Investment Banks Keep Raising Their Price Target on This Rare-Earth Mining Stock. Time to Buy?
Written by Courtney Carlsen for The Motley Fool -> MP Materials is the only integrated Western rare-earth producer and has the largest such mine in the U.S. The company entered into a historic public-private partnership with the U.S. government last year. Its first-quarter res
MP Materials is the only integrated Western rare-earth producer and has the largest such mine in the U.S.
The company entered into a historic public-private partnership with the U.S. government last year.
Its first-quarter results prompted several Wall Street analysts to raise their price targets for the company.
The U.S. is making a strong push to secure domestic rare-earth mining and processing. This move is primarily fueled by the fact that China currently dominates the global market controlling a staggering 70% of mining and 90% of processing, giving the country considerable influence in international negotiations.
The U.S. entered into a historic arrangement with MP Materials (NYSE: MP) last year, investing in the company to help it ramp up its processing capacity while also providing it with price floors for its critical magnets. Over the past month, several investment banks have raised their price targets on the company. Here's what investors need to know.
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MP Materials is the only fully integrated Western rare-earth producer that also owns the largest rare-earth mine in the U.S. at Mountain Pass. Last year, the company entered into a landmark public-private partnership with the U.S. government to purchase its neodymium-praseodymium (NdPr) products, which are used in critical rare-earth magnets for electric vehicles, robotics, and defense.
As part of this agreement, the U.S. established a price floor of $110 per kilogram for MP's NdPr products that are stockpiled or sold. This price floor is unusual but is seen as necessary, given that China heavily subsidizes state production of rare-earth elements. By instituting a price floor, the U.S. is locking in a price at which it will buy MP's products, preventing the company from being undercut by foreign competitors.
