MP Materials, the rare earth miner at the center of America’s scramble for critical minerals, has become a lightning rod for both market speculation and geopolitical maneuvering in 2025. Its stock skyrocketed by a staggering 318% year-to-date, only to tumble 30.8% in a matter of days—an eye-watering rollercoaster that exposes the volatile intersection of national security, global supply chains, and financial markets.
Why all the drama? It starts with China, which, according to the U.S. Geological Survey and as reported by Bloomberg, controls 70% of global rare earth mining, 90% of processing, and a jaw-dropping 93% of magnet manufacturing. These magnets aren’t just for fancy gadgets—they’re essential for everything from F-35 fighter jets and nuclear submarines to Tomahawk missiles and the smartphones in your pocket.
On October 9, 2025, China’s Ministry of Commerce announced sweeping new export restrictions, expanding its control list to include five additional rare earth elements—holmium, erbium, thulium among them. The restrictions, taking effect December 1, are designed to tighten Beijing’s grip on the world’s rare earth supply chain, especially for defense applications. As The Wall Street Journal notes, these controls mean that anyone wishing to use these elements must now obtain a license from China. The message from Beijing is clear: “China’s hard-earned expertise is no longer for sale.”
The U.S. response was swift and dramatic. The Pentagon launched a $1 billion emergency stockpiling program, warning that supply disruptions could be measured in “days if not weeks.” The Department of Defense doubled down on its investment in MP Materials, purchasing a 15% stake in July and making the U.S. government the company’s largest shareholder. Apple, not to be left behind, inked a $500 million magnet supply contract with MP Materials. President Trump personally championed the company as vital to national security, and Wall Street responded with a buying frenzy. MP Materials’ stock soared from $16.39 on January 1 to $98.65 by October 14, briefly reaching a $17 billion market capitalization.
But then, reality bit back. Multiple independent discounted cash flow analyses published in October pegged the company’s fair value between $2.36 and $65 per share—suggesting that at its peak, MP Materials was trading up to 4,000% above its intrinsic value. Even the most optimistic models implied a 400% overvaluation. As of late October, the company traded at roughly 52 times its enterprise value to EBITDA ratio—double the typical materials sector multiples—while generating negative free cash flow of $260 million annually. The fundamentals, as sober analysts pointed out, simply couldn’t justify the sky-high price.
The heart of the problem? MP Materials can mine rare earths, but it currently lacks the processing capability to manufacture the high-purity magnets needed by defense contractors and Apple. Its new magnet manufacturing facility won’t reach full operational capacity until 2028, leaving a two-to-three-year gap where U.S. defense contractors will remain dependent on China or alternative sources. As the Pentagon’s own warnings suggest, existing stockpiles could run dry between late 2025 and mid-2026, well before MP Materials can deliver a domestic solution.
Meanwhile, China’s export controls are more than a short-term bargaining chip—they’re a structural element of Beijing’s long-term economic security strategy. As Reuters reports, China now requires licenses for anyone seeking to use these rare earth elements, and the new restrictions cover not only exports but also mining, refining, magnet production, and recycling technologies. This is leverage, pure and simple—a quiet but powerful form of influence in global politics.
Ironically, the U.S. is now adopting some of China’s own playbook. In addition to its stake in MP Materials, the U.S. government has taken direct equity positions in other strategic companies: 10% in Intel Corp., Lithium Americas Corp., and Trilogy Metals Inc., plus a “golden share” in U.S. Steel Corporation. As The Financial Times observes, this marks a fundamental shift—Washington is no longer just a regulator, but an active investor, blending public and private resources to secure critical technologies.
MP Materials is also expanding its reach abroad. In April, the U.S. signed an agreement with Ukraine to secure access to critical minerals in exchange for reconstruction aid. In May, MP Materials partnered with Saudi Arabia’s Ma’aden to build a new supply chain inside the kingdom. These moves reflect a broader transformation in U.S. industrial strategy, one that seeks to reduce dependence on China by building parallel supply chains and forging global partnerships.
Yet, for all the patriotic fervor and government backing, the market’s faith in MP Materials is built on a precarious foundation. As one analysis in Investing.com noted, “The company’s current market cap prices in best case scenarios with minimal room for execution delays, cost increases, or competitive pressures. That’s speculation, not analysis.” Even bullish analysts concede that their lofty price targets depend on “perfect execution of an extraordinarily difficult industrial buildout over three to five years.” Any delays, cost overruns, or shifts in rare earth prices could send the stock tumbling again.
For investors seeking exposure to the rare earths sector without betting the farm on a single company, diversified funds like the VanEck Rare Earth and Strategic Metals ETF (up nearly 25% year-to-date) or defense contractor ETFs such as the SPDR S&P Aerospace & Defense ETF (up almost 36% this year) offer alternative paths. These funds spread risk across multiple companies, many of which—like Lockheed Martin and RTX Corp.—have the scale and government backing to weather supply disruptions.
China’s dominance in rare earths is the product of decades of strategic planning. The late Deng Xiaoping famously quipped, “The Middle East has oil; China has rare earths.” Today, President Xi Jinping’s government has turned that vision into reality, using rare earths as both an economic asset and a geopolitical tool. During a 2019 visit to JL MAG Rare-Earth Co. in Ganzhou, Xi signaled the sector’s strategic importance—a message not lost on Washington or Wall Street.
This new phase of the U.S.-China rivalry is less about ideology and more about who controls the arteries of global production and innovation. As rare earths become a permanent fixture in the economic security strategies of both superpowers, the stakes for investors, policymakers, and industries couldn’t be higher.
For MP Materials, the next few years will be a test of execution, resilience, and perhaps a bit of luck. The company owns valuable assets and has secured meaningful partnerships, but its future—and that of America’s rare earth independence—remains far from certain. In the meantime, the market will keep watching, betting, and sometimes, as recent weeks have shown, getting burned by the unpredictable tides of geopolitics and sentiment.
