MP Materials stock rips 23% higher after $500 million Apple deal for rare earth magnets

Apple and miner MP Materials announced a $500 million deal Tuesday for rare earth magnets and the development of a recycling facility that will reinforce the iPhone maker's U.S. supply chain.

MP Materials stock climbed 23%. Shares of Apple were marginally higher.

As part of the agreement, Apple will buy rare earth magnets created at the company's facility in Fort Worth, Texas. Both companies will combine on a new rare earth recycling line in Mountain Pass, California. MP Materials plans to start shipping magnets in 2027.

"American innovation drives everything we do at Apple, and we're proud to deepen our investment in the U.S. economy," said Apple CEO Tim Cook in a press release. "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.".

Apple said the deal will create dozens of new manufacturing and research and development roles.

Rare earth magnets are key components that make up everything from consumer electronics such as smartphones and computers to cars and renewable energy systems.

For years, the U.S. has worked on curbing its reliance on China, which dominates the global rare earth elements supply chain. MP Materials operates the only rare earth mine in the U.S.

Earlier this month, the Department of Defense became the largest shareholder in the rare earth miner, buying $400 million in preferred stock to improve rare earth magnet supply on American soil.

Apple announced a plan to invest more than $500 billion to beef up U.S. manufacturing capabilities earlier this year. The plan included a new factory for artificial intelligence servers in Texas.

Shares of MP Materials have nearly quadrupled since the start of the year, pushing the miner's market capitalization to nearly $10 billion. The stock has nearly doubled over the last month.

WATCH: Pentagon invests in MP Materials, guarantees floor price for rare earth minerals