MP Materials, Rare Earth Stocks Fall—Again

Rare-earth stocks fell again on Monday, despite a little love from Wall Street. (oe Buglewicz/Bloomberg)

Key Points

• Rare earth stocks, including MP Materials, USA Rare Earth, and Ramaco Resources, experienced declines on Monday, continuing a 45% drop over the past month.
• China controls an estimated 85% of global rare earth processing capacity, materials critical for various technology products.
• Despite recent volatility, MP Materials’ shares have risen 276% this year, following a Defense Department deal and operational progress.

Rare-earth stocks just can’t catch a break.

Shares of MP Materials , the largest rare-earth producer in the Western Hemisphere, fell again on Monday, despite positive comments from a Wall Street analyst.

MP stock dropped 2.8%, closing at just under $57 a share, while the S&P 500 and Dow Jones Industrial Average fell 0.9% and 1.2%, respectively. Shares of aspiring rare-earth miners USA Rare Earth and Ramaco Resources lost 0.3% and 3.9%, respectively.

The red numbers carry on a painful trend. The three stocks are down 45% over the past month. Early in October, investors got overly excited by what threatened export restrictions by China meant for the stocks—two of which don’t produce rare-earth materials yet. Then, shares crashed back down after trade tensions between the U.S. and China cooled.

China dominates rare-earth production with an estimated 85% of global processing capacity. The materials are a small but key part of countless technology products, ending up in everything from iPhones to fighter jets.

Despite the volatility, the U.S. is moving to reduce its dependence on China. In July, the Defense Department signed a deal with MP, which included an equity stake, price floor, and guaranteed customer for the rare-earth magnets that MP is building the capacity to produce.

The change in policy has had its effect. Shares of MP are up 276% this year. USA Rare Earth and Ramaco are up 26% and 110%, respectively.

A lot is going right for MP and the rare-earth industry.

D.A. Davidson analyst Matt Summerville pointed out in a Monday report that MP was making “operational progress,” citing mining improvements and agreements with Apple for rare earth recycling. He rates MP shares Buy and has an $82 price target.

Summerville’s comments, however, weren’t enough to arrest Monday’s slide.

Write to Al Root at allen.root@dowjones.com