Rare earth elements have once again returned to the center of the geopolitical and market conversations.
On Thursday, China’s Ministry of Commerce announced an expansion of its export controls on certain rare earths, materials critical to semiconductors, defense systems and electric vehicles.
The new measure will also apply to goods manufactured outside of China that contain trace amounts of rare earths sourced from China.
Beijing says the move is aimed at protecting “national security and national interests,” but analysts view it as an escalation in the ongoing U.S and China trade rivalry and a signal of China’s dominance in the global supply chain.
This comes a week before President Donald Trump visits South Korea for the Asia-Pacific Economic Cooperation (APEC) summit, where he was scheduled to meet with President Xi Jinping. The meeting now appears uncertain, following President Trump’s questioning of China’s motives on his Truth Social platform.
Image source: STR/AFP via Getty Images
“I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so. The Chinese letters were especially inappropriate in that this was the Day that, after three thousand years of bedlam and fighting, there is PEACE IN THE MIDDLE EAST. I wonder if that timing was coincidental?”
Trump has since announced an additional 100% tariffs on Chinese imports in response.
U.S bets on MP Materials
While the broader market trend was bearish after the tariffs announcement, it reignited investor interest in U.S. rare earth producers, especially MP Materials, which operates the only integrated rare earth mining and processing site in the Western Hemisphere.
MP’s stock was up 8.4% on Friday, even when the market reacted bearishly to the tariff announcement. It continued to gain 23% on Monday and has increased by 31% over the past month, marking a 525% gain year-to-date.
The rally highlights the company’s role in representing America’s ambition to regain control of critical mineral supply chains.
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President Trump described China’s move as “hostile” and suggested that China is boasting a monopolistic position on rare earth. But also exclaimed that,
“For every Element that they have been able to monopolize, we have two. Ultimately, though potentially painful, it will be a very good thing, in the end, for the U.S.A.”
MP’s strategic importance in this rare earths war, and that establishing trade supremacy has not gone unnoticed in Washington. The administration’s innovative move to invest in equity in rare earth companies could prove beneficial in the long run.
Related: White House bets big on rare earths
In July, the company announced a public-private partnership with the U.S. Department of Defense to accelerate domestic rare earth magnet production and reduce dependence on Chinese processing.
This 10-year agreement, valued at $400 million investment from the US government, solidifies MP Materials’ strategic capability of extracting, separating and refining high-purity rare earth materials in one location.
Wall Street weighs in on MP Materials
BMO Capital analyst Raj Ray noted that after this partnership, the company has “emerged as the U.S.’ rare earth champion” and reinstated coverage with a Market Perform rating and a $76 price target. Ray also noted that the market is fairly valuing the company, given its earnings visibility.
“Rare earth magnets are one of the most strategically important components in advanced technology systems spanning defense and commercial applications. Yet today, the U.S relies almost entirely on foreign sources,” read the company’s official statement, highlighting their pivotal role in strengthening industrial resilience and securing critical supply chains for the country.
In parallel, MP Materials also announced a $500 million partnership with Apple to produce rare earth magnets in the United States, underscoring the growing demand from technology companies for secure, sustainable, and domestic supply lines.
Analysts cite high expectations amid global supply disruptions and higher metal prices in the event of a weakening dollar. Morgan Stanley raised its price target on MP to $69 from $65, keeping an Equal Weight rating on the shares, as reported by TheFly.
While MP’s moves align with the U.S. government’s strategy to invest heavily in critical mineral independence, China’s recent move will test how reliant the world remains on its materials. One thing is sure: it has refocused investors’ attention on domestic rare earth companies.
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