Shares in rare earths mine operator MP Materials (MP) rocketed higher today after winning $500 million of investment from iPhone maker Apple (AAPL).
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U.S. Supply Chain
The tech giant said buying American-made rare earth magnets developed at MP Materials’ flagship Independence facility in Fort Worth, Texas would help localize and expand its U.S. supply chain.
It said that it would also work with MP to develop a “cutting-edge” rare earth recycling line in California and develop new magnet materials.
The investment, Apple added, is part of the $500 billion it has pledged to spend in the U.S. over the next four years. This followed calls from President Trump for U.S. firms to manufacture more at home rather than abroad, particularly China.
It should also help further protect Apple from the impact of Trump’s tariffs and any concerns over rare earth materials supply.
As one can see below production is one of the key risks at the business investors need to be aware of.
Rare earths are a group of 17 metals, such as Neodymium and the Scrabble-winning Ytterbium, used to make magnets that turn power into motion. They are used in a range of electronics such as phones. China halted rare earths exports in March following a trade spat with Trump.
American Innovation
“American innovation drives everything we do at Apple, and we’re proud to deepen our investment in the U.S. economy,” said Tim Cook, Apple’s CEO. “Rare earth materials are essential for making advanced technology, and this partnership will help strengthen the supply of these vital materials here in the United States.”
MP last week agreed to a multibillion-dollar deal with the U.S. Department of Defense to boost output of rare earth magnets and help loosen China’s market control.
China currently controls over half of global rare earths mining production and 90 percent of separation and refining capacity. However, its production has been criticized for the damage done to the environment.
Is MP a Good Stock to Buy Now?
On TipRanks, MP has a Strong Buy consensus based on 6 Buy and 2 Hold ratings. Its highest price target is $55. MP stock’s consensus price target is $40.83 implying a 29.58% downside.
