MP Materials soars after China's move to restrict rare earth exports

Joaquin Corbalan/iStock via Getty Images

MP Materials (NYSE:MP) +5.1% in Wednesday's trading after China announced it will restrict exports of rare earth specialty materials germanium and gallium products used in computer chips and other components.

Gallium is a soft silver metal used to produce compound semiconductor wafers for electronic circuits, semiconductors and light-emitting diodes; germanium is used in making fiber optics to transfer data and information.

The decision is viewed as retaliation for U.S. curbs on sales of technologies to China, and has raised concerns that China could eventually limit exports of other materials, notably rare earths, whose production China dominates.

More on MP Materials:

• Financial and valuation comparison to sector peers
• Analysis: MP Materials: Waiting On Major Market Catalysts To Fuel Fundamental Tailwinds
• Stock price return: Down 4% YTD, down 25.5% in the past 12 months

Comments

[SR1978]

Best way to play this is to capitalize on the volatility. Sell puts or strangle.

[diy88888]

china save it, take down the CCP!!!!

[Gregory Holter]

We knew this was coming. Not so coincidentally, I bumped up my positions in both MP and LYSDY recently. I probably should have been more aggressive.

[young usd]

hopefully $SQM get's some steam from this

[Gregory Holter]

LYSDY is up a similar amount.

[fidelity comment]

germanium and gallium are NOT rare earths. The only rare earth that starts with the letter 'G' is gadolinium. Wikipedia is your friend.

[SpliffMeister]

@fidelity comment inium schminium.

[Ronaldo123]

Anyone buying $MP??

[Investor since ‘73]

@Ronaldo123 Only the smart people. Not a crowded trade.

[Whoosh1999]

Since MP sends all their raw rare earth material to China for separation, it will be interesting to see how long before China shuts down that supply chain. Lynas is a much better long term bet in the rare earth space.

[jerseyvalueinvestor]

@Whoosh1999 Thats why there is government funding to build a processing facility in the US.

old news in fact

www.defense.gov/...

[Whoosh1999]

@jerseyvalueinvestor It's is more than a matter of funding. There is a reason why MP Materials hasn't performed any significant separations since they've been a company (going back to Molycorp and earlier) - they don't have a cost competitive separation technology. DoD wants to fund their research but it will take several years to develop their capability at production scale.

They have a mine full of light rare earths with minimal concentrations of heavy rare earth elements. There is a reason why China dominates this space besides lax environmental laws. They developed the separation technology and they hold onto it as a competitive advantage to support their real "mines-to-magnets" strategy that Molycorp/MP Materials have only dreamed about.

Market is just reacting to headline news here without understanding the details or the risks IMO.

[jerseyvalueinvestor]

@Whoosh1999 Our buddies in Norway have plenty of rare earths.

And lets be serious, rare earths are non rare at all if you start mining in the ocean.

This is a nothingburger long term, china is gasping for air and desperate. This was their final card to play.

[Investor since ‘73]

Gee whiz, who could’ve seen this coming? LOL!!

[The Fortune Teller]

MP deserves to trade a lot higher than where it's today, regardless of (but certainly following) the recent news.
twitter.com/...

[jerseyvalueinvestor]

@The Fortune Teller I doubled my money on this way back, was one of the only SPAC's that interested me, ill be adding to my non-existent MP position in the coming months.

[RWilliam]

@The Fortune Teller I’m adding, concur

[Lambsup]

@The Fortune Teller

MP seems like it has interesting cash flow and could fairly be priced a bit higher but I am not sure I can fully evaluate the market it operates in, most of the rare earths markets are tiny.

Still profitable but I am not as confident in most rare earths compared to the long tailwinds that exist for lithium.

[UncleSherpalot]

China is only speeding up international development of rare earth resources and
speeding up international decoupling. Recent events show Westerners are more than willing to sacrifice short term pain for long term gains when it comes to national security.

[Investing for Freedom]

@UncleSherpalot easy said than done, but in the right direction. China dominates the refinement of raw earth, which is a bigger problem.

[SpliffMeister]

@UncleSherpalot errbody be like f**k china.... and err russia. Finally.

[starsandstripes]

Well what do we expect after the USA plans to limit China's chip making ability.
That's the way it works isn't it? Shouldn't surprise anyone.

[Duncan20903]

Now it's just plain silly to buy a mining company which doesn't produce the metals China restricted.

[CincinnatiRick]

@Duncan20903 Not "silly" at all...the implication is that might easily follow.