American rare earth giant hit hard.
According to the latest information, the new round of tariff policies from the Trump administration has already impacted the American rare earth industry chain. As the biggest hope for building a domestic rare earth industry chain in the U.S., MP Materials has confirmed that its business of exporting rare earth concentrate to China has stalled due to "lack of commercial feasibility." Affected by this negative news, on April 17, during the trading session on the East Coast of the U.S., the stock price of MP Materials plummeted sharply, falling more than 10% at one point.
An American expert in critical minerals analyzed that when MP Materials cannot export its products, it will face difficulties. At the same time, for the United States attempting to acquire heavy rare earths, there are currently only two choices: either face supply chain disruptions or try to negotiate.
China dominates the global rare earth supply chain, controlling approximately 70% of the global rare earth production and 90% of the refining capacity, making it the only source of separated heavy rare earths globally. Data released by the U.S. Geological Survey shows that in 2024, China's rare earth production accounted for nearly 70% of the global total, and from 2020 to 2023, 70% of the rare earth imports to the U.S. came from China.
In stagnation
MP Materials, headquartered in Las Vegas, USA, confirmed that due to trade conflicts, its main revenue-generating business—exporting rare earth concentrates to China—has stalled because it is "not commercially viable." As a countermeasure to Trump's "reciprocal tariffs," now all products sold by MP Materials to China are subject to a 125% tariff.
Due to this negative news, during the trading session on April 17 on the East Coast of the U.S., the stock price of MP Materials plummeted sharply, falling more than 10% at one point. Subsequently, the decline narrowed somewhat, and by the end of the day, the decline was 4.46%, with the total market value shrinking to $4.307 billion (approximately RMB 31.4 billion).
It is reported that in 2024, MP Materials achieved revenue of $204 million, of which about 80% came from selling rare earth concentrates to China. According to the disclosure documents, Chinese enterprises settle the import of MP Materials based on "market price minus tariffs and other costs."
MP Materials confirmed that this part of the business has stalled because "it is not commercially rational to sell these materials at a 125% tariff."
MP Materials also emphasized that it will process half of the capacity at its refinery in California and then try to sell to other buyers. It has also invested $1 billion in an attempt to rebuild a complete rare earth supply chain domestically in the U.S.
However, from both financial data and industrial reality perspectives, MP Materials will face significant challenges. The financial report shows that the company incurred a net loss of over $65 million in 2024, with cash holdings of $851 million at the end of the year, while long-term debt reached $909 million.
Morgan Stanley analyst Carlos De Alba interpreted that he sees two opposing forces affecting this stock—its increasing geopolitical importance makes it a more valuable asset, but tariffs will have a negative impact on financial performance in the short term.
To date, MP Materials can separate and process light rare earths, but still lacks the ability to produce heavy rare earths required for high-performance permanent magnets—such as dysprosium and terbium used in F-35 fighter jets, MRI equipment, and automobiles. There is no production timeline for separating heavy rare earths yet.
Graceleen Basquill, a key mineral expert at the Center for Strategic and International Studies (CSIS), pointed out that when MP Materials cannot export its products, it will face difficulties. At the same time, for the United States attempting to acquire heavy rare earths, there are currently only two choices: either face supply chain disruptions or try to negotiate.
The dilemma of the U.S. rare earth industry chain
Currently, China is the only source of separated heavy rare earths globally. The Wall Street Journal reported that China almost controls the rare earth industry, being the dominant global miner, refiner, and producer of rare earth magnets.
Rare earths are a collective term for 17 elements and are non-renewable strategic resources. Classified by their physical and chemical properties and distribution, they are divided into two major categories: light rare earths and medium-heavy rare earths. Light rare earths are relatively abundant and widely distributed, while medium-heavy rare earths are rarer and unevenly distributed, with most concentrated in China. Ion-type rare earths (heavy rare earths) are mainly distributed in Jiangxi, Fujian, Guangdong, Yunnan, and other areas of China, accounting for more than 80% of the world's heavy rare earth reserves.
Data released by the U.S. Geological Survey shows that in 2024, China's rare earth production accounted for nearly 70% of the global total, and from 2020 to 2023, 70% of the rare earth imports to the U.S. came from China.
From the perspective of product forms, light rare earths are exported in the form of oxides, carbonates, and primary alloys, while medium-heavy rare earths are more often indirectly exported in high-value-added products such as neodymium-iron-boron permanent magnets. Rare earths play a crucial role in high-end industries such as aerospace, national defense, electronics, and new energy.
Previous reports from American media stated that in response to the Trump administration's increased tariffs on China, China implemented export controls on multiple rare earth-related items, including vital resources for the aviation electronics sector. This may significantly impact the development progress of the U.S. sixth-generation aircraft project.
Some analysts noted that rare earths, known as the "industrial flavoring," are becoming the softest underbelly of the U.S. military-industrial complex. Of the 153 main combat equipment currently in service or under development by the U.S. military, 87% of the supply chains require processing through China's rare earths.
Notably, Lynas Rare Earth Company of Australia is constructing a heavy rare earth separation plant in Malaysia, which is nearing commissioning. Similar to MP Materials, Lynas's financial situation is also challenged by the rare earth market environment. In the six months ended December 31, 2024, the company's after-tax net profit was only AUD 5.9 million, roughly one-sixth of market expectations.
In the earnings conference call in late February, Lynas CEO Amanda Lacaze called on the Trump administration, which was eyeing Ukrainian rare earths, not to underestimate the time needed to build a rare earth supply chain from scratch.
Lacaze stated: "Anyone who has assessed this industry knows that from the idea of 'how great it would be to get rare earths from X place' (wherever X may be) to actually having separated products packaged in large bags ready for customers to purchase, requires a considerable amount of time."
Basquill also pointed out that although Lynas Rare Earth Company of Australia is the largest rare earth separator outside of China, it still needs to transport oxides to China for refining. It is expected that Australia will continue to rely on China for rare earth refining until at least 2026.
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