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Trump intensifies bets on rare earths! Is it a good time to position in resource stocks?
牛牛課堂
joined discussion · Jan 13 17:25 ·

[Quick Opportunity Alert] Major power rivalry, the rare earth battleground! After a 50% pullback and a 30% rebound, is it time to position in MP Materials?

Rare earths, known as the 'industrial vitamins,' are key strategic raw materials indispensable for modern high-tech industries and national defense. As major power competition intensifies, the strategic value of these niche metals has been elevated to unprecedented levels, becoming the core battleground for major powers vying for dominance in future technology and industry.
$MP Materials (MP.US)$It is the only scaled, vertically integrated rare earth producer in the U.S. and even the Western Hemisphere,Operating the most important rare earth mine in North America, Mountain Pass, its autonomous controllability has become a core concern for the U.S. government.
In July 2025, the U.S. Department of Defense (now renamed the Department of War) spent $400 million to acquire approximately 15% of its shares, directly sparking a surge in MP Materials' stock,The share price soared from $15 at the beginning of 2025 to $100 at one point but then fell by about half.
Since the beginning of the year, Trump has repeatedly spoken about Greenland's rare earth resources, and Treasury Secretary Bessent has also called on allies to discuss strategies regarding critical resources. Greenland is considered a key variable in the global rare earth landscape, with abundant reserves accounting for about one-third of the world’s known resources and rich in heavy rare earths needed for defense industries. Trump has made acquiring Greenland’s resources a priority, exploring various options including mining investment, financial acquisition, and even military action.
The rare earth concept performed strongly at the beginning of 2026, $Critical Metals (CRML.US)$ Thanks to the Greenland rare earth deposit, it had already doubled in value just as the new year began, $United States Antimony (UAMY.US)$ 、 $USA Rare Earth (USAR.US)$ Smaller and more flexible rare earth stocks also showed impressive performance, with MP Materials rebounding by 30%.
How should we view MP Materials and the rare earth industry now? Is it time to invest? Let’s dive into this week’s Opportunity Spotlight.
Trump’s 'National General Mobilization'
For a long time, China has dominated the global rare earth supply chain, not only possessing abundant resource reserves but also controlling over 90% of the world's rare earth smelting and separation capacity, holding a near-monopoly position in heavy rare earth separation technology.
Rare earths, known as the 'industrial vitamins,' are key strategic raw materials indispensable for modern high-tech industries and national defense. As major power competition intensifies, the strategic value of these niche metals has been elevated to unprecedented levels, becoming the core battleground for major powers vying for dominance in future technology and industry. $MP Materials (MP.US)$It is the only scaled and vertically integrated rare earth producer in the U.S. and even the Western Hemisphere,operating North America's crucial Mountain Pass rare earth mine, with its autonomous control becoming a core concern for the U.S. government. In July 2025, the U.S. Department of Defense (now renamed the War Department) invested $400 million to acquire approximately 15% of its shares, directly igniting MP Materials' stock.The share price surged from $15 at the beginning of 2025 to $100 at one point, but then fell by about half. Since the start of the year, Trump has frequently spoken out about Greenland’s rare earth resources, and Treasury Secretary Bessent has convened allies to discuss strategies for critical resources. Greenland is considered a key variable in the global rare earth landscape, with abundant reserves accounting for about one-third of the world's known resources, rich in heavy rare earths essential for national defense. Trump has made securing Greenland's resources a priority, exploring various options including mining investments, financial acquisitions, and even military actions. Rare earth stocks performed strongly at the beginning of 2026, $Critical Metals (CRML.US)$...
Data source: Goldmansachs.
In 2025, against the backdrop of the trade war, China systematically upgraded its rare earth governance system. In April, export controls were imposed on seven categories of medium and heavy rare earths, and in October, the scope was further expanded.Targeting vulnerabilities in the US high-performance magnet and military industries.
Faced with countermeasures, the vulnerability of the US rare earth supply chain became glaringly apparent—with 80% of its rare earth imports dependent on China. Some US defense enterprises faced critical shortages, forcing the US back to the negotiating table. A temporary agreement and 'dual suspension' arrangement were reached between China and the US, with Trump publicly acknowledging, 'The rare earths we need will be supplied by China,' which was seen as a tactical concession.
