MP Materials (MP 3.84%) operates one of the few rare earth metal mines and processing facilities in the U.S. -- the Mountain Pass Mine in California. This mine is critical as feedstock for neodymium-iron-boron magnets, which are found in consumer electronics, electric vehicles, and drones, among others.
To put it plainly, no other U.S. company can match in scale what MP Materials does, which is one reason the mining stock jumped 330% on the year. With a big push from the U.S. government, the stock may still have runway ahead.
The convergence of several big tailwinds
To understand MP Materials' big moment right now, just look at the larger context. China currently dominates the supply chain of rare earth metals. In 2024 alone, it accounted for about 65% of rare earth mining production. To put that into perspective, the U.S. came in second with a meager 11%.
If China and the U.S. were on friendlier terms, that might not be significant. But since they're not, the White House has been issuing executive orders to shore up the nation's supply of metals.
A rare earth magnet. Image source: MP Materials.
Back in July, the Department of Defense inked a huge multibillion-dollar deal with MP Materials. In exchange for a 15% stake in the company, MP got a variety of benefits, including a 10-year price floor of $110 per kilogram of neodymium-praseodymium.
MP plans to use the DOD's investment to build up its 10X Facility, which could produce about 10,000 metric tons of magnets per year.
Along with support from the Pentagon, MP also inked a $500 million deal with Apple. Under this agreement, MP will supply Apple with magnets made from recycled materials, the shipment of which should begin in 2027.
The convergence of these tailwinds has sent MP stock soaring. Likewise, it's given it a rich valuation. At today's price, the company trades at roughly 81 times forward earnings, meaning a lot of expectation is baked in. As such, expect this stock to be bumpy in the near term. Investors with a long-term horizon stand to benefit most.
