Shortly after the US Pentagon invested in rare earth company MP Materials (WKN A2QHVL) in a multi-billion dollar deal (as we reported), news now follows that tech giant Apple (WKN 865985) has finalized a $500 million deal with the sole producer of the sought-after high-tech minerals in the US. MP Materials’ stock continues its surge!
The US Department of Defense and iPhone producer Apple are part of comprehensive efforts to secure domestic supply chains for the rare earths—which are actually not so rare—needed for smartphones, electric vehicles, and the defense sector. In particular, independence from China, which currently dominates the global rare earth market, is paramount for Washington.
Apple and MP Materials Plan to Develop Specialized Production Lines
Apple has indeed committed to acquiring US-made rare earth magnets from MP Materials’ facility in Fort Worth, Texas. The new partners plan to jointly develop a factory where neodymium magnet production lines will be established, specifically tailored for Apple products. The tech giant is already pursuing a comprehensive strategy to expand its production in the US and plans to invest $500 billion over the next four years for this purpose.
MP Materials’ stock, which had already risen by more than 50% after the Pentagon deal, gained another approximately 20% after the agreement was announced and closed on the NYSE at $58.22, reaching its highest level in at least five years.
Apple CEO Tim Cook stated in a press statement that rare earth materials are essential for the production of advanced technology products and that the new partnership will help strengthen the supply of these critical materials in the US.
The agreement also includes a rare earth recycling initiative at MP Materials’ Mountain Pass mine in California. The recycled material will also be used for the production of Apple products.
Ucore Rare Metals also Benefits from US Government Plans
The Canadian Ucore Rare Metals (WKN A2QJQ4 / TSXV UCU) began years ago to position itself as part of a North American/US rare earth supply chain.
The company led by CEO Pat Ryan has developed the so-called RapidSX technology, which allows for faster and more cost-effective processing of both light and heavy rare earth ores than with conventional methods. For this purpose, they are already collaborating with the US Department of Defense in a demonstration plant in Kingston, Canada, which provides financial support of up to $4 million.
Just recently, however, the Pentagon provided Ucore with an additional $18.4 million (!) to accelerate the planned expansion of a commercial RapidSX facility in the US state of Louisiana, where the expertise gained in Kingston is to be applied. The groundbreaking already took place at the end of May, after which the stock climbed to CAD 2.00. Even though the price is currently just under CAD 1.46 again, this still represents a near doubling since the beginning of the year. And we believe that Ucore still has significant upside potential given the latest developments and the US government’s plans, provided the company delivers on the operational side. We are excited and will definitely stay tuned to this exciting story and the rare earth sector as a whole.
