Where Will MP Materials Stock Be in 5 Years?

As the U.S. grapples with a shortage of rare-earth elements, the spotlight shines on one key component: magnets. These crucial items power everything from electric vehicles to cutting-edge aerospace technology and high-performance semiconductors.

One company slated to benefit from the domestic push for rare earths is MP Materials (NYSE: MP). Its Mountain Pass is the only commercial-scale, active rare-earth mine in the United States, and it was also the first to secure a deal with the U.S. government. If you're thinking of buying MP Materials stock, here's what you can expect from it over the next five years.

A landmark partnership with the U.S. government

Last year was an important one for the company, as it entered into a landmark public-private partnership agreement with the U.S. government. As part of that agreement, the government established a price floor of $110 per kilogram for MP's NdPr products (concentrate, oxide, and metal) for approximately 10 years.

It has also committed to purchasing the entire output of magnets produced at MP's new 10X facility at a price equal to production costs plus a guaranteed profit. In return, the U.S. government got a 15% stake in MP Materials. In January, Reuters reported that the White House was stepping back from these plans. MP Materials criticized the report and assured investors that the agreement is a binding long-term contract that remains fully in force.

The company has also reached agreements with major companies, including a long-term supply agreement with Apple to manufacture and supply rare-earth magnets made from 100% recycled materials. General Motors is also a major customer in its downstream magnetics segment and expects commercial sales of finished magnets to GM to begin in the second half of this year.

What to watch for from MP Materials over the next five years

Looking ahead, MP Materials plans to expand its vertically integrated business and build the aforementioned 10X large-scale rare-earth magnet manufacturing campus on a 120-acre site in North Lake, Texas. This is a cornerstone of its mine-to-magnet strategy, and will help the company produce 10,000 metric tons of NdFeB magnets annually.

Image source: Getty Images.

The company is investing $1.25 billion in this project, has begun procurement of long-lead equipment along with detailed engineering, and expects to break ground this year. The 10X facility is designed with flexibility to handle a variety of magnet formulations and specifications, serving broad commercial and defense markets. The company is on track to begin commissioning in 2028, a deadline set by its partnership with the Department of War.

The next five years are crucial for MP Materials and its ability to scale up. The company is ramping up production of heavy rare-earth, and its 10X facility is a vital part of its ability to scale up. Analysts project its revenue could reach $1.1 billion by 2029, representing a 51% compound annual growth rate from its 2025 revenue. In five years' time, the company hopes to be a cornerstone of the U.S. domestic supply chain and significantly reduce the country's reliance on Chinese production for these materials.

A bet on domestic rare-earth production

MP Materials stands out as a more compelling investment than emerging domestic miners like USA Rare Earth, thanks to its established Mountain Pass facility and existing production capabilities for critical minerals and magnets. While it still has its work cut out for it to build its 10X facility and scale operations, its first-mover advantage and historic agreement with the U.S. government set it apart.

As the U.S. intensifies its focus on securing a domestic supply of these essential resources, MP Materials should be among the biggest beneficiaries of the U.S. push for domestic rare-earth elements, making it a compelling buy for aggressive investors looking to tap into the future of rare-earth mining.

Courtney Carlsen has positions in Apple, MP Materials, and USA Rare Earth. The Motley Fool has positions in and recommends Apple and is short shares of Apple. The Motley Fool recommends General Motors and MP Materials. The Motley Fool has a disclosure policy.