On the other hand, the US government defined rare earths as the lifeline of critical infrastructure and the defense industry, channeling national will through strong capital leverage to guide private sectors toward strategic goals.
In July, the Department of War invested $400 million in MP Materials, becoming the largest shareholder.An agreement was signed to purchase its products at more than double the market price at that time (110 USD/kg).Attempting to activate domestic production through price guarantees. Meanwhile, the US restarted Wyoming's first new rare earth mining project in 70 years.
Just days after the government took a stake, $Apple (AAPL.US)$ announced a $500 million agreement with MP Materials to support the establishment of rare earth recycling and magnet production capabilities in the United States. As part of the agreement, Apple has committed to sourcing rare earth magnets produced at MP Materials' plant in Texas.
Under the Indo-Pacific Economic Framework and bilateral agreements, the United States has formed a small circle of 'mineral allies' with countries such as Australia, Canada, and Japan, aiming to build a corridor that bypasses China.On January 12, US Treasury Secretary Bessent convened a meeting of finance ministers from various countries to discuss supply chain security issues related to critical minerals.
Rare earths, known as the 'industrial vitamins,' are key strategic raw materials indispensable for modern high-tech industries and national defense. As major power competition intensifies, the strategic value of these niche metals has been elevated to unprecedented levels, becoming the core battleground for major powers vying for dominance in future technology and industry. $MP Materials (MP.US)$It is the only scaled and vertically integrated rare earth producer in the U.S. and even the Western Hemisphere,operating North America's crucial Mountain Pass rare earth mine, with its autonomous control becoming a core concern for the U.S. government. In July 2025, the U.S. Department of Defense (now renamed the War Department) invested $400 million to acquire approximately 15% of its shares, directly igniting MP Materials' stock.The share price surged from $15 at the beginning of 2025 to $100 at one point, but then fell by about half. Since the start of the year, Trump has frequently spoken out about Greenland’s rare earth resources, and Treasury Secretary Bessent has convened allies to discuss strategies for critical resources. Greenland is considered a key variable in the global rare earth landscape, with abundant reserves accounting for about one-third of the world's known resources, rich in heavy rare earths essential for national defense. Trump has made securing Greenland's resources a priority, exploring various options including mining investments, financial acquisitions, and even military actions. Rare earth stocks performed strongly at the beginning of 2026, $Critical Metals (CRML.US)$...
The current situation is that while negotiations have stabilized the current supply, they have also accelerated the push for a Western rare earth supply chain aimed at reducing dependence. The success or failure of this mobilization will directly impact the power dynamics of global high-tech and defense industries over the next decade.
MP Materials: Officially Designated 'National Champion' with Comprehensive Upstream, Midstream, and Downstream Deployment
As the 'National Champion' officially designated by the US government, MP Materials is not a traditional mining company. Its core strategy is to build a fully US-based, end-to-end closed-loop industrial chain from mine extraction to magnet manufacturing, filling the gap in the US rare earth industry.
Rare earths, known as the 'industrial vitamins,' are key strategic raw materials indispensable for modern high-tech industries and national defense. As major power competition intensifies, the strategic value of these niche metals has been elevated to unprecedented levels, becoming the core battleground for major powers vying for dominance in future technology and industry. $MP Materials (MP.US)$It is the only scaled and vertically integrated rare earth producer in the U.S. and even the Western Hemisphere,operating North America's crucial Mountain Pass rare earth mine, with its autonomous control becoming a core concern for the U.S. government. In July 2025, the U.S. Department of Defense (now renamed the War Department) invested $400 million to acquire approximately 15% of its shares, directly igniting MP Materials' stock.The share price surged from $15 at the beginning of 2025 to $100 at one point, but then fell by about half. Since the start of the year, Trump has frequently spoken out about Greenland’s rare earth resources, and Treasury Secretary Bessent has convened allies to discuss strategies for critical resources. Greenland is considered a key variable in the global rare earth landscape, with abundant reserves accounting for about one-third of the world's known resources, rich in heavy rare earths essential for national defense. Trump has made securing Greenland's resources a priority, exploring various options including mining investments, financial acquisitions, and even military actions. Rare earth stocks performed strongly at the beginning of 2026, $Critical Metals (CRML.US)$...
