Imagine controlling 99% of something the modern world literally cannot function without. That’s been China’s position on rare earth elements for decades. Your phone, your electric car, the missiles defending your country – almost all of them need these obscure metals that barely anyone had heard of until recently.
And then, almost overnight in 2025, everything changed.
The Wake-Up Call Wall Street Can’t Ignore Anymore
Friday morning started like any other for most investors. Coffee, scroll through headlines, maybe check the futures. Then Morgan Stanley dropped a note that felt less like an analyst upgrade and more like a geopolitical earthquake.
They didn’t just raise their price target on MP Materials. They basically declared that America has finally picked its horse in the race to break China’s rare earth monopoly – and that horse is already running at full gallop.
Shares of MP Materials have surged 296% year-to-date as I write this. Let that sink in. While the broader market has had its ups and downs, this one company – the only significant rare earth producer in the United States – has nearly quadrupled.
But according to Morgan Stanley’s Carlos De Alba, we’re still in the early innings.
Why This Upgrade Feels Different
Most analyst upgrades are pretty dry affairs. “We like the valuation,” or “margin expansion ahead,” that sort of thing. This one read more like a strategy paper from the Pentagon.
The key phrase that jumped out? “The U.S. has effectively chosen MP Materials as the U.S. solution.”
That’s not marketing hype. That’s an analyst at one of the world’s most powerful banks stating what increasingly looks like reality: when Washington decided it could no longer tolerate China’s near-total control of these critical elements, they didn’t spread bets across multiple companies.
They went all-in on the one American company that was already producing, already had the mine, and – crucially – had a credible plan to go from dirt in the ground to finished magnets.
The Mountain Pass Miracle
If you’ve never heard of Mountain Pass, California, you’re not alone. It’s a dot in the Mojave Desert that happens to sit on what was once the world’s richest rare earth deposit.
For years, it was the symbol of American decline in critical minerals – a mine that supplied the world in the 1980s and 1990s, only to be driven out of business by Chinese competition that seemed willing to lose money forever to capture market share.
China didn’t just compete on price. They built the entire supply chain – mining, separating, refining, and magnet production – while the rest of the world happily outsourced and saved a few bucks per unit.
MP Materials bought the bankrupt Mountain Pass mine in 2017 for $20 million. Pocket change. Today, that same asset has made them the only meaningful non-Chinese supplier of rare earth concentrates in the Western world.
But here’s what makes this story different from every other “China +1” narrative you’ve heard: MP didn’t stop at mining.
The Holy Grail: Mine-to-Magnet in America
Everyone talks about vertical integration like it’s easy. Apple does it with chips. Tesla does it with batteries. But building a complete rare earth supply chain outside China?
That’s been considered practically impossible for twenty years.
The separation and refining process is extraordinarily complex and environmentally challenging. The Chinese spent decades perfecting it while accepting pollution levels that would never fly in the West. They built expertise that was considered insurmountable.
MP Materials is now less than two years away from producing separated rare earth oxides in Texas. And they’re building magnet production capability that will make them the only company in the world with a fully integrated mine-to-magnet supply chain outside China.
Let me say that again: the only company in the world.
“MP’s development of a fully domestic rare earth mine-to-magnet supply chain in the U.S. puts it in prime position to benefit as the U.S. tries to develop ex-China supply chains.”
Morgan Stanley analyst Carlos De Alba
The Deals That Changed Everything
The real validation came this summer and fall, when the deals started flowing that no one saw coming.
First, there was the massive contract with the Department of Defense – the largest single investment the DoD has ever made in rare earth production. Not a loan. Not a grant. A direct investment that essentially said: we need this capability for national security, and we’re betting on MP to deliver it.
Then came the partnership that made everyone’s head spin: MP Materials, the U.S. Department of Defense, and… Saudi Arabia’s national mining company Ma’aden.
Yes, you read that right. The same Defense Department that views China as the primary strategic competitor is helping finance a rare earth processing facility in Saudi Arabia – with MP as the technology partner.
The beauty of this deal? The DoD pays for the U.S. portion of the Saudi facility, giving MP massive downstream capacity at essentially zero capital cost. Meanwhile, MP gets to diversify its processing base while maintaining complete control of the intellectual property and the American supply chain.
It’s the kind of sophisticated geopolitical-industrial strategy that makes you wonder if someone’s been reading too many Tom Clancy novels – except it’s actually happening.
Why China’s “Pause” Changes Nothing
You might have seen headlines about China pausing some rare earth export restrictions. The narrative went that tensions were easing, everything was fine, no need to worry about supply chains anymore.
Morgan Stanley’s response was essentially: nice try.
The export license process remains painfully slow and completely opaque. Companies still need approval for every shipment, and that approval can be withdrawn at any moment for any for political reasons.
More importantly, the fundamental issue isn’t solved: the United States and its allies remain almost completely dependent on a strategic competitor for materials essential to both economic competitiveness and national security.
As De Alba put it, geopolitical tensions may be “temporarily subdued,” but they’re far from resolved. And every day that dependence continues is another day of vulnerability.
The Numbers Behind the Story
Let’s talk about what this actually means in dollars and cents.
MP Materials is currently producing about 15% of global rare earth supply – remarkable for a company that restarted operations less than five years ago. By 2027, with their separation facility online and magnet production ramping, that percentage grows dramatically in the segments that matter most.
- Neodymium and praseodymium (NdPr) – the key elements for permanent magnets used in EVs and wind turbines
- Dysprosium and terbium – critical for high-temperature applications like military systems
- Full control of the supply chain from mine to finished magnet
The addressable market isn’t small. Permanent magnets alone are a $20 billion+ industry growing at double digits annually. And currently, essentially 100% of Western demand is met by Chinese suppliers.
MP doesn’t need to capture much of that to generate extraordinary returns.
The Risk Factors (Because There Always Are)
Look, I’m not here to sell you shares. This is a complex, capital-intensive business in a geopolitically charged environment.
The separation facility in Texas is a massive engineering challenge. Delays are possible. Cost overruns happen. The magnet facility will take years to reach full production.
China could flood the market with cheap supply to protect their position – they’ve done it before. Regulatory hurdles remain significant.
But here’s what I’ve learned watching these kinds of situations: when the U.S. government decides something is a national security priority and puts real money behind one specific company?
Things tend to get done.
Where We Go From Here
The Morgan Stanley upgrade to overweight with a $71 price target implies about 15% upside from current levels. Nice, but probably conservative given the binary nature of the opportunity.
More interesting is what happens when the Texas separation facility comes online in 2026-2027. When MP starts delivering finished magnets to American automakers and defense contractors using American-mined, American-processed materials?
That’s when this stops being a mining story and becomes something much bigger.
A story about whether the United States can actually rebuild strategic industries it allowed to atrophy. About whether “friend-shoring” is real or just another buzzword. About whether we can compete in the industries that will define the next fifty years of technological leadership.
MP Materials isn’t just a stock. Right now, in this moment, it’s arguably the purest play on American industrial reawakening we’ve got.
And Morgan Stanley just told the world they think it’s going to work.
Sometimes the most important investment trends aren’t about the hottest new technology. Sometimes they’re about controlling the basic building blocks that make all the hot new technologies possible.
Rare earth elements were yesterday’s forgotten commodity. Today, they’re becoming tomorrow’s most strategic resource.
And one American company – backed by the full force of the U.S. government – is positioning itself to be the alternative the world has been desperate for.
Whether that positioning translates into the kind of returns that justify a 296% move this year?
That’s the bet Morgan Stanley just made overweight.
And honestly? In this environment, it feels like one of the more reasonable bets you could make.
