Shares in MP Materials (MP 2.38%) rose by 11.1% in the week to Friday morning. The move comes as the market prices in the possibility of an improved trading relationship with Venezuela, a country rich in resources.
MP Materials and Venezuela
The country is better known for its oil deposits, but it's also believed to have 300000 tonnes of rare-earth minerals in the Orinoco Mining Arc. In addition, Venezuela's deposits contain monazite minerals, which in turn contain highly prized heavy rare-earth elements, including Dysprosium (used in electric vehicles and wind turbines) and Terbium (used in defense munitions and advanced sensors).
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Key Data Points
These minerals could potentially be highly valuable to MP Materials, as its Mountain Pass deposit in California is scarce in them and is known as a light rare-earth deposit, producing. light rare-earth such as neodymium and praseodymium.
What it means to investors
While it's interesting to speculate about MP Materials, a company with substantial U.S. government investment, utilizing heavy rare-earth elements from Venezuela to feed its magnet-producing facilities, it's a long way from happening or even being a possibility. It's a long way from happening anytime soon.
Image source: Getty Images.
That said, the reality is that securing non-China-sourced materials and magnets is clearly a priority for the current administration, and MP Materials offers a pathway to help ensure a domestic source of such materials, even if the company faces execution, funding, and political risks ahead.
