Can MP Maintain Its Lead in the Race to U.S Rare Earth Independence?

MP Materials MP has emerged as a key beneficiary of the renewed spotlight on rare earths amid escalating tensions between the United States and China. Beijing recently tightened export controls on rare earths in an effort to “safeguard national security”. 

China currently accounts for roughly 70% of global rare earth mining and 90% of processing capacity, giving it significant leverage. Under the new regulations, foreign entities must obtain licenses to export products containing even traces of rare earths and disclose their intended use. In response, President Donald Trump threatened to impose an additional 100% tariff on Chinese goods. 

MP Materials is America’s only fully integrated rare earth producer with capabilities spanning the entire supply chain, from mining and processing to advanced metallization and magnet manufacturing. It currently operates the Mountain Pass Rare Earth Mine, the world’s second-largest rare earth mine and a processing facility at the site.

In July, MP Materials secured a landmark deal with the U.S. Department of Defense (DoD) to fast-track the development of a fully integrated domestic rare earth magnet supply chain. The deal consists of a comprehensive, long-term package of commitments from the DoD, including equity investments, loan financing, purchase commitments and pricing support. 

Rare earth magnets are critical components in a wide range of advanced technologies, including defense systems, electric vehicles, wind turbines and other commercial applications. Focus has intensified lately on building production capabilities that are independent of China. Various players are now diversifying into rare earths to capitalize on this demand. 

Energy Fuels UUUU, which produces uranium, is expanding its rare earth capabilities. Leveraging its White Mesa Mill and existing expertise, facilities and permits, the company is producing high-purity separated neodymium-praseodymium (NdPr) oxide at commercial scale from monazite, a low-cost mineral feedstock and byproduct of heavy mineral sand mining. Energy Fuels is also piloting the separation of heavy rare earth elements, including samarium (Sm), dysprosium (Dy) and terbium (Tb), to strengthen its foothold in this space.

Idaho Strategic Resources IDR is a gold producer that also owns the largest rare earth elements land package in the United States. Idaho Strategic has three REE exploration properties in Idaho - Lemhi Pass, Diamond Creek and Mineral Hill. Idaho Strategic has conducted numerous exploration programs on its REE properties, which include drilling, trenching, sampling and mapping certain areas within its 19,090-acre landholdings. The company plans for its busiest exploration season to date in 2025, targeting REE and thorium at its properties. 

USA Rare Earth Inc. USAR is developing a rare earth sintered neo magnet manufacturing plant in Stillwater, OK. USA Rare Earth recently inked a deal to acquire LCM, a United Kingdom-based manufacturer of specialized rare earth metals and both cast and strip cast alloys.  LCM holds a unique position as the only proven ex-China producer of both light and heavy rare earth permanent magnet metals and alloys at scale at its 67,000 square foot production facility in Cheshire, UK. It also has an established supply of raw materials outside of China. The acquisition will significantly accelerate USA Rare Earth’s mine-to-magnet strategy, establishing an end-to-end rare earth supply chain.

MP’s Price Performance, Valuation & Estimates

MP Materials’ shares have skyrocketed 509.4% so far this year compared with the industry’s 34.9% growth.

MP is trading at a forward 12-month price/sales multiple of 28.36X, a significant premium to the industry’s 1.45X.

The Zacks Consensus Estimate for MP Materials’ 2025 earnings is pegged at a loss of 26 cents per share, narrower than the loss of 44 cents reported in 2024. The bottom-line estimate for 2026 is pegged at earnings of 90 cents per share, indicating a solid improvement.

The estimates for 2025 and 2026 have moved down in the past 60 days, as shown in the chart below.

The company currently carries a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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