MP Materials unveiled a multibillion-dollar deal with the U.S. government on Thursday to boost output of rare earth magnets and help loosen China's grip on the materials used to build weapons, electric vehicles and many electronics.

The Defense Department on Thursday became the largest shareholder in MP Materials, which owns the only rare earth mine in the U.S., amid a surge in demand for rare earths mined in the U.S. as China has curbed its rare earth exports amid a trade war with the U.S.