1) Upstream Minerals: Reviving the Glory of a Top-Tier Rare Earth Mine
MP Materials' foundation is its 100% owned and operated Mountain Pass,the largest rare earth mine in the Western Hemisphere with the highest grade globally.The historical production capacity of this mine has proven its scale, and the company's ongoing 'Upstream 60K' plan aims to increase annual rare earth oxide (REO) concentrate production from over 40,000 tons to approximately 60,000 tons to fully meet the raw material needs of its midstream and downstream processing operations.
This mine has been engaged in rare earth mining since 1952,Between 1965 and 1995, this mine supplied the majority of the world’s rare earth metal consumption.In 1998, it was shut down due to environmental concerns, and its path to restarting has been fraught with challenges. Meanwhile, by the late 1990s, China had rapidly become the dominant low-cost producer of rare earths.
2) Midstream Smelting: Breaking Dependence on Separation Processes
This is the most critical part of MP’s strategic transformation and currently the weakest link in the U.S. supply chain.。The company is making every effort to advance its midstream separation and refining capabilities:
Neodymium-praseodymium oxide (NdPr) is a core raw material for manufacturing permanent magnets. The company aims to achieve an annual NdPr oxide production capacity of 6,000 tons by the end of 2026, operating at full capacity. In the third quarter of 2025, its NdPr output reached a record 721 tons, marking a 21% increase quarter-on-quarter, laying a solid foundation for capacity ramp-up.
MP has planned the construction of a new heavy rare earth separation facility, scheduled to begin production by mid-2026, with an annual processing capacity of approximately 3,000 tons of raw materials, producing over 200 tons of dysprosium and terbium annually.In August 2025, the U.S. Department of Defense provided a direct loan of $150 million to accelerate its construction.
3) Downstream Manufacturing: Partnering with Local Clients to Achieve Industrial Loop Closure
The company's manufacturing plant was initially designed with an annual production capacity of 1,000 tons of neodymium-iron-boron magnets. The plant commenced commercial production in January 2025 and produced its first batch of commercial magnets by the end of the year.
The second magnet plant, planned with support from the U.S. Department of Defense, has an annual design capacity of up to 7,000 tons.Construction planning for this plant has already begun, and it is expected that after starting operations in 2028, MP’s total planned annual magnet production capacity in the U.S. will reach 10,000 tons.
In addition to Apple mentioned above, MP Materials has also reached a strategic cooperation agreement with $General Motors (GM.US)$ , and the company began selling precursor products to General Motors in Q3 2025.
However, it should be noted thatalthough MP Materials has received substantial funding and administrative support from the U.S. government to expand production capacity and enhance America’s self-sufficiency in rare earth permanent magnets, achieving scaled product supply will still take another 3 to 4 years.
Shifting operations bring financial growing pains, but future catalysts remain.
To align with the U.S. domestic supply chain strategy,the company ceased all sales of rare earth concentrates to China starting July 2025, resulting in zero traditional main revenue for Q3 2025.Revenue for the quarter decreased by 15% year-over-year to $53.553 million, with a GAAP net loss of $41.8 million.
MP Materials' quarterly revenue (Unit: billion USD)
Rare earths, known as the 'industrial vitamins,' are key strategic raw materials indispensable for modern high-tech industries and national defense. As major power competition intensifies, the strategic value of these niche metals has been elevated to unprecedented levels, becoming the core battleground for major powers vying for dominance in future technology and industry. $MP Materials (MP.US)$It is the only scaled and vertically integrated rare earth producer in the U.S. and even the Western Hemisphere,operating North America's crucial Mountain Pass rare earth mine, with its autonomous control becoming a core concern for the U.S. government. In July 2025, the U.S. Department of Defense (now renamed the War Department) invested $400 million to acquire approximately 15% of its shares, directly igniting MP Materials' stock.The share price surged from $15 at the beginning of 2025 to $100 at one point, but then fell by about half. Since the start of the year, Trump has frequently spoken out about Greenland’s rare earth resources, and Treasury Secretary Bessent has convened allies to discuss strategies for critical resources. Greenland is considered a key variable in the global rare earth landscape, with abundant reserves accounting for about one-third of the world's known resources, rich in heavy rare earths essential for national defense. Trump has made securing Greenland's resources a priority, exploring various options including mining investments, financial acquisitions, and even military actions. Rare earth stocks performed strongly at the beginning of 2026, $Critical Metals (CRML.US)$...
