Magneto Would Approve

MP Materials Corp.

MP Materials was once the largest producer of rare earths during the Cold War, and fell dormant as China reshaped the industry. MP Materials acquired the site again in 2017 and went public via a reverse merger with Fortress Value Acquisition Corp in 2020. MP is becoming a strategic player in the U.S. rare earths sector, operating at the intersections of geopolitics, national defence, clean energy, and advanced manufacturing. MP Materials is becoming one of the most credible Western sources for rare earths. MP is building the infrastructure that will enable American industrial independence across EVs, defence, and tech. 

MP Materials currently accounts for over 15% of global rare earth content production and is the second-largest producer worldwide by volume. The produce bastnasite concentrate and praseodymium, which are ingredients used in electric vehicles, wind turbines, drones, missiles, and robotics. Recently, MP signed a partnership with the Department of Defence and the deal includes $400 million in convertible preferred equity, a $150 million loan to expand rare earth capabilities, a 10-year NdPr price floor, and a guaranteed offtake from the 10x magnetics facility. They also signed a major supply agreement with Apple, which inserts themselves into the global tech supply chain as a magnetics partner for one of the world's most demanding manufacturing. 

MP is approaching a convergence point, where its execution on infrastructure built over the last five years will begin yielding exponential leverage. The company’s magnet production facility is estimated to start production by the end of 2025, with major orders from GM and Apple. These developments, along with favorable policy and rising global demand for magnets, position MP to transition from a volatile stock to a strategic compounder. The risks for MP are real as scaling high-purity oxide separation and commercial magnet is complex, and delays in processes or customer qualification could impact the timeline to monetization. There are also geopolitical risks related to U.S.-China trade dynamics and potential restrictions on rare earth technologies. 

MP Materials is a rare earths company, and its core products are neodymium, praseodymium, lanthanum, cerium, and several other rare earth elements. As of 2025, the company has generated revenue through the sale of upstream concentrates, midstream oxides, and downstream magnets. In 2023, 85% of MPs' revenue came from upstream concentrate, and it is predicted that over 60% of its revenue will come from midstream and downstream sales with higher margins and greater price visibility. This is critical as the company transitions from a commodity-exposed mining firm to a vertically integrated material supplier with infrastructure-style economics. 

MP’s operational footprint is fully domestic with a mine and refining facility in Mountain Pass, while its Fort Worth site houses metal and magnet production. MP’s exposure is increasing globally as they are selling products into Japan and Korea as well as U.S. auto and tech OEMs. MP recently inked a deal with Apple that adds great exposure to consumer electronics, complementing its existing auto and defense verticals. EVs, defense, and electronics represent the structural growth engines for magnet demand through 2030. Most notably, MP exited the Chinese markets, breaking a dependency that historically tethered firms to chinese processing infrastructure. 

MP is entering its next phase, a massive foundation has been laid, and monetization is underway. The past 12 months have been a series of big milestones that will alter the company’s long-term trajectory. MP’s deal with Apple makes them the first U.S. rare earth company to directly supply the world's largest tech firms. MP has also commenced metal production at its Fort Worth facility with plans to expand magnet production by the end of 2025. MP is no longer blowing smoke; they are delivering throughput, signing deals, and generating defensible revenue streams. 

The rare earth elements industry is currently sitting at the foundation of the future technology stack and powering everything from EVs, robotics, advanced defense systems, and consumer electronics. At the core of rare earths are NdFeB (neodymium-iron-boron) magnets, which deliver unparalleled energy to motion efficiency are are essential to compact, high-performance electric motors. China currently controls over 85% of the global rare earth separation capacity and over 90% of global magnet production. MP is here to counter that leverage; they are the only Western firm with operational scale across mining, separation, and magnet production. MP is the only player positioned to disrupt the Chinese dominance by capturing market share in strategic sectors. 

