Here’s Why Rare Earth Stocks Are Surging
Rare earth stocks are roaring back to life, and investors are taking notice. The recent surge in share prices across the sector traces directly to a $400 million strategic partnership between the U.S. Department of Defense and MP Materials (NYSE: MP), the nation’s top rare earths miner. This groundbreaking deal has not only catapulted MP’s stock price but has also sparked an industry-wide rally that’s drawing sharp attention from Wall Street.
MP shares exploded 50% in a single day, closing at $48.52, while the S&P 500 (SPX) and Dow Jones Industrial Average (DJIA) edged up only 0.1% and 0.2%, respectively. The rally didn’t stop there; other rare earth players followed suit, with USA Rare Earth (NASDAQ: USAR), Rare Element Resources (OTC: REEMF), and Lynas Rare Earth (OTC: LYSCF) all posting impressive double-digit gains. Even Ramaco Resources (NASDAQ: METC) and United States Antimony Corporation (NYSE Arca: UAMY) joined the party, each rising more than 40% after the news broke.
The China Catalyst
Behind this rapid momentum lies a national security concern that’s been brewing for years: China’s dominance in rare earth production and processing. In 2024, China mined 270,000 metric tons of rare-earth oxides, nearly 70% of global output, and controls 85% of global refining capacity. These materials are critical components in everything from smartphones to guided missiles, and as geopolitical tensions flare, the U.S. has made clear it no longer wants to rely on Beijing for them.
That’s where MP Materials comes in. As the operator of Mountain Pass mine, the only active rare earths mine in the U.S., MP is uniquely positioned to anchor a domestic supply chain. The new agreement with the Pentagon ensures MP will receive a guaranteed floor price of $110 per kilogram for its neodymium-praseodymium oxide, more than double the current market price in China. The Department of Defense also took a 15% equity stake, becoming MP’s largest shareholder.
“We’re meeting an important national security requirement,” said MP Founder and CEO James Litinsky. “However, we’re maintaining our free-market, publicly-traded company approach.”
A Rising Tide for the Sector
The MP-DoD deal sent ripples far beyond Mountain Pass. Shares of USA Rare Earth soared as much as 25%, despite the company being pre-revenue and still in early development stages. Rare Element Resources and Lynas Rare Earth, which operate primarily in Australia, jumped 44% and 40% respectively.
Even companies outside the immediate magnet supply chain are seeing upside. Ramaco Resources popped 57% following news that engineering giant Fluor confirmed the feasibility of Ramaco’s rare earth deposits in Wyoming. Meanwhile, U.S. Antimony Corp, a key domestic producer of antimony used in rare earth separation, surged 40.3%.
“This is a game changer for the ex-China industry and a much-needed surge in magnet production capacity,” said Ryan Castilloux, Managing Director of Adamas Intelligence.
The market clearly agrees. Analysts have scrambled to revise their price targets. Canaccord’s George Gianarikas more than doubled his price target on MP Materials from $27 to $55, while Baird’s Ben Kallo raised his from $32 to $52, citing the newfound revenue visibility and upcoming catalysts, including magnet partnerships and M&A.
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From Miner to Magnet Giant
This isn’t just about mining rocks. The deal funds MP’s expansion into magnet manufacturing, a move designed to close the loop from raw material to finished product. MP plans to complete its massive “10X Facility” in Texas by 2028, capable of producing neodymium-iron-boron (NdFeB) magnets for use in F-35 jets, electric vehicles, and wind turbines.
The Pentagon’s involvement goes beyond investment. It agreed to buy all of MP’s magnet output for the next decade, further de-risking the business and transforming MP into a cornerstone of U.S. industrial policy.
“This partnership will dramatically accelerate America’s rare earth magnet manufacturing capabilities,” Litinsky said, “ensuring a secure and resilient supply chain for our national defense and critical industries.”
The financial side of the deal includes $1 billion in commercial loans led by JPMorgan (NYSE: JPM) and Goldman Sachs (NYSE: GS), with an additional $150 million Pentagon loan expected within 30 days. These funds will help MP expand its heavy rare earth separation capacity, currently the biggest bottleneck in building a fully domestic supply chain.
Looking Ahead
MP Materials now finds itself in a class of its own. The company is not only the leading U.S. rare earth miner, but it’s quickly becoming the nation’s premier magnet producer, thanks to a deal that rewrites the rules of public-private partnership.
Meanwhile, the rally across the rare earths sector reflects growing investor belief that more deals could follow. The Trump administration has signaled support for expanding similar models across other critical minerals. Interior Secretary Doug Burgum hinted that the DoD-MP partnership could serve as a blueprint for securing domestic supply chains across lithium, cobalt, and more.
For now, MP Materials is the clearest winner, with its stock up over 217% in the past year and analysts forecasting a 2027 EBITDA of $554 million, well above Wall Street’s earlier $200 million consensus.
Whether this surge marks the beginning of a long-term trend or a short-term pop remains to be seen. But one thing is certain: the rare earth race has officially entered a new phase, and the U.S. is finally catching up.
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