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China’s handling of rare earth elements poses significant supply challenges for the United States.
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Recently, MP Materials secured a substantial contract with the U.S. Department of Defense.
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Although the current stock price may seem high, support from the government coupled with strong demand for magnets could make this valuation reasonable.
China continues to negatively impact those in search of rare earth metals.
In the last couple of weeks, the Chinese government has increased export controls on five additional rare earth elements and limited crucial processing equipment, with these regulations taking effect on November 8. In September, exports of rare earth magnets dropped by around 6.1%. China has cautioned that even a 10% reduction in supply could result in a $150 billion loss in global output.
For instance, if you’re in the automotive or consumer electronics industry, this isn’t very encouraging news. On the flip side, MP Materials’ Mountain Pass mine in California stands as one of the few rare earth metal operations in the U.S., and these regulations create favorable conditions for the company’s stock.
The price of MP Materials’ stock has surged an impressive 340% as of October 23, 2025, currently trading at record highs. The future price-to-earnings ratio is in the low double digits. Short-term investors might hesitate due to high valuations.
However, for those investing long-term, there could be strong reasons to consider buying this stock. While it might not be essential to buy next month, November could present a good opportunity.
China dominates the mining, refining, and processing of rare earth elements globally, controlling roughly 70% of mining, 92% of refining, and an astonishing 98% of magnet production.
The U.S. has long recognized the need to lessen its reliance on this key economic rival for rare earth imports. It wasn’t until this year, amid renewed trade tensions, that the White House began making direct investments in domestic suppliers to help revitalize American supply chains.
Among the notable players is MP Materials, which mines and processes essential rare earth elements like neodymium and praseodymium. These are critical for producing high-strength magnets used in various applications, from electric vehicles to smartphones.
Back in July, the Department of Defense invested $400 million, making it MP’s largest shareholder. It also established a price floor of $110 per kilogram for neodymium praseodymium oxide and assured that the entirety of production from MP Materials’ second magnet plant would be procured for defense or commercial purposes.
