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Rare-Earth Stocks Slump. The Bad News for MP Materials and Others in a Trade Deal.

Oct 27, 2025 05:57:00 -0400 by Al Root | #Politics

A rare-earth magnet is being inspected at MP Materials’ Independence facility in Fort Worth, Texas. (Courtesy MP Materials)

Key Points

MP Materials and other rare-earth stocks fell sharply after the U.S. and China struck a positive tone on their trade talks over the weekend.

Investors can expect more volatility for the sector’s stocks in the days ahead.

Shares of MP Materials , the largest producer of rare-earth materials in the Western Hemisphere, fell 7.4% to $65.57 on Monday after jumping 3.5% Friday. The S&P 500 and Dow Jones Industrial Average were up 1.2% and 0.7%, respectively.

Coming into Monday trading, shares were still up more than 350% this year. Moves in the stock have been wild lately. Monday’s slide left MP shares down about 4% over the past month.

Shares of USA Rare Earth and Ramaco Resources dropped 8.4% and 2.6%, respectively. Monday’s moves left those two stocks up 23% and 5%, respectively, over the past month.

Rare-earth stocks and the broader market are moving for the same reason: progress on U.S.-Chinese trade relations. President Donald Trump and President Xi Jinping are slated to meet in South Korea on Thursday to discuss a trade deal. Treasury Secretary Scott Bessent said after meeting with Chinese officials that he expected China to defer implementing tightened export controls on rare-earth materials.

China dominates rare-earth production, accounting for an estimated 85% of global refining capacity. Only hundreds of thousands of tons of rare-earth materials are used annually worldwide, but they are critical for manufacturing modern technology. These materials end up in EVs, wind turbines, electronics, and defense systems. It is why UBS analysts call rare earths the “spice” of industry.

The U.S. is eager to reduce its dependence on China for these materials. In July, it announced a blockbuster deal with MP that included an equity stake, a price floor for rare-earth products, and a guaranteed customer for new capacity to be built by MP.

Canaccord analyst George Gianarikas estimates that the U.S. uses about 50,000 metric tons of rare-earth magnets, a finished rare-earth product, annually. A few years ago, the U.S. imported essentially all of that volume. MP is making magnets today and has plans to manufacture about 10,000 tons annually by the end of the decade.

Details of a rare-earth trade deal remain vague. Bessent told NBC News he anticipates “some kind of deferral” on the curbs China has discussed, but that it is up to Trump and Xi.

A move by Beijing to lift its export curbs will likely be seen as a problem for rare-earth stocks. Still, Ramaco and USA Rare Earth don’t generate rare-earth sales today. Investors should be thinking about the industry’s future structure. Eventually, the U.S. will be producing more materials at prices that justify rare-earth project development in the West.

It is difficult to say which rare-earth projects will be successful, such as Ramaco’s Brook Mine in Wyoming or USA Rare Earth’s Round Top mine in Texas. (MP’s Thacker Pass mine near the California-Nevada border is in production.) The takeaway is that more American capacity is coming.

A truce won’t halt the development of rare-earth materials in America. China has threatened rare-earth exports several times in the past, leaving America with the policy, “Fool me once, shame on you; fool me again, shame on me.”

Coming into Monday trading, shares of the three rare-earth stocks were up an average of 233% this year, despite dropping 17% on average over the past week.

Write to Al Root at allen.root@dowjones.com and Callum Keown at callum.keown@dowjones.com