MP Materials Stock Surges On China’s Rare-Earth Move. What Next?

MP Materials (NYSE:MP), an American rare-earth materials company headquartered in Las Vegas, Nevada, saw its stock jump by about 8% on Friday after China announced new export restrictions on rare-earth elements. The new rules will require foreign buyers to obtain licenses, raising fears of supply shortages. In response, President Donald Trump threatened steeper tariffs on Chinese goods and hinted at canceling his meeting with President Xi, reigniting U.S.-China trade tensions. This development could be a major tailwind for MP Materials. With Washington already investing $400 million in the company and guaranteeing future purchases, MP stands to benefit from any move that pushes the U.S. to rely less on Chinese supply. Investors are now betting on stronger demand, better pricing, and continued policy support for U.S.-based producers.

MP stock has jumped meaningfully recently and we currently find it unattractive. This may feel like a caution, and there is significant risk in relying on a single stock. However, there is a huge value to the  broader diversified approach we take with Trefis High Quality Portfolio. Separately, consider what could long-term performance for your portfolio be if you combined 10% commodities, 10% gold, and 2% crypto with equities.

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Geopolitical shifts have only increased the importance of this position. Earlier this year, after Washington imposed higher tariffs on Chinese products, Beijing introduced export controls on rare earths. China’s rare earth exports have been sharply affected: in September 2025, exports plummeted 31% from August to 4,000.3 tonnes, the lowest monthly figure since February 2025. Now, China expanded its rare earth export restrictions to include 12 of the 17 rare earth elements, with new controls taking effect from December 1. These controls will require licenses for exporting rare earth magnets and related products, including for foreign firms that use Chinese-origin rare earth materials or technologies. These episodes are underscoring the need for a secure domestic supply.

This makes MP Materials one of the most strategic companies in America’s effort to build its critical minerals supply chain. The company owns and operates the Mountain Pass Mine in California – currently the only operating rare-earth mine and processing facility in the United States. Its key focus is producing Neodymium-Praseodymium (NdPr), essential for high-strength permanent magnets used in EV motors, wind turbines, drones, and defense equipment. In July, the U.S. Department of Defense became MP’s largest shareholder after a $400 million equity investment aimed at accelerating the company’s magnet production capacity. MP also signed a $500 million supply deal with Apple, with prepayments funding most of its new Independence facility in Texas, which will produce finished rare-earth magnets.

Operational Progress

MP’s operational progress has been strong. In Q2 2025, the company reported record NdPr oxide production, up 119% year-over-year, with sales volumes tripling to 443 metric tons. Revenue surged 84% to $57.4 million, beating expectations. Management expects another 10%–20% sequential production increase in Q3. The company is also moving downstream — transitioning from raw oxide production to high-value magnet alloys and finished magnets, a segment where sales already reached $20 million last quarter. MP plans to scale this to 10,000 metric tons annually by 2028, which could meaningfully lift margins. Financially, MP remains well-capitalized, holding nearly $2 billion in cash, providing flexibility for expansion and R&D.

What Are The Risks?

Despite its strong fundamentals and policy support, valuation is a key concern. MP trades at roughly 50x forward revenue, more in line with high-growth tech companies than miners. The business remains unprofitable, posting a $53.5 million net loss and burning $126 million in cash year-to-date. While geopolitical tailwinds have powered its rally — the stock is up over 500% year-to-date — this dependence cuts both ways. Any easing in trade tensions or normalization in Chinese exports could weaken the bullish case. With China still producing 90% of the world’s rare-earth magnets, MP’s edge remains very policy-sensitive.

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