MP Materials, which has been more often in the red than in the black since 2018, is benefiting from the political context. Beijing largely controls the global market for rare earths and did not hesitate, at the height of tensions, to drastically slow down its exports. Rare earths are high on the list of China's commercial weapons. As a reminder, rare earth magnets are essential for the production of electronic products.
For more information: Rare earths: China's weapon that's threatening global industry.
The planned resumption of exports of Nvidia H20 chips to China is part of US negotiations on rare earths, US Commerce Secretary Howard Lutnick said on Tuesday.
Reducing dependence on China has become a priority for the US. MP Materials is currently the only operator of a rare earth mine on US soil. The company extracts, refines, and prepares the ore for commercial production. Deliveries to Apple are expected to begin in 2027. The technology group has already signed similar agreements with General Motors and Germany's Vacuumschmelze.
Apple and MP Materials have been working on this for five years. However, the announcement comes at just the right time. A few days ago, MP Materials won a multi-billion dollar contract with the Pentagon. The Department of Defense has even become a majority shareholder and is supporting the creation of a second mine.
To encourage domestic production, the contract with the Pentagon sets a floor price for Chinese magnets, whose production costs remain unbeatable. Despite this economic disadvantage, investment in rare earths is likely to continue to grow: the issue is too directly linked to economic and military security to be ignored.
