MP Materials and Lynas: Evaluating Growth Upside in the Rare Earth Supply Chain

Rare earth elements have become a strategic asset in today’s geopolitical landscape. As the world transitions toward electric vehicles, renewable energy, and advanced defense systems, the demand for rare earth magnets continues to accelerate. With China controlling approximately 70% of global rare earth mining output and 90% of processing capacity, the Western nations’ push for supply chain independence has elevated the importance of domestic and allied rare earth producers. Among the key players capturing investor attention are MP Materials and Lynas Rare Earths Limited, two companies with distinct strategic advantages in the rare earth ecosystem.

Strategic Positioning in the Rare Earth Ecosystem

MP Materials, headquartered in Las Vegas, Nevada, operates as the United States’ only fully integrated rare earth producer. Its comprehensive supply chain spans mining and processing through advanced metallization and magnet manufacturing, giving it significant control over the entire value chain. The company boasts a market capitalization of $11.8 billion.

Lynas Rare Earths Limited, based in Perth, Australia, has built its reputation as an environmentally conscious producer with a secure, traceable supply chain. Operating with mining and processing facilities in Australia and Malaysia, Lynas holds a market valuation of approximately $11.5 billion. Both companies have attracted major government and commercial partnerships, positioning them as critical players in the West’s effort to reduce reliance on Chinese rare earth supply.

MP Materials: Production Ramp-Up and Defense Partnerships

MP Materials has demonstrated aggressive expansion in recent quarters, particularly in separated rare earth product manufacturing. In 2025, the company announced landmark agreements that underscore its strategic importance. A partnership with Apple brought commitments to supply rare earth magnets manufactured entirely within the United States using recycled materials. Additionally, MP Materials signed an agreement with the U.S. Department of Defense to accelerate domestic magnet supply chain development, leading to construction of the 10X Facility—a second domestic magnet manufacturing center that will increase total U.S. rare earth magnet capacity to 10,000 metric tons.

Third-quarter 2025 results revealed mixed signals. Revenue declined 15% year-over-year to $56.6 million, yet production metrics told a different story. NdPr (neodymium-praseodymium) output reached a record 721 metric tons, representing a 51% year-over-year surge driven by increased separated product manufacturing. Rare earth oxide production totaled 13,254 metric tons, marking the company’s second-strongest quarterly performance. The Materials segment experienced significant fluctuations, with revenues falling 50% to $31.6 million as concentrate sales halted, though separated rare earth revenues climbed 61% on higher volumes and pricing.

Profitability remains under pressure. MP reported a third-quarter loss of 10 cents per share, an improvement from the 12-cent loss in the prior year period. The company expects full-year 2025 losses but projects fourth-quarter 2025 profitability and expects to return to earnings in 2026. A key development—the Department of Defense’s Price Protection Agreement commencing October 1, 2025—should provide revenue stability and margin support going forward.

Lynas: Completing Growth Initiatives and Expanding Downstream

Lynas has recently transitioned from a capital-intensive expansion phase to operational optimization and downstream expansion. The company’s 2025 growth initiative, conceived in 2019, has now essentially reached completion. This multi-year effort included separation of Heavy Rare Earths at its Malaysia facility, expansion of the Mt Weld mining operation in Western Australia, and ramp-up of the Kalgoorlie processing plant.

A significant milestone occurred in 2025 with Lynas’ first commercial production of separated Heavy Rare Earths outside China in decades. The Malaysia facility successfully produced Dysprosium Oxide and Terbium Oxide, marking a breakthrough in diversifying global rare earth separation capacity. With capital projects largely concluded, Lynas is now executing its “Towards 2030” strategy, which emphasizes optimizing returns from recent investments while pursuing downstream expansion into metal and magnet supply chains.

Lynas operates a highly integrated system: concentrates from the Mt Weld mine in Western Australia flow to the Kalgoorlie processing facility, with further processing at the Lynas Malaysia advanced materials plant in Kuantan. The company also maintains a U.S. Department of Defense contract for constructing a Heavy Rare Earths processing facility at Seadrift, Texas, strengthening its Western market positioning.

Financial Metrics and Growth Trajectories

Consensus earnings estimates reveal divergent near-term financial profiles. MP Materials faces projected losses, with Zacks Consensus Estimate pegging 2025 results at a 32-cent loss per share—an improvement from the 44-cent loss in 2024. However, 2026 estimates anticipate a swing to profitability at 61 cents per share.

Lynas presents a more immediate growth picture. The Zacks Consensus Estimate for fiscal 2026 (ending June 2026) projects earnings of 19 cents per share, compared to just 1 cent in fiscal 2025. The 2027 estimate of 31 cents per share suggests 66% year-over-year growth acceleration. Notably, both companies’ most recent consensus estimates have moved downward over the past 60 days, reflecting the conservative approach analysts are taking.

Valuation and Stock Price Performance

The past year witnessed substantial appreciation in both names. MP Materials rallied 220.6% compared to Lynas’ 186.9% advance, reflecting investor enthusiasm for rare earth exposure amid geopolitical concerns. However, valuation multiples differ considerably.

MP Materials trades at a forward 12-month price-to-sales ratio of 24.56X, significantly exceeding the broader industry’s 1.35X multiple. This premium reflects market expectations for future growth and margin expansion. Lynas also commands a premium to industry multiples, trading at a forward 12-month price-to-sales of 13.95X—substantially below MP’s multiple but still elevated relative to the sector average. The valuation gap suggests the market is pricing in different recovery trajectories and profitability timelines for each company.

Strategic Considerations and Investment Implications

MP Materials and Lynas represent different expressions of rare earth exposure, each with distinct advantages. MP’s position as America’s only fully integrated producer provides strategic national importance and benefits from government support, exemplified by Department of Defense partnerships and revenue protection agreements. However, the company remains unprofitable in the near term, and production ramp-up activities are generating elevated costs.

Lynas, having substantially completed its multi-year capex program, stands positioned to benefit from operational leverage and improved cash flow generation. The company’s diversified geographic footprint and emerging downstream capabilities position it well for long-term sector growth. With lower valuation multiples and stronger near-term earnings visibility, Lynas appears better positioned for investors seeking exposure to the sector’s structural growth story.

Current Zacks Rank assignments reflect this analysis: Lynas carries a #2 (Buy) rating while MP Materials holds a #4 (Sell) rating. For investors evaluating