China’s latest contretemps with the Trump administration over rare earth metals is nothing new. I wrote a story about it six years ago that could just as accurately describe last week’s exchange of rhetoric between the two countries (“Rare Earth Metals: China’s Trump Card”).

Of course, there are some significant differences between now and 2019. The Biden administration emphasized renewable energy and electric vehicle (EV) technologies, both of which require rare earth metals.

So do data centers using super high-speed computers to run artificial intelligence (AI) apps. The AI market is projected to grow at a compound annual growth rate (CAGR) of 29 percent over the remainder of this decade.

It’s no wonder that China wants to implement strict controls over how other countries use its rare earth metals. Their use in military equipment by foreign powers (including the United States) could pose a threat to China (or its allies) during a future conflict.

Climbing Fast

That is why the Trump administration is prioritizing domestic production of rare earth metals. While they are not as abundant in North America as they are in Southeast Asia, there is still enough of them to justify making a major investment in extracting them.

That is why shares of mining company MP Materials Corp. (NYSE: MP) have more than quadrupled in value over the past five months. After the White House announced its “liberation day” reciprocal tariff plan in April, Wall Street quickly correctly assumed that it was only a matter of time until China retaliated.

After closing below $19 in May, MP climbed rapidly to close above $70 three months later. At the start of this week, it jumped another 25 percent in response to last week’s unexpected action by China.

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It could still climb further. Even at that elevated share price, MP is valued at 20 times trailing earnings compared to a multiple of 30 for the S&P 500 Index. It is not unusual for a mining company to trade at a discount to the overall market. However, MP Materials is not your average miner, either.

Roll of the Dice

MP Materials is headquartered in Las Vegas, Nevada. Not exactly the type of place that you would expect to find a business that is deemed critical to our national security.

In 2017, a group of far-sighted investors restarted mining operations at Mountain Pass in California. At that time, the cost of mining rare earth metals here was more expensive than simply importing them from China.

That is still the case. Restarting mining operations is an expensive undertaking that requires large investments in extraction, separation, and refining infrastructure (that’s why China is in a commanding position; industry experts estimate that China controls 70 percent of rare earth metals and 90 percent of their refining capacity).

Last year, MP Materials reported a loss. Its total revenue was less than half what it was two years earlier. It was beginning to look like the much-anticipated spike in domestic demand for rare earth metals would never happen.

Skyrocketing Demand

That is no longer the case. Based on the company’s fiscal 2025 Q2 results (ended June 30), demand for the company’s products is skyrocketing.

During the second quarter, the company’s total revenue increased by 84 percent on a year-over-year basis. That’s the good news.

The bad news is that MP Materials reported a loss for the quarter of 19 cents per share. That is only a mild improvement over its 21 cents per share loss the year before.

That should not be the case going forward. As demand for rare earth metals rises, so will the wholesale prices at which they can be sold.

It is that expectation that has propelled MP up the charts. However, it also leaves the stock vulnerable to a big selloff if it cannot convert sales to profits.

Takeover Target?

That may not matter much longer. I would not be surprised to see MP Materials taken private or acquired by one of the big tech companies such as Apple (NSDQ: AAPL), which recently entered into a substantial supply agreement with the company.

Despite its recent surge in value, MP Materials has a market cap of around $17 billion. That is a rounding area for a company that size of Apple with its $3.7 trillion market cap.

Apple needs something to jumpstart its stock market performance. This year, AAPL has posted a negative return while the overall stock market has rallied sharply.

That’s because Apple is perceived as being most vulnerable to a trade war with China given its extensive manufacturing and sales operations there. Acquiring MP Materials would ensure it of having an uninterrupted source of rare earth metals for its smartphones.