On Tuesday, Apple (AAPL.O) announced a $500 million agreement with MP Materials (MP.N), a Las Vegas-based company operating the only rare earth mine in the United States. The deal ensures a stable supply of rare earth magnets for Apple, starting in 2027, with an initial prepayment of $200 million. This partnership supports Apple’s goal of reducing reliance on traditional mining by using magnets made from recycled materials at MP’s Fort Worth, Texas, facility, sourced from its Mountain Pass, California, mining complex.

Apple logo is seen on the Apple store at The Marche Saint Germain in Paris, France July 15, 2020.

MP Materials has seen significant growth, with its stock price nearly doubling after a recent multibillion-dollar agreement with the U.S. Department of Defense, making the Pentagon its largest shareholder. This follows a challenging period last year when the company considered merging with an Australian competitor due to a difficult pricing environment for rare earths, as described by CEO Jim Litinsky as “very frustrating.”

The agreement addresses supply chain reliability, a priority for Apple amid global trade dynamics. In April, China introduced export restrictions on rare earths, prompting concerns about access to these critical components used in devices like smartphones and electric vehicles. Although a June agreement between the U.S. and China eased some restrictions, the need for diversified supply chains remains. “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.

Apple’s CEO Tim Cook emphasized the importance of the partnership, stating: “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.” The deal aligns with Apple’s $500 billion, four-year investment commitment to the U.S. and its environmental goals, as the magnets will be produced from recycled materials.

Bob O’Donnell, president of TECHnalysis Research, noted: “This move makes complete sense,” highlighting Apple’s need for rare earth magnets in its devices and the strategic advantage of partnering with a U.S.-based supplier. The agreement will supply magnets for hundreds of millions of devices, though specific products were not disclosed. MP Materials, which also supplies General Motors and Germany’s Vacuumschmelze, plans to begin commercial magnet production in Texas by year-end.

Rare earths, a group of 17 metals, are vital for creating magnets used in electronics, electric vehicles, and other technologies. This deal strengthens MP’s position while supporting Apple’s efforts to secure a sustainable, domestic supply chain.