Winning the AI Race Part 3: Jensen Huang, Lisa Su, James Litinsky, Chase Lochmiller

**Chamath Palihapitiya** (0:00)
Guys, this is one of the most amazing entrepreneurs that you're going to meet, Jim Litinsky, the founder and CEO of MP Materials.

**Jason Calacanis** (0:08)
Good to be here.

**David Sacks** (0:09)
Hey, how are you?

**Chamath Palihapitiya** (0:11)
So, let me set this up. Jim was a hedge fund guy running a pretty successful hedge fund, and he ended up basically investing in something called Molly Corp, which went out of business. And you did this incredible thing, which is you said, you know what, screw this.
You essentially shuttered the fund, took over the company, and fast forward many years later, you are the largest and only, I think, supplier and refiner of rare earth materials and maker of magnets inside the United States.

**James Litinsky** (0:45)
We're 100% of the American industry.

**Chamath Palihapitiya** (0:47)
100% of the American industry. You just did two really incredible things, actually, in the last couple of weeks. One was you announced an enormous public-private partnership with the DoD, $400 million, et cetera. Then the second is you announced a really big deal with Apple.

**James Litinsky** (1:04)
Yes.

**Chamath Palihapitiya** (1:04)
Okay. So take a huge step back, talk to us why rare earths matter, tell us about the supply chain for AI, tell us why you're doing this.

**James Litinsky** (1:14)
Rare earth magnets are really the feedstock to physical AI. Robots, drones, everything we're talking about today, the biggest industry in the world to come.
Essentially, electrified motion requires rare earth magnets. So you mentioned the predecessor went bankrupt. There was a feeling when I took over this site with my co-founder, and this goes back to 2015

**David Sacks** (1:38)
Where is the site?

**James Litinsky** (1:40)
It's in Mountain Pass, California. So you'll be familiar if you take a 45-minute drive from the Las Vegas Strip, just over the border in California is the site. You actually can see it from the road. And it's actually really the best rare-earth ore body in the world. The thing about rare-earths is that when you mine them, you also have to refine them. And it's really expensive and difficult to refine them. It's really a specialty chemical process. And so it's really a... Think of it as a multi-billion-dollar refinery that you need to have just to separate them. And then once you separate them, you need to turn them into metal and then a magnet. And so there's multiple layers of this stream to get this supply chain.
And of course, you could have all the rarests in the world, but if you don't make the magnets, you're sending it to China. Or you could have all of the magnetic capability in the world, but if you don't have the rarests, you're relying on China. And so our vision from day one going back to... We originally bought these assets out of bankruptcy. Officially, it was a two-year battle, took it out in 2017 And there was a perception that we just couldn't compete against China. And what we discovered actually is we could. It's a world-class site, but we had to reorganize the process flow. And then we had to make investments to move downstream. So over the last eight years, we invested about a billion dollars. Chamath, as you know, we took the company public in 2020 We built out the refining capability. And then about four years ago, we announced we were going to build a magnetics factory in Texas. We built that factory. We have GM as a foundational customer. We're now producing autograde magnets to GM spec. And we'll be ramping up sales to GM at the end of this year in magnets. And then Chamath, you referenced a couple. It's been a busy few months for us. We announced a pretty transformative public-private partnership with the Department of Defense. DoD is there's really three pillars to this deal. DoD is becoming our largest economic investor, as well as they're going to provide a price floor for our commodity so that the Chinese sort of Chinese mercantilism, we can get into that, won't take the price of the commodity below the cost of production. And then as a result of the DoD investment, we're going to accelerate the build out of the magnetic supply chain. So we're expanding our facility in Texas for Apple. I'll talk about that in a second. But we're then going to build a 10x facility to 10x our capacity with DoD as our 100% off take partner, customer and business partner, because we'll be splitting profits 50-50 with DoD.

**David Sacks** (4:12)
To just translate this, it's not a handout from the government. They didn't gift you $400 million. They invested in your company. They have warrants. They have equity.