Reason Behind MP Materials Corp.'s 90% Increase This Month
In a significant development, MP Materials Corporation, America's only fully integrated rare earth producer, has announced a long-term purchase agreement with technology giant Apple for recycled rare earth metals. This agreement marks a strategic shift in the global landscape of rare earth materials supply.
The U.S. government's deal with MP Materials comes amidst a trade dispute with China, the dominant global supplier of rare earth elements, over tariffs. The demand for a U.S.-based supplier of these crucial materials is high due to geopolitical tensions and the urgent need for secure American supply chains.
MP Materials' stock has rallied roughly 90% in less than a month, with shares rallying roughly 90% in late June through July 2025, and a year-to-date increase of over 200%. This growth can be attributed primarily to geopolitical shifts and U.S. government efforts to secure a domestic supply of rare earth materials crucial for national security and technological independence.
The company's business model revolves around controlling the entire supply chain from mining and refining rare earth elements at its Mountain Pass mine in California to advanced processing and manufacturing of permanent magnets used in key modern technologies like electric vehicles, defense, robotics, and clean energy. MP Materials focuses particularly on Neodymium-Praseodymium (NdPr), critical for high-strength magnets powering traction motors and other advanced applications.
MP Materials emphasizes cleaner, greener production and recycling innovations and has raised significant funds through green bonds to support sustainable operations aligned with environmental standards. The company's partners have recently received significant attention, further boosting investor confidence.
The U.S. government agreement with MP Materials is for a decade and could potentially lead to the government taking a significant stake in the business. If the convertibles and warrants were exercised, the U.S. government would own approximately 15% of MP Materials' stock.
MP Materials has successfully upsized a $650 million equity offering from the initial $500 million, capitalizing on the excitement around the stock. The company has been working towards becoming a U.S. provider of rare earth metals for several years and has deftly positioned itself to take advantage of the current situation.
The strategic importance of reducing U.S. dependence on China for rare earth materials is evident. A shortage of these materials could impact the automotive sector and vehicle production. Rare earth metals are important for modern technology, particularly in magnets and various items.
The long-term opportunity for MP Materials is significant, given the strategic and long-term importance of what it sells. The agreement with Apple is a testament to the company's potential to become a key player in the global rare earth materials market.
- In light of the strategic agreement with Apple and the government's increased investment, MP Materials could potentially explore investing some of its funds in areas like sports technology, where rare earth materials are essential for advanced devices and equipment.
- As technology continues to play a critical role in sports, particularly in areas like wearable fitness technology, MP Materials' position as a supplier of rare earth materials could open up opportunities for collaborations with sports organizations or companies specialized in technology for sports.
