The U.S. and China hit pause on the rare earth issue.
But things could spiral out of control again.
That’s because China now wants to prevent the U.S. military from getting its rare earth supply.
As noted by CNBC, “Beijing will not allow the export of rare earth materials for use by foreign militaries, China’s Ministry of Commerce announced on Oct. 9. These are the first restrictions imposed by China that specifically target the defense sector, according to Gracelin Baskaran, a critical minerals expert at the Center for Strategic and International Studies.”
Considering rare earths are critical in U.S. weapons systems, this could get bad again.
If that’s the case, investors may want to jump into rare earth trades again, including:
MP Materials (MP)
One of the biggest rare earth winners of the bunch has been MP Materials.
Since late April, the MP stock raced from about $25 to a current price of $56.
JPMorgan believes MP is set to benefit from supply-demand issues, too. The firm also upgraded the miner to an overweight rating with a price target of $74 a share.
“Our new rating reflects our view that rare earths national security concerns are ‘here to stay’ despite China’s reported one-year pause on export restrictions, with risks remaining, especially for military exposure,” they said, as quoted by CNBC.
“MP’s unique mine-to-magnet vertical integration positions the company as the ex-China leader ready to immediately begin addressing these concerns, although it will ultimately take multiple players over many years to sort out.”
Sincerely,
Ian Cooper
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