended December 31, 2023, to $51shares of Series A Preferred Stock are initially convertible and for which the year ended December 31, 2024. This negaWarrant is initially exercisable collectively impacrepresented our results of operations and cash flows15% of the Companys issued and outstanding common stock prior to the DoD Transactions, which, at times, has ithout giving effect to the issuance of such sharesulted in a decrease in. The Series A Preferred Stock and the trading priceWarrant are convertible and increased volatility of our common stock.

Most recently, as we areexercisable at any time and from time to time after the date that is 45 days after the only rare earth miningclosing of the DoD Transactions. Further, at any time after the five-year and processniversary of the closing site of scale in North Ameof the DoD Transactions, if the closing prica, oe of our common stock price has been impacted by announcements related to President Trumps Executive Orders anexceeds 150% of the then-current conversion price for at least twenty trading days in any period other actif thirty cons related to critical mineralecutive trading days, as wewe will ashave the implementatoption of tariffs and other changes in trade policies. For example,to require all or any portion of the the tran-outstanding price of our Series A Preferred Stock be converted into common increased morstock at the than 16% during theen-current course of the week ended Anversion pril 18, 2025, and almost 70% since December 31, 2024. There are no assurancce, subject to certain conditions. As such, existing common stockholders, including holders of shares that ourof common stock prioffered hereby, may experience will continue atsubstantial dilution of this level for any period of time or will coeir ownership positions.

Furthermore, the sale of a substantinue to be favorably impacted by President Trumps Executive Orders and oal number of shares of our common stock in the public market, or ther ac perceptions related to critical that these sales minerals. Further, tariffs and oght occur, including of ther chang shares in trade policies, including ssuable upon conversion and exercise of the consequences of our ceasing shipments of rare earth concentrate to China,Series A Preferred Stock and the Warrant, could depress the market price of our common stock and could outweiimpair our ability to raise capital through the near-term positive impact on our stock price and result in a negative impact isale of additional equity securities. We are unable to predict the effect that sales may have on the longer-term. prevailing market price of our common stock.

The significfinance, extential, tax and durationaccounting treatment of tariffs and ohe DoD Transactions contemplated by ther recent eve DoD Transaction Agreements also remain largely s uncertain and dependent on future desubject to change.

Given both the novelopments that cannot be accurately predictety and complexity of the DoD Transactions, the Companys initial analysis of the financial, tax and at this time, whichccounting implications of its could further lead to volmmitments and obligatility in our stock price.

You mayons under the DoD Transaction Agreements has not be able to resell your shares aten completed and may take considerable time an attractive price due to a number of factors such as those listd require significant attention from management.

Additionally, no assurance can be provided in Risks Relating to our Business and Indthat this initial assessment will not require adjustry above and in our Form 10-K and the following: (a) fluctument or amendment over time due to changes in tax law or regulations in dem, accounting practices and requirements and unfor, and priceseseen developments in the course of, REE  providing services and magnet products; (b)receiving cash flows results of operalating to the DoD Transactions that vary from the ex, particularly with respectations of securities analysts to the DoD Offtake Agreement and investors; (c) changes in exPPA, including with respectations as  to the Companys future financial performance, including financial estimates and investiming and characterization of payments received from the DoD, among

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otment recommendher considerations by securitie. The DoD Transaction Agreements analysts andre also highly investors; (d) declines tegrated, and certain of the market prices of stocks generally and market prices of minobligations under each DoD Transaction Agreement are conting-related companies in particular; (e) strategic acent upon or impacted by the terms and obligations byof the Companyothers. If one or its competitors; (f) announcemore of the DoD Transaction Agreements by the Company, or one or its competitormore elements of significant contracts, acquisithe DoD Transactions, joint ventures, other strwere to be altered, amended or terminategic relationships or capital commitments; (g) any d, management would need to assess the financial, tax and accounting implications of such changes, which could be significant change in t, together with any related remedies available to the Companys management; (h) changes in general economic or market conditions o and the present condition of its business and operations. We are unable to predict and may not be able to anticipate either trends in hese changes or the Coimpanys industry or markets; (i) changes in ct thereof, which may have a material and adverse impact on our business or regulatory condand financial positions, including new laws or regulati, but not limited to, material changes to our financial outlook, recharacterizations or new interrestatements of our financials or adjustments to pretations of exiviously provided esting lawmates or regulations applicableguidance.

