Rare earths are a small market with a far-reaching industrial footprint. According to an opinion analysis by Siddhi Pujara published on Investing.com on 20 October 2026, the four rare earths used in magnets are worth around US$6 billion a year, a fraction of the silver market, yet they sit inside the motors of electric cars, wind turbines and fighter jets. The article identifies 2025 as the point at which that dependence became costly.
According to the author, a Chinese licensing requirement was enough to halt car plants from Chicago to Japan. Since then, Washington has been supporting a rare earth supply chain that does not run through China, using grants, loans, price floors and even equity stakes, the article states. The author argues that the widely discussed question of whether anyone can break China's grip on the sector is less important for investors than it appears.
In the author's view, manufacturers are not seeking to replace Beijing but are looking for a second supplier to turn to when Chinese supply is restricted. MP Materials, USA Rare Earth and Lynas are presented as the companies best placed to benefit from that demand. The article traces the industrial history of the sector to 1787, when Karl Arrhenius found an unusual black rock in a quarry at Ytterby, Sweden.
Its investigation led to the identification of yttrium, and later analyses revealed additional elements. Rare earths are now used in medical scans, in refineries to help produce fuel, in optical fibres and, most importantly, in powerful magnets for electric motors, wind turbines and electronics. According to the article, China began building its rare earth industry long before these materials became a global investment theme.
In 1964, Deng Xiaoping visited the Bayan Obo mine and called for rare earth development alongside steel. During the 1970s, research led by chemist Xu Guangxian helped Chinese factories improve separation, which is difficult because many rare earths have very similar chemistry. Inexpensive Chinese supply then attracted overseas manufacturers, and China expanded across mining, separation, metals, alloys and finished products.
The article notes that China widened its export controls in October 2025 and then paused the expansion until 10 November 2026 under its truce with Washington. The author concludes that Beijing can effectively turn the supply tap on and off while the rest of the world is still building alternative sources. On resources, the article cites revised 2026 USGS figures showing that Brazil holds the largest reported reserves after China, followed by Australia, Russia and Vietnam.
It also notes that Australia's Lynas already operates an alternative supply chain with Japanese backing, and that Europe and Canada are expanding processing and manufacturing. Greenland's heavy rare earth deposits are described as strategically important, although turning them into dependable supply still requires infrastructure, processing and investment. The article cites an IEA estimate that meeting projected magnet rare earth demand outside China requires around US$60 billion of investment by 2035, and notes that recycling and substitutes can help, depending on collection, cost and performance.
MP Materials is described in the article as the only fully integrated rare earth producer in the United States, connecting mining and separation with metal, alloy and magnet manufacturing. Its Mountain Pass operation in California primarily produces light rare earths, particularly neodymium and praseodymium, and the company is commissioning heavy rare earth separation there, with initial dysprosium and terbium production expected later in 2026. The Independence facility in Fort Worth, Texas, converts processed materials into metals, alloys and finished magnets, and magnet production has begun.
According to the article, MP produced 2,599 tonnes of separated NdPr in 2025 and targets an annualized rate of approximately 6,075 tonnes by December 2026. Government agreements support the expansion: eligible NdPr benefits from a US$110 per kilogram floor through December 2035, with qualifying upside shared. The planned 10X facility and the expanded Independence facility would together provide 10,000 tonnes of annual magnet capacity.
General Motors and Apple are described as contracted customers for magnets from Independence, and Apple's US$500 million purchase commitment supports manufacturing and recycling, with deliveries expected from the second half of 2027. The article also reports that, as of 30 June 2026, Leon Cooperman disclosed an MP position representing 4.74% of his reported securities portfolio, and Bridgewater Associates disclosed a 0.10% allocation. The author notes that these percentages refer to disclosed securities portfolios rather than total assets under management.
The author's sum-of-the-parts discounted cash flow model for MP, based on the company's filings and government agreements, uses a reference close of US$40.17 on 16 October 2026. The base case assumes MP reaches its planned volumes by 2030, with NdPr at US$140 per kilogram. The bear case uses US$110 NdPr and weaker margins, while the bull case uses US$200 NdPr and a faster ramp.
The author's five-year base target is US$40.02, which he describes as offering little appreciation from the reference price. He states he would build exposure at a lower entry price and add as commercial deliveries and earnings develop. USA Rare Earth, referred to as USAR, is described as offering exposure to both light and heavy rare earths.
Its purchase of Serra Verde on 3 September 2026 added a producing mine in Goiás, Brazil, through the Pela Ema operation. According to the article, production at Pela Ema began in January 2024 but the operation is still ramping up, and first half 2026 revenue was US$0.6 million. USAR cites Serra Verde as the only scaled producer of all four principal magnet rare earths outside Asia.
Its current product is a mixed carbonate that still requires separation, and management targets an annualized rate of 4,000 tonnes of total rare earth oxide equivalent by the end of 2026. A second stage, now under construction, targets average annual production of 6,400 tonnes. The article identifies Less Common Metals, acquired in November 2025, as a second key asset.
According to the piece, LCM converts rare earth oxides into metals and alloys used by magnet makers and works with both light and heavy rare earths. USAR's first half 2026 revenue of US$11.5 million came entirely from LCM, before Serra Verde was consolidated. The Wheat Ridge demonstration facility in Colorado has produced light and heavy rare earth oxide samples from magnet scrap, and the Stillwater facility in Oklahoma has commissioned its first magnet line and is progressing through customer qualification.
The article also mentions planned magnet capacity at Blacksburg and the mineral resources at Round Top. As of 30 June 2026, USAR represented 0.63% of Alyeska Investment Group's disclosed securities portfolio and 0.12% of Driehaus Capital Management's. The author's USAR valuation, based on a sum-of-the-parts model that draws on management forecasts in the acquisition filings and on Moelis's transaction analysis disclosed in those filings, uses a reference close of US$10.54 on 16 October 2026.
The base case includes a US$1.7 billion equity raise in March 2027 at US$12 a share, adding about 141 million shares. The bear case assumes a second year of delay and a raise at US$8, while the bull case follows management's schedule with a raise at US$18. The article states that the forecast adjustments, financing assumptions and price targets are the author's own estimates.
The author's five-year base target for USAR is US$28.14, which he says implies approximately 21.7% annually from the reference price. Measured against his 15% annual return requirement, he considers the shares undervalued and suggests building a position in stages as financing is secured, operations connect and customer deliveries grow. The main risks identified are integration, further dilution, Chinese sourcing restrictions and MP's disputed trade secret lawsuit.
In conclusion, the author argues that the investment case rests less on the West overtaking China than on manufacturers paying to avoid future supply shortages. He notes that separation and refining, where China built its lead, remain the hard part, and that output only creates value if it sells at a profit. In his assessment, MP is the more complete operator but its price already reflects his base case, while USAR carries more execution risk and dilution but its price leaves more room for upside.
Note on sources: this article is a contributor opinion piece published on Investing.com. The market data, company figures and government terms are attributed in the original text to company filings, government agreements, USGS and IEA data, and disclosed portfolio holdings. The valuation figures, scenarios and price targets are the author's own estimates and are not investment recommendations from Investing.com.
Source: investing.com