The Only Fully Integrated U.S. Rare Earth Producer Has a Deal With Apple and the Pentagon. Here's What Investors Need to Know.

Rare-earth mining company MP Materials (NYSE: MP) is having a moment. Its shares are up more than 30% so far this year, even though it may be years before the company is close to turning a profit.

While it has a U.S. competitor in USA Rare Earth, MP Materials' Mountain Pass mine in San Bernardino County, California, is the only operating large-scale rare-earth mine in the U.S. China dominates the processing of rare-earth magnets, according to Motley Fool research.

Here are three reasons to buy MP Materials stock:

Image source: Getty Images.

MP's move to vertical integration

MP is transitioning from being a mere mining company to being a full-scale manufacturer of permanent magnets. In the fourth quarter, it announced that it had produced its first neodymium-iron-boron (NdFeB) magnets on commercial equipment at its Independence facility in Fort Worth, Texas.

This vertical integration allows it to capture higher margins across the entire value chain. As one of the few high-grade hard-rock rare-earth miners outside China, MP faces structural scarcity. Its ability to refine heavy rare-earth metals -- essential for high-performance military and electric vehicle magnets -- sets it apart from smaller competitors.

The company reported revenue of $224 million in 2025, up 10%, but had a net income loss of $85.8 million, compared to a loss of $65.4 million in 2024. There was progress in the fourth quarter with earnings per share of $0.05, compared with a loss of $0.14 in the same period a year ago.

More importantly, the company is beginning to ramp up production. It produced a record 2,599 metric tons of neodymium-praseodymium (NdPr) oxide in 2025, a 101% increase year over year. NdPr oxide is the primary raw material for NdFeB magnets. They are the strongest permanent magnets in existence and are essential in certain motion technologies, including electric vehicles, missile guidance systems, and wind turbines. The company also produced a record 50,692 metric tons of rare-earth oxides in concentrate in 2025, a 12% increase. Rare-earth oxide concentrate is 60% to 70% rare-earth oxides and must be separated into individual rare-earth elements.

Its strategic partnership with Apple

In July 2025, MP Materials announced a $500 million long-term agreement with Apple (NASDAQ: AAPL). This partnership is centered on creating a circular supply chain: MP will process recycled rare-earth magnets from end-of-life Apple products at its Mountain Pass facility. MP is expanding its Fort Worth, Texas, facility to build manufacturing lines specifically for magnets used in hundreds of millions of Apple devices. Apple made a $200 million prepayment to fund this expansion, securing its magnet supply independent of Chinese export restrictions.

Its deep connection with the Pentagon

In 2025, the Department of Defense invested $400 million in convertible preferred stock, becoming the company's largest shareholder with a 15% stake. It did this for national security reasons, with an eye toward making the the military less dependent on rare-earth magnets supplied by China.

To protect MP from market manipulation (such as China flooding the market to crash prices), the Pentagon established a $110/kilogram floor price for NdPr oxide -- nearly double recent market lows -- ensuring stable cash flow even during commodity downturns. It has committed to ensuring 100% of the output from MP's upcoming 10X magnet facility, which gets its name from management's plan to bring MP's total annual capacity to 10,000 metric tons of neodymium-iron-boron (NdFeB) magnets, is purchased for at least a decade.

It's hard to fight Uncle Sam

MP Materials' success has become a matter of national security as the U.S. seeks to wean itself off Chinese-produced rare-earth magnets. This is seen by the U.S. government as crucial for defense purposes and for tech companies that rely on the magnets.

In the short term, MP Materials' stock is likely to be volatile and still somewhat dependent on international prices for rare-earth magnets. However, its vertical integration, first-mover status in the U.S., and government backing will help it succeed in the long run.

James Halley has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends MP Materials. The Motley Fool has a disclosure policy.