Data source: Company announcements
At the same time, new businesses began contributing cash flow.In Q3, magnet precursor sales reached $21.9 million and separation product revenue was $11.7 million. Moreover, the adjusted EBITDA of the magnetic materials segment turned positive at $9.48 million.
The market generally views 2026 as the turning point for MP Materials to achieve full-year profitability.The core rationale is: The Department of Defense's price guarantee of $110/kg, combined with expectations of full production of 6,000 tons of NdPr oxide, is projected to contribute approximately $400 million in EBITDA from this alone. Additionally, as the magnet factory begins commercial deliveries, management expects operating cash flow to significantly improve starting from Q1 2026.
Since mid-October, MP Materials' stock performance has been weaker than the broader market, mainly due to rare earth prices falling short of expectations and profit-taking after easing U.S.-China trade tensions.
Over the past two decades, there have been two major price cycles for rare earths: The first occurred between 2010-2012, driven by the expansion of direct-drive wind power technology and environmental crackdowns on the supply side, resulting in a 'super cycle.' The second took place during 2021-2022, spurred by a boom in electric vehicles, which also caused a brief price spike. Amidst current geopolitical tensions, rare earth prices haven’t shown significant fluctuations, but the market is already showing signs of tightening.
Rare earths, known as the 'industrial vitamins,' are key strategic raw materials indispensable for modern high-tech industries and national defense. As major power competition intensifies, the strategic value of these niche metals has been elevated to unprecedented levels, becoming the core battleground for major powers vying for dominance in future technology and industry. $MP Materials (MP.US)$It is the only scaled and vertically integrated rare earth producer in the U.S. and even the Western Hemisphere,operating North America's crucial Mountain Pass rare earth mine, with its autonomous control becoming a core concern for the U.S. government. In July 2025, the U.S. Department of Defense (now renamed the War Department) invested $400 million to acquire approximately 15% of its shares, directly igniting MP Materials' stock.The share price surged from $15 at the beginning of 2025 to $100 at one point, but then fell by about half. Since the start of the year, Trump has frequently spoken out about Greenland’s rare earth resources, and Treasury Secretary Bessent has convened allies to discuss strategies for critical resources. Greenland is considered a key variable in the global rare earth landscape, with abundant reserves accounting for about one-third of the world's known resources, rich in heavy rare earths essential for national defense. Trump has made securing Greenland's resources a priority, exploring various options including mining investments, financial acquisitions, and even military actions. Rare earth stocks performed strongly at the beginning of 2026, $Critical Metals (CRML.US)$...
For MP Materials, the impact of market prices on operations is minimal due to the fixed pricing agreement with the Department of Defense. However, sentiment-driven effects are more prominent. Company management also noted that while U.S.-China trade negotiations have 'temporarily' eased tensions around the rare earth supply chain, risks of renewed supply restrictions remain over the medium term.
For risk-tolerant investors who believe in the U.S. strategy to rebuild its rare earths supply chain, the current pullback may present a buying opportunity. The key highlights include government-backed support, the potential to transition into higher value-added downstream segments, and an irreplaceable strategic position under the theme of supply chain security. However, close attention should be paid to the progress of its Texas permanent magnet plant, the narrowing of quarterly losses, and subsequent developments in relevant U.S. industrial policies.
Technical Analysis and Options Strategies
MP Materials' stock price rebounded from near the low of $50 on January 2, 2026, closing at $65.34 on January 12 with a 30% increase, hitting a one-month high.Historical data shows that the stock price has successfully broken through the consolidation range seen in mid-December 2025 (approximately between $53-$57).
Trading volumes have been effectively amplified during the upward movement, especially on January 7 and 12, when volumes were significantly higher than the average for the period, indicating active buying interest and robust upward momentum.
