Geopolitical Tensions Fuel Rally for Rare Earths Producer MP Materials

Shares of MP Materials continued their upward trajectory, adding nearly 4% in a single session. Year-to-date, the stock has surged more than 20%, driven primarily by fresh uncertainty in global rare earths supply chains following an export curb from China to Japan.

A broad rally across the rare earths sector was ignited mid-week. The catalyst was Beijing's imposition of an export ban on dual-use goods, including materials related to rare earths, to Japan for military purposes. According to China Daily, the list encompasses over 800 products, ranging from chemicals to sensors. This move follows diplomatic tensions stemming from statements by Japanese Prime Minister Sanae Takaichi concerning Taiwan.

Market reaction was swift and pronounced. In Australia, shares of Lynas Rare Earths leapt as much as 16% at one point, marking their strongest trading day since July. Japanese suppliers saw even sharper gains: Toya Engineering climbed 20%, while Daiichi Kigenso Kagaku-Kogyo jumped 27%.

The sensitivity of the markets to any shift in Chinese export policy is underscored by the nation's dominant position. Data from the Japan Organization for Metals and Energy Security indicates China controls over 90% of the world's rare earths refining capacity.

Strategic Positioning and Government Backing

MP Materials stands as the largest non-Chinese producer in the Western hemisphere, a position that makes it a direct beneficiary of such supply chain disruptions. The company operates the Mountain Pass mine in California and solidified a strategic partnership with the U.S. Department of Defense in 2025.

Key elements of this $400 million agreement include:
* Long-term support for production expansion
* A price floor of $110 per kilogram for its neodymium-praseodymium (NdPr) output, guaranteed for ten years

Further bolstering its outlook is a multi-year, $500 million supply deal with Apple. The contract involves providing magnets made from 100% recycled rare earths.

Should investors sell immediately? Or is it worth buying MP Materials?

Additional Geopolitical Catalysts Emerge

Adding further momentum was confirmation from Washington regarding Greenland. A White House spokesperson, Karoline Leavitt, stated that President Trump and his team were discussing "a range of options" for acquiring the island, which holds significant rare earths deposits. Leavitt labeled the potential acquisition a "national security priority" and did not rule out military options. This rhetoric has sharpened investor focus on non-Chinese sources for critical minerals.

Financial Performance and Analyst Sentiment

Operationally, MP Materials has ramped up its NdPr production by 51% year-over-year in recent quarters. The company is targeting a return to profitability in the fourth quarter of 2025, with results scheduled for release on February 19, 2026.

Wall Street's view remains constructive. Of the 11 analysts covering the stock, the consensus recommendation is "Buy":
* 45% rate the shares a "Strong Buy"
* Another 45% maintain a "Buy" rating

This average assessment reflects confidence in the firm's strategic positioning amid persistent supply chain risks.

Forward-Looking Catalysts

The near-term focus will be on whether MP Materials confirms its anticipated path back to profitability in its upcoming earnings. Against the current geopolitical backdrop, any additional Chinese export restrictions targeting other countries or materials could further amplify demand for suppliers outside the People's Republic.

Another potential driver for the stock is a joint venture project announced in November 2025 with the Saudi Arabian Mining Company (Ma'aden). The project aims to establish a rare earths refinery, which would mark MP Materials' first significant expansion beyond its U.S. operations and broaden its international value chain.