California miner MP Supplies struck metaphorical gold in July when it introduced a landmark take care of the Trump administration to make the Protection Division its largest shareholder, adopted up days later by an growth settlement with Apple. However what MP truly mines—so-called uncommon earth components which might be central to most of the world’s most vital applied sciences—seems to be much more valuable than gold to buyers.
MP is the nation’s solely uncommon earths miner, at a time when the U.S. aspires to compete in opposition to China’s provide chain dominance in that area. Its share worth has spiked an astonishing 365% yr thus far, together with a 150% surge in simply over a month.
MP’s market cap has risen from simply over $2 billion to $13 billion, getting into large-cap territory—not dangerous for a corporation that introduced in simply $204 million in income final yr. It’s an increase similar to that of Silicon Valley protection agency Palantir—however with all due respect to that AI-fueled firm, Palantir’s inventory has risen by solely 140% yr thus far.
“I give MP credit score for having the foresight and for being in the fitting place on the proper time,” Ben Kallo, Baird senior analysis analyst, advised Fortune. “I feel it’s shocking as a result of I didn’t consider the federal government would react in such a fast and forceful approach.
“I feel the hearth is within the stomach of provide chain managers to maneuver away from China proper now.”
MP is also the nation’s solely vertically built-in miner and specialty magnets producer, having simply opened a metals and neodymium magnets plant in Fort Value. Not one to overlook a advertising and marketing alternative, MP named that plant “Independence.”
oe Buglewicz/Bloomberg—Getty Photos
The highly effective magnets are as critically vital as they’re little-known. They’re utilized in electrical automobiles, renewable vitality, cellphones, navy tools, and, most just lately, AI information facilities. Normal Motors was MP’s first flagship buyer for magnets.
From a navy standpoint, the magnets are simply as essential: They’re utilized in drones, fighter jets, missile programs, and nuclear submarines. Greater than 80% of the world’s neodymium magnet provide is manufactured in China. The U.S. counts just a few producers, whereas China has just a few hundred.
“Uncommon earth” supplies truly will not be uncommon, however they’re costly to separate and refine. That development takes monetary assist.
The Protection Division purchased $400 million value of MP shares in July to develop into a 15% shareholder; on Aug. 10, it backed up its preliminary take care of an extra $150 million mortgage to MP to assist increase its mining operations in Mountain Go, Calif.
“We’re taking decisive motion to revive our home crucial minerals provide chain, revive our industrial base, and rebuild our navy to attain President Trump’s aim of peace by way of energy,” mentioned Emil Michael, protection undersecretary for analysis and engineering, in an announcement. Michael is a former high government at Uber.
Even aside from the navy, each MP and the administration see the corporate rising due to the AI increase.
“We’ve the platform, the companions, and the attitude to grab one other monumental runway of alternative,” mentioned MP founder, chairman, and CEO James Litinsky within the firm’s Aug. 7 earnings name. “And it doesn’t damage that we’ve a entrance row seat and an vital function in what might properly develop into probably the most vital enterprise transformation of our era, the period of bodily AI.”
The rise of MP
MP is constructed on the ashes of the previous mine proprietor Molycorp and its Mountain Go services. A decade in the past, Molycorp was failing due to heavy indebtedness and China’s worth dumping into the worldwide uncommon earths markets.
Seeing the thesis case for home uncommon earths mining, Litinsky and his eponymously named JHL Group hedge fund purchased into Molycorp’s bonds throughout its 2015 chapter proceedings. Litinsky ultimately folded his fund to purchase the Mountain Go property outright and kind MP Supplies in 2017.
Litinsky had beforehand labored on the New York-based Fortress Funding Group, and MP Supplies went public in 2020 when it merged with one in every of Fortress’ a number of special-purpose acquisition corporations, or SPACs, in a $1.47 billion deal.
“One of many greatest query marks and pushback was, ‘How can these finance guys function a mine and make it work?’” Kallo mentioned. However MP cleaned up itsmining operations, stored debt low, and centered on vertical-integration and development. “They’ve stunned to the upside.”
The Independence plant opened in January, and MP was a smoother development trajectory. However, within the spring, the onslaught of Trump’s tariff conflict shook issues up, and corporations started to appreciate they shouldn’t depend on Chinese language provide chains so closely.
“A variety of corporations didn’t notice their magnets got here from China,” Kallo mentioned. “It woke lots of people up. These magnets go into all the things.”
That is when the Wall Avenue-ization of the Protection Division below the second Trump administration got here into play.
Steve Feinberg, the brand new U.S. deputy secretary of protection, is the billionaire co-founder of Cerberus Capital Administration. Feinberg spearheaded the bizarre, landmark take care of Litinsky. It not solely made the Pentagon a 15% shareholder; it included the pledge of a multibillion-dollar whole funding as MP goals to increase its magnet manufacturing capability by 10 instances.
That growth is predicted to be accomplished in 2028. The deal additionally places a flooring on pricing for MP’s uncommon earths supplies for 10 years, serving to offset the opportunity of overseas worth dumping.
A Protection Division spokesperson advised Fortune: “Rebuilding the crucial minerals and uncommon earth magnet sectors of the U.S. industrial base gained’t occur in a single day, however DoD is taking instant motion to streamline processes and determine alternatives to strengthen crucial minerals manufacturing.”
4 days after the Pentagon deal announcement, on July 15, MP introduced a $500 million partnership with Apple to produce uncommon earth magnets which might be totally manufactured from recycled supplies, a pledge that may entail recycling expansions at each the Mountain Go and Fort Value services. MP and Apple had piloted superior recycling applied sciences for 5 years earlier than saying the deal.
“American innovation drives all the things we do at Apple, and we’re proud to deepen our funding within the U.S. economic system,” mentioned Apple CEO Tim Cook dinner in an announcement. “Uncommon earth supplies are important for making superior expertise, and this partnership will assist strengthen the provision of those very important supplies right here in the USA.”
MP used to ship extra of its uncooked supplies to China due to an absence of U.S. refining capability. One potential stumbling block for MP was its smaller possession stake nonetheless held by China’s Shenghe Sources, which had helped Litinsky purchase out Molycorp in 2017. However the bigger U.S. authorities possession place mixed with the brand new pricing flooring and Chinese language tariffs on U.S. exports has allowed MP to stop its exports to China as of April.
“We’re maniacally centered on investing and executing in the USA of America,” Litinsky mentioned in his earnings name. He emphasised, “By way of years of relentless execution, this workforce has reworked a bankrupted and deserted mine website right into a vertically built-in American nationwide champion with a strategic and financial platform that issues.”
