The trade war between the United States and China is heating up and is leading investors to gobble up rare earth mineral stock MP Materials (MP +0.84%), which operates the only rare earth mine and processing facility in the United States. As of 11:25 a.m. ET, shares of MP Materials have soared 22.7%, while the S&P 500 (^GSPC +0.54%) has jumped 1.1%.
NYSE: MP
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The only opportunity to buy American (sort of)
Throughout the morning, there have been reports emerging that suggest President Donald Trump plans to announce an executive order that will permit the United States to begin the stockpiling of rare earth minerals. Consequently, MP Materials is bright on investors' radars as it operates the sole rare earth mining asset, Mountain Pass, in the United States.
Last week, China halted exports of rare earth minerals. This represents a devastating blow to the various industries that rely on rare earth minerals for the manufacturing of their products, including semiconductors, electric vehicles, and defense. About 70% of U.S. imports of rare earth minerals come from China, the global leader in the production of these highly sought-after minerals.
Is now the time to power your portfolio with MP Materials?
While MP Materials is an obvious stock consideration in light of the potential announcement of an executive order that allows for the stockpiling of rare earth minerals, the situation is more nuanced than it may appear. MP Materials sells its rare earth minerals concentrate to customers in China.
In fact, the company identifies the following as a risk factor in its 10-K: "Changes in China's political environment and policies, including changes in export policy or the interpretation of China's export policy and policy on rare earths production or the import of rare earth feedstock, may adversely affect our financial condition and results of operations."
The developments around rare earth minerals is a rapidly changing situation, and there will be more news to come. At this point, only investors with high thresholds for risk and volatility should be considering a position in MP Materials.