MP focuses on neodymium and praseodymium, which are the essential building blocks for NdFeB magnets. These magnets are mission-critical for electrification, powering over 90% of EV motors and providing the torque and efficiency needed for robotics, renewable energy, and advanced defense systems. The TAM for these magnets is expected to triple in volume from 91 kilotons in 2025 to about 287 kilotons by 2024, according to Adams Intelligence. With long-term contracts with GM, Apple, and the DoD, MP is positioned to kick ass and take names. By integrating upstream mining, midstream separation, and downstream fabrication, the company can offer its customers supply security and geopolitical insulation. Something that no other Western competitor can match. This allows MP to participate in multiple points along the value chain and expand its serviceable market well beyond what a pure-play miner or processor could capture. 

The rare earths industry is massively benefiting from several macro forces like the electrification of four-wheeled vehicles, offshore wind turbines, and more. This, along with the coordinated reindustrialization push in the United States, is now prioritizing domestic or allied sourcing for critical minerals. Advanced defense platforms, including fighter jets, naval propulsion systems, missile guidance systems, and satellites, all rely on rare earth magnets for enhanced performance, miniaturization, and improved efficiency. The convergence of electrification, reindustrialization, and militarization creates a demand stack that is both cyclical-resistant and politically supported. MP’s vertical integration ensures it is aligned with all three of these premium growth pillars. 

While rare earth mining has existed for decades, the technical challenges have limited competition to a handful of global players, most of which are located in China. MP is breaking from this legacy by deploying AI-driven processes at Mountain Pass that monitor and adjust separation chemistry in real time. This improves recoveries, reduces reagent use, and enhances throughput stability. Automation will also allow MP to operate with fewer bottlenecks and greater consistency, a necessity for meeting strict customer quality standards in automotive and defense markets. This combo meal of process automation, advanced analytics, and vertical integration creates a strong technical moat that will be difficult for other firms and new entrants to replicate. Over time, these innovations could open more opportunities for MP to expand its TAM and reinforce its edge. 

Consumer expectations and purchasing behaviors are exerting an indirect but powerful influence on MP. Automakers, tech firms, and defense contractors are now facing increased scrutiny over supply chain ethics and national security implications of sourcing strategies. Values from younger generations are influencing OEM procurement decisions, as brands seek to align product messaging with consumer priorities. The company's partnership with Apple and GM not only provides revenue but also places the company within the brand ecosystems most sensitive to these generational expectations. This alignment between consumer psychology and supply chain strategy enhances MP’s long-term demand and pricing power. 

The “global” rare earths industry is heavily concentrated in China, with key players including Northern Rare Earth Group, Shenghe Resources, China Minmetals Rare Earth Co., all of which operate with state backing, scale advantages, and strong supply chain integrations. Lynas Rare Earths is the largest non-Chinese producer of separated oxides, with a significant share of the Japanese market. In the U.S., MP Materials has no direct peer with equivalent vertical integration. Energy Fuels produces monazite concentrates and has initiated rare earth separation at a small scale, but does not operate in magnets. European firms are on vacation. This leaves MP with an outsized role in the West, as the only operator capable of producing mined rare earth feedstock, separating it into individual oxides, and fabricating finished magnets at scale. 

MP Materials' moat is reinforced by three core pillars, including its vertical integration, strategic alignment, and technical capability. MP owns its upstream mining, midstream separation magnet production infrastructure, enabling it to capture margin at every stage while isolating itself from disruptions and bottlenecks. MP strategic partnerships with the U.S. federal government add another layer of sustainability, with price floors, guaranteed offtake, and equity participation. This creates an embedded customer that is not only profit-driven but policy-driven. MP’s assets are not easily replicable; they require massive capital investments, political suction, and industry expertise that has been accumulated over the years. 