Inability to perform the Companys business; (j) future sales of the Companys common stock or other securities; (k) investor obligations under our customer supply agreements could have a material adverse effect on our financial position and results of opercepations of the investment opportunity associated.

We have entered into the DoD Transaction Agreements with the Companys common stock relative to other investDoD, including the DoD Offtake Agreement alternatives; (l) the publics response to , and the supply agreement with Apple Inc. (Apple), and we press releases or other public announceviously entered into a binding long-term supply agreements by with the General Motors Company or third parties, including(GM). Our ability to fulfill our obligations under the Companys filings with the SEC; (m) litigation involving se long-term agreements to supply the DoD, Apple and GM, as well as any othe Company, the Companys industry, or both, or investigations by regulators intor future customers, with magnets and magnet materials, are subject to a number of risks and contingencies. We are currently building the Companys operations or those of our competitors; (n) guidance, if any, that the Company providesIndependence Facility, the first scaled rare earth magnet manufacturing facility in the U.S. in several decades, and under the DoD Transaction Agreements, we are required to the public,begin planning any changes in this guidance or the Companys failure to meetd constructing a second rare earth magnet manufacturing facility, the 10X Facility. While we are relying, and will rely, on a number of experienced engineers and other this guidance; (o) rd parties in the developmentsign, engineering and sustainabconstruction of the Independence Facility of an active tradand the 10X Facility, we are making market for the Companys stock; (p) aand will be required to make a number of judgments and assumptions on process design, equipment selections by institut and design, and plant operational s, that may or activist stockholders; (q) declines in the market price of our stock as a result of negative repormay not prove to be correct. Design, engineering or construction delays may impair our ability to perform under our long-term agreements onwith the Company by research firmDoD, Apple and GM, as well as that engage in short selling; (r) changes in accounting standards, policies,

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gose made with any other future customers. We will also need to promptly assess the need for and to build out additional resources to suidelines,pport multiple novel construction projects interpreta parallel. In additions or, we need to principles;ocure the necessary equipment and (s) other events or factors, includingmaterials to produce magnets and their precursor products, some of which may be difficult to obtain. There can be no assurance thoseat such resulting from natural disasters, war, acts of terrorism, health pources, equipment and materials will be procured on time or not be delayed due to both the finite time and resources of our management andemics or  employees to assess and responsesd to these events.

Volatility inincreased demand, and to circumstances beyond our stock price could adversely affect our buscontrol.

Further, we need to hire a sufficient number of enginesers, operators and financing opportunities. These broad marketother professionals to successfully design and operate the Independence Facility and industry fluctuationsthe 10X Facility. It may adversely affect the market price of our common stock, regardless of the Companys actual operating performance. In addbe difficult for us to hire employees with the experience, education and skills needed to produce magnet materials, and we may need to hire employees from other countries if we cannot recruit employees in the U.S. We will also face competition, price volatility for these employees. These challenges may be greater ifexacerbated by the public floneed to develop multiple facilities at and trading volume of our common stock is low.

In the past, following periods of markthe same time.

There can be no assurance that we successfully produce magnet volatility, stockholders have instituted securities class action litigationmaterials at the volumes and quality necessary to meet the requirements under our long-term supply agreements with the DoD, Apple and GM. Ifn the Company was involved in securities levent we are not able to mitigation, ite these risks or fail to could have a substantial cost and divert resources and mply with the terms of the DoD Transaction Agreements, particularly the attention of executive manageDoD Offtake Agreement, and our supply agreement from the Companys business regardless of the outcome of such litigs with Apple and GM, we may experience material adverse effects on our financial position and results of operations.