Uncommon earth metals—the uncooked supplies powering fashionable applied sciences like chips, EV engines and army weapons—are on the heart of escalating U.S.-China commerce tensions. Because the Trump administration pushes to scale back reliance on imports from China, which produces greater than 90 p.c of the world’s provide, buyers are betting huge on MP Supplies, the one U.S.-based firm that mines, refines and processes uncommon earths. Its inventory has surged greater than 400 p.c this 12 months. However as geopolitical and financial forces shift, some specialists are questioning whether or not MP’s valuation is getting into bubble territory.
Investor curiosity surged after China imposed new restrictions on uncommon earth exports to the U.S. in April. The rally was additionally fueled by MP’s high-profile offers, together with multi-billion-dollar investments with the Division of Protection and a $500 million settlement with Apple in July. Whereas some trade observers see these developments as a significant win, others are skeptical that MP can absolutely ship on its promise to anchor the U.S. tech provide chain.
“MP Supplies appears like a sizzling inventory in the intervening time, as buyers’ enthusiasm stems from a uncommon mixture of geopolitical tailwinds, high-profile strategic offers and robust monetary momentum,” John Murillo, chief enterprise officer at fintech agency B2Broker, advised Observer. “My best considerations, although, are tempered by lingering worries overvaluation, execution danger and insider promoting.”
MP Supplies operates in California’s San Bernardino Valley, sitting atop a wealthy ore deposit on the Mountain Go mine. Its core product, neodymium-praseodymium (NdPr) oxide, is processed at its Fort Value, Texas facility into neodymium magnets, generally known as NdFeB magnets. These magnets are important parts in electronics, EVs, robotics, aerospace and protection programs as a result of their excessive magnetic power and power density. Because the U.S. seeks to scale back its dependence on China, MP gives a strategic benefit, difficult China’s near-total dominance of the worldwide metals market amid the Trump administration’s push to revive home manufacturing.
Why MP Supplies is the only real steel producer within the U.S.
MP’s dominance stems largely from timing. Between the Sixties and Nineteen Nineties, the U.S. was a significant producer of uncommon earths, sourcing most of its provide from the Mountain Go mine. However as globalization expanded commerce, competitors from cheaper, backed Chinese language imports pressured the mine to shut in 1998. Practically 20 years later, in 2017, MP Supplies purchased the location out of chapter for $20.5 million and restarted operations the next 12 months.
Constructing new U.S. mines is notoriously tough as a result of advanced allowing guidelines, environmental laws, excessive capital prices and lengthy improvement timelines. MP sidestepped many of those obstacles by reviving an current mine that already had a lot of the wanted infrastructure and approvals in place.
“The prolonged allowing processes and overly advanced laws within the U.S. have made home extraction and processing of uncommon earths very costly, inserting U.S. improvement at a extreme drawback in comparison with world rivals,” Steve Christensen, govt director of nonprofit Accountable Battery Coalition, advised Observer.
In the meantime, the U.S. additionally lags behind China in processing expertise. Producing uncommon earths requires solvent extraction, a expensive steel separation course of dominated by Chinese language companies, Mark MacDonald, vice chairman of investor relations at Ucore Uncommon Metals, advised Observer.
MP isn’t in a bubble–but
Regardless of considerations, most analysts agree MP is unlikely to enter bubble territory within the brief time period. China’s export restrictions, mixed with deregulation underneath the Trump administration and robust authorities partnerships, have positioned MP as a key participant in America’s effort to decouple its tech provide chain from China, in line with MacDonald.
“This authorities dedication will present wonderful long-term monetary alternatives as this new trade is established and MP is the de facto chief of this motion,” he advised Observer.
Nonetheless, MP’s long-term worth hinges on its potential to scale manufacturing. The corporate lately opened a magnet facility in Fort Value, Texas, which started business manufacturing in January 2025—a part of a broader plan to ascertain a U.S. uncommon earth-to-magnet provide chain by 2026. MP goals to produce 1,000 metric tons of magnets yearly, supplying three of the 5 main automakers, together with Normal Motors, in line with the corporate. To justify its valuation, MP should show it might probably broaden output effectively.
“There’s loads of promise for this to truly convey the management of the provision chain residence, nevertheless it hasn’t been confirmed out at scale but,” Diana Rasner, group lead of the supplies, chemical compounds, waste and recycling division at CleanTech Group, a enterprise intelligence agency, advised Observer.
Rasner cautions in opposition to placing all hopes on one firm. Overreliance on MP may sideline smaller gamers within the U.S. tech provide chain (comparable to Noveon Magnetics, a magnet recycler) in addition to new uncommon earth producers that would emerge underneath the Trump administration. “If we’re going to permit ourselves to say MP Supplies is our solely answer, I see a bubble,” she mentioned.
She additionally notes that shifting geopolitics may cool MP’s inventory. A return to U.S.-China diplomacy, for example, may decrease demand for reshored provide chains and deflate MP’s worth. China has beforehand used its uncommon earth dominance as a geopolitical weapon—most notably proscribing exports to Japan in 2010 throughout a maritime dispute—highlighting how coverage dangers may unsettle world provide chains.
Rasner speculates that MP’s inventory may self-correct if China lifts its export restrictions. That would imply the U.S. goes again towards diplomacy and finds a extra “pleasant manner” to alternate items, she mentioned.
As Murillo from B2Broker put it, “Hypothesis pushed by coverage headlines greater than underlying fundamentals” can backfire. “If earnings progress or manufacturing volumes don’t hold tempo, the inventory could possibly be susceptible to sharp corrections,” he cautioned.