The barriers to entry in the rare earths sector are YUGE. New entrants face high capital requirements, long permitting timelines, and technological barriers. Downstream magnet fab adds another layer of complexity, with strict customer qualification protocols that can take up to two years before volume shipments begin. Switching costs are also high for MP customers, and defense and automotive buyers are tightly integrated into the end product design. Changing suppliers means requalifying components, redesigning assemblies, and reliability testing. These processes are expensive, time-consuming, and risky. This locks customers in and amplifies MP’s production status. 

MP Materials has been growing its revenue at a fast pace. In the second quarter of 2025, MP reported about $166 million in revenue. More than double what it was producing just a few years ago. A major reason for this is the Stage 2 upgrade at its mountain pass facility, enabling MP to produce separated rare earth oxides like NdPr instead of selling lower-value raw concentrate. MP’s adjusted EBITDA came in at a good ole $69 million, while net income was a clean $38 million. MP’s balance sheet is very strong; the company has low debt and more than $900 million in cash thanks to a recent stock sale in July. 

MP has been able to generate positive free cash flow, even while pouring money into major construction projects. They predict that once these investments are complete, its free cash flow will grow significantly. From a valuation perspective, MP trades at an EV/EBITDA multiple slightly higher than other mining companies. This is justified because of its fast growth and unique position as the only integrated rare earth supplier in the Western Hemisphere. MP’s ROIC and ROE are both strong, thanks to its efficient use of capital and balance sheet. MP offers similar or better profit margins compared to peers like Lynas Rare Earths or other Chinese-based producers with far less geopolitical risk. With a strong balance sheet, reliable government and corporate customers, and the ability to sell high-value products, MP is well-positioned for both stability and growth. 

MP has grown through its organic growth strategy from selling raw, rare earth concentrates to delivering high-value, finished magnets. The launch of Stage II separation at Mountain Pass has already allowed MP to produce and sell separated NdPr oxide directly to customers in the U.S, Japan, and Korea. Pricing power is also increasing due to MP’s unique position as the only fully integrated rare earth miner to magnet producer in the Western Hemisphere. Customers are willing to pay a premium for security of supply and traceability. Particularly in sectors like defense and EV manufacturing, where supply chain risks are a major concern. Even in the volatile rare earths market, MP has protection through the U.S. DoD price floors built into its strategic partnership agreements. This guarantees baseline profitability while allowing MP to benefit from price upswings. MP’s customer relationships will create long-term export channels for MP and open up future capacity expansions. 

MP has not been focused on acquisitions, but the management team has indicated they are open to strategic M&A if it accelerates their integration or adds critical technologies. MP could acquire advanced magnet fab firms, recycling tech companies, or heavy rare earth separation specialists that would complement MP’s current capabilities and open new market possibilities. Joint ventures also represent another growth vector, given the capital intensity of building new facilities. Partnering with major players or sovereigns could speed expansions while reducing MP’s capital burn. Beyond magnets for EVs and defense, there are emerging markets for rare earths in robotics, medical imaging, and next-gen computing hardware. These sectors value reliability and performance over price sensitivity which aligns with MP’s premium positioning. 

MP has been able to benefit from the global push towards electrification and the reindustrialization push from the United States and allied countries. This is also driven by national security and supply chain resilience concerns, which have further amplified the opportunity to create a market where MP is not just a supplier but a strategic necessity. Regulatory dynamics have begun to work in MP’s favor as policies like the Inflation Reduction Act and DoD critical mineral mandates explicitly incentivize domestic rare earth production. These incentives include tax credits, grant funding, and direct procurement commitments that lower MP’s cost of capital. Margin improvement is a major catalyst as MP moves downstream. When MP’s Fort Worth is running at full capacity in 2026 (estimate), its product mix will have shifted toward high-value products. 

