Not All Rare-Earth Metals Are Created Equal. What That Means for Investors.

A wheel loader moves raw ore at MP Materials’ Mountain Pass mine in California, in 2019. (Joe Buglewicz/Bloomberg)

Key Points

• Rare earths comprise more than a dozen elements that UBS calls the “spice” of industry.
• China threatened rare-earth export restrictions in April and October 2025, but agreed to suspend them for one year as part of a framework agreement with the U.S.
• The U.S. government is expected to implement further policies to reduce reliance on China for rare-earth materials, benefiting domestic companies.

Not all rare-earth elements are the same, or equally important, a challenge for investors looking to understand what has become a critical and volatile corner of the stock market.

Rare earths comprise more than a dozen elements that UBS calls the “spice” of industry. They aren’t the main ingredient in most industrial recipes, but they are critical to complete the cooking. Rare earths end up in magnets, lasers, catalysts, displays, and many other products.

Interest is sky-high. Take MP Materials .

It was a little-known company that went public via a merger with a special-purpose acquisition company in 2000. Now, it is the largest rare- earth miner in the Western Hemisphere, though at the start of the year, it was worth only about $3 billion, a blip on the global mining scene.

Coming into Thursday trading, shares were up 283% year to date, despite falling 37% over the past month. The stock is valued at roughly $13 billion, including the federal government’s stake, taken in July. It amounts to about 22 times estimated 2026 sales of $575 million.

Sales, however, are expected to more than triple by the end of the decade as the U.S. moves away from China, the world’s main source of rare-earth materials, as a supplier.

Amid rising trade tensions with the U.S. in 2025, China threatened rare- earth export restrictions, first in April and again in October.

A dozen elements were affected by recent moves. They include samarium, which ends up in magnets for defense applications; gadolinium, which is used in magnetic resonance imaging; terbium and dysprosium, which are also used in magnets; lutetium, used in imaging; yttrium, which has heat-resistant applications; scandium, used to make lightweight metal alloys; holmium, ytterbium, and thulium, which are used in lasers; erbium, used in fiber optics; and europium, which is used for lighting and displays.

Neodymium and praseodymium, also key for magnets, weren’t on the list of restricted metals. China chose “to focus on heavy rare earth elements that serve as critical components to strategic sectors, including certain healthcare and military defense applications,” wrote UBS in a recent report.

Heavy rare-earth elements include dysprosium, terbium, holmium, erbium, thulium, ytterbium, lutetium, and yttrium. They aren’t as abundant and are more expensive to produce than the lighter elements, according to the broker.

For now, the Chinese threat is less of a concern. At the end of October, China agreed to suspend restrictions for a year as part of its framework agreement with the U.S.

That won’t stop the U.S. government from acting. “We expect further US policies to derisk from China,” added UBS.

That is good news for domestic companies in the rare-earth space. But it also means investors will have to do some hard work to value rare-earth miners and start-ups, and to understand the difference between projects and metals.

A good place to start is asking companies and analysts which metals a company is focused on and where they source their products from now, and where they plan to obtain them in the future.

The ore from MP’s Mountain Pass mine contains a lot of cerium, lanthanum, neodymium, praseodymium, and samarium. In addition to mining, the company is moving downstream into processing, with plans to produce 10,000 tons of rare-earth magnets a year by the end of the decade.

MP shares lost 3.7% on Thursday, a tough day for the market. The S&P 500 and Dow Jones Industrial Average both fell about 1.7%.

Shares of some aspiring miners that investors can follow— USA Rare Earth and Ramaco Resources —dropped 12.2% and 9.9%, respectively. Coming into Thursday trading, USA Rare Earth and Ramaco shares were up 47% and 156% year to date, respectively.

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