Applying Fibonacci retracement analysis to the trend since the peak in October 2025,The next key level (38.2% retracement) lies around $69.5, and it will be worth watching if the price can break through this level effectively.
Rare earths, known as the 'industrial vitamins,' are key strategic raw materials indispensable for modern high-tech industries and national defense. As major power competition intensifies, the strategic value of these niche metals has been elevated to unprecedented levels, becoming the core battleground for major powers vying for dominance in future technology and industry. $MP Materials (MP.US)$It is the only scaled and vertically integrated rare earth producer in the U.S. and even the Western Hemisphere,operating North America's crucial Mountain Pass rare earth mine, with its autonomous control becoming a core concern for the U.S. government. In July 2025, the U.S. Department of Defense (now renamed the War Department) invested $400 million to acquire approximately 15% of its shares, directly igniting MP Materials' stock.The share price surged from $15 at the beginning of 2025 to $100 at one point, but then fell by about half. Since the start of the year, Trump has frequently spoken out about Greenland’s rare earth resources, and Treasury Secretary Bessent has convened allies to discuss strategies for critical resources. Greenland is considered a key variable in the global rare earth landscape, with abundant reserves accounting for about one-third of the world's known resources, rich in heavy rare earths essential for national defense. Trump has made securing Greenland's resources a priority, exploring various options including mining investments, financial acquisitions, and even military actions. Rare earth stocks performed strongly at the beginning of 2026, $Critical Metals (CRML.US)$...
Looking at options trading, the Put/Call ratio is 0.26, indicating positive market sentiment. Here are a few potential options strategies for fellow investors to consider:
1) Bull Call Spread
For investors who do not hold MP Materials but are optimistic about its potential rise, this is a moderately bullish strategy. Compared to simply buying Calls, it allows for controlling initial costs and downside risks while sacrificing some upside profit potential.
Rare earths, known as the 'industrial vitamins,' are key strategic raw materials indispensable for modern high-tech industries and national defense. As major power competition intensifies, the strategic value of these niche metals has been elevated to unprecedented levels, becoming the core battleground for major powers vying for dominance in future technology and industry. $MP Materials (MP.US)$It is the only scaled and vertically integrated rare earth producer in the U.S. and even the Western Hemisphere,operating North America's crucial Mountain Pass rare earth mine, with its autonomous control becoming a core concern for the U.S. government. In July 2025, the U.S. Department of Defense (now renamed the War Department) invested $400 million to acquire approximately 15% of its shares, directly igniting MP Materials' stock.The share price surged from $15 at the beginning of 2025 to $100 at one point, but then fell by about half. Since the start of the year, Trump has frequently spoken out about Greenland’s rare earth resources, and Treasury Secretary Bessent has convened allies to discuss strategies for critical resources. Greenland is considered a key variable in the global rare earth landscape, with abundant reserves accounting for about one-third of the world's known resources, rich in heavy rare earths essential for national defense. Trump has made securing Greenland's resources a priority, exploring various options including mining investments, financial acquisitions, and even military actions. Rare earth stocks performed strongly at the beginning of 2026, $Critical Metals (CRML.US)$...
2) Covered Call
Suitable for those who already hold MP Materials stock, are optimistic about its short-term trend but believe the upside potential may be limited (such as near the Fibonacci retracement level of $69). Additional premium income can be earned by selling a call option.
For example, if you currently hold 100 shares of MP Materials, you could sell one call option expiring in a month with a strike price of $69. If MP Materials' share price is above $69 at expiration, you would sell these 100 shares at $69. If the share price does not reach $69, you can keep the entire options premium.
It should be noted that the success of all strategies depends on the stock price movement meeting or partially meeting expectations. If the stock price moves contrary to expectations, losses may occur or the anticipated gains may not be realized.
Risk Disclosure: This content does not constitute a research report and is for reference only. It is not intended as a basis for any investment decision. The information provided herein does not comprehensively describe the securities, markets, or developments mentioned. While the sources of information are considered reliable, no guarantee is made regarding the accuracy or completeness of the content above. Additionally, no assurance is given regarding the accuracy of any statements, opinions, or forecasts provided herein.
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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