MP’s most visible expansion is the Fort Worth facility, which will produce more NdFeB magnets at a commercial scale starting in late 2025. MP management has already signaled that further expansions are on the table, particularly if demand from EVs and tech customers exceeds projections. Distribution capacity is also improving as the company builds relationships with customers in multiple geographies. MP is developing tailored delivery schedules and quality control protocols to meet specific market requirements. MP is investing heavily in the R&D side, by investing in process optimization, magnet recycling, and heavy rare earth separation. Recycling could become an important future capacity lever, enabling MP to capture rare earth minerals from older projects and feed them back into its supply chain at a lower cost. 

The biggest operational risk for MP Materials is that its highly integrated model magnifies the impact of any single point failure. Mountain Pass remains the company's sole upstream asset, meaning any delay or outage could damage the entire supply chain. While the company is working on reducing its reliance on its Fort Worth facility. Upstream disruption could still ripple across production, shipments, and customer commitments. Management execution is also a risk factor; scaling the company without quality failures, cost overruns, or delays will require precise execution. A slip in timing could hurt revenue and weaken short-term financials and consumer confidence. 

The rare earth market is volatile with prices swinging double digits in a matter of weeks based on Chinese policy changes, speculative stockpiling, or sudden demand shifts. A prolonged price drop could hurt margins and investment returns before MP’s Stage 3 is fully scaled. Regulatory risk is also major as MP benefits from government incentives and direct support, but policy can change. A shift in political priorities, budget cuts, or trade deals concessions could reduce funding or weaken sourcing requirements. Demand risk stems from the pace of EV adoption and renewable energy buildout. 

MP is also exposed to labor disputes, strikes, or safety incidents at Mountain Pass or Fort Worth could delay shipments and hurt the company's reputation. Defense contractors and OEMs are sensitive to delivery reliability, which could weaken negotiating leverage in the future offtake. Legal exposure also exists in the form of commercial disputes, IP litigation, and contract enforcement. Patent disputes or trade secret litigation could become costly and distract MP from what matters.  Fuck ESG risks, MP operations already meet California’s high standards, but any compliance failure could spark regulatory intervention, delay expansions, and enable competitors to cook. 

In a bull case for MP, where they execute across all platforms, revenue could surpass $1.2 billion by 2027, EBITA would break $500 million, and free cash flow would rocket as capex slows. This scenario would assume that MP can capture downstream margins at scale, expand capacity beyond Fort Worth by 2027, and continue to monetize its heavy rare earth capability. In a base case, things go as just okay, nothing crazy. MP ramps up production but faces a temporary oversupply or cyclical demand dip. In a bear case, MP eats delays for breakfast, lunch, and dinner, which causes revenue to stall and production capacity to take a hit as well. Although MP’s strong cash position and low leverage with its baseline demand from the DoD, GM, and Apple could prevent a financial crisis. 

Major catalysts in the year few years include the commissioning of its Fort Worth facility, throughput gains at its Mountain Pass location, and new agreements with foreign countries. If customer validation from the DoD and Apple comes quickly, the market will quickly rerate the stock on the credibility of its supply chain. MP has a target of 6,075 metric tons of NdPr oxide annually. Each quarterly step in production capacity will reinforce MP’s ability to be known as a strong partner. Deals with new Japanese or European manufacturers could provide incremental upside that is not yet reflected in forecasts. These deals could broaden MP’s revenue base and reduce dependency on a few large customers. Also, any sustained increase in NdPr pricing driven by export restrictions or strategic stockpiling would give MP immediate revenue and margin leverage. 

The bad boys over at Azar Capital Group will be giving MP Materials a ‘BUY’ rating for investors willing to hold through the ramp and ignore quarter-to-quarter noise. We believe that MP is on the cusp of becoming the only fully integrated rare earth and magnet producer in the Western Hemisphere with blue chip and government contracts. MP offers a rare chance for investors to ‘own’ a critical asset at a valuation that does not yet reflect its long-term earnings power. MP has a strong balance sheet, low leverage, and locked-in demand from the DoD, which makes the risk/reward profile asymmetric, with far more ways to win than lose over the next few years. 

Disclosure

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