U.S. efforts to break China's dominance of the rare earths market and to drive investment in its own industry have moved up a gear with a Washington-backed plan to create a separate, higher pricing system.

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.

Shares of the little-known mining company soared on Thursday on news that the Pentagon would become the largest shareholder.