What happened
Extending their 14% rise in February, shares of rare earth metals mining company MP Materials (MP -0.19%) soared 25.7% in March, according to data from S&P Global Market Intelligence.
While the main source of investor interest in February was the company's fourth-quarter 2021 earnings report, enthusiasm for the stock last month stemmed from the growing interest in President Biden's use of the Defense Production Act (DPA) to secure the nation's supply of materials used in electric vehicles -- and the eventual decision of the White House to invoke the DPA.
So what
On March 14, senators sent a letter to the White House asking President Biden to invoke the DPA -- which gives the president the authority to compel industries to produce goods for national defense. The motivation for the letter stems from interest in shoring up the nation's supply of rare earth metals, a critical component of batteries found in electric vehicles. Representing support from both sides of the aisle, Democrat Joe Manchin and Republicans Lisa Murkowski, James Risch, and Bill Cassidy penned the letter, suggesting that the topic isn't a partisan issue.
Image source: Getty Images.
According to Bloomberg, which claims to have seen a copy of the letter, the senators wrote that "In order to address the threats to our national security, we respectfully request that you invoke the Defense Production Act (DPA) to accelerate domestic production of lithium-ion battery materials, in particular graphite, manganese, cobalt, nickel, and lithium."
About two weeks after the senators sent the letter, the White House announced that President Biden would indeed invoke the DPA in an effort "to support the production and processing of minerals and materials used for large capacity batteries."
MP Materials is the self-proclaimed owner and operator of the only integrated rare earth mining and processing site in North America, illustrating why investors were particularly interested in the stock last month. Among the rare earth metals that the company produces are lanthanum, which prevents corrosion in EV batteries, and neodymium, which helps convert electrical energy into motion.
Now what
It's unsurprising that investors raced to MP Materials in March with bipartisan support for the DPA emerging. China is largely responsible for the global supply of rare earth metals, yet MP Materials is helping to reduce EV manufacturers' reliance on the nation for the indispensable materials used in EV batteries.
