Magnets are part and parcel of everyday life. Everyone knows the way they can be used to attach notes to pinboards. Magnetism has a much greater and more important significance in technology. It is just as essential for electric motors as it is for wind turbines and many electronic articles. The effectiveness of a magnet depends to a large extent on the energy density of the metal used. This is the context that makes neodymium-praseodymium (NdPr) a commodity of the moment. It belongs to the group known as rare earths. “NdPr oxide is the cornerstone material enabling the world’s most efficient motors, actuators and generators,” writes MP Materials on its website. The US mining company is the owner and operator of the Mountain Pass mine. Located in California, not far from the border with Nevada, it holds around 1.9 million tons of rare earth oxides. That makes it one of the richest deposits in the world and the largest mine of its kind in the western hemisphere.
With that in mind, it is not surprising that MP Materials is calling on US politicians to take action. Securing the supply of critical minerals is high on the agenda of president Donald Trump. This market is still firmly in the grip of China: The Middle Kingdom has by far the most extensive reserves of rare earths in the world and is consequently also the leading producer (see graph). When Trump imposed high tariffs on imports from China in April, Beijing reacted with strict export controls on certain rare earths, among other measures. Although the two superpowers have since had something of a rapprochement and the supply of these commodities has eased again, Washington is working on reducing its dependency. A billion-dollar agreement between the Pentagon and MP Materials caused quite a stir on 10 July, when the US Department of Defense invested in the mining company by way of a public-private partnership. In return, MP Materials is getting a purchase and price guarantee.
Specifically, the US is buying shares in the company for USDmn 400 and is also providing it with a USDmn 150 loan. MP Materials will use the capital to increase its capacities and to build a second plant for the manufacture of magnets. The Pentagon has committed to purchasing the deliveries from this “10X Facility” over a period of 10 years through companies in the defence sector and the general economy. And that's not the whole story: the department is also guaranteeing a selling price of USD 110 per kilogram for the same timespan. To compare, this quantity of the commodity currently trades at around USD 65 on the commodities exchange in Shanghai. The latest agreement consequently triggered a rally in MP Materials’ share price, with the company’s market value more or less doubling since the announcement.
“This is a game changer for the ex-China industry and a much-needed surge in magnet production capacity,” said Ryan Castilloux of consultancy Adamas Intelligence, commenting on the event. The prices of other mining companies also rose in the slipstream of MP Materials. In the view of the analysts at J.P. Morgan, other governments could follow the USA’s example and seek to secure contracts for uncommitted rare earths. While it is very possible that China will respond and try to defend its pre-eminent position, the analysts say the partnership of MP Materials with the US government will deliver a clear boost to sentiment for coverage in this sector. Alongside the Californians, mining stocks from Australia in particular are among those that will potentially profit. In short, investors could find it more worthwhile than ever taking a look at this “hot property”.
As at: January 2025; source: U.S. Geological Survey, Mineral Commodity Summaries
Source: Reuters, as at: 1 August 2025Past performance is not a reliable indicator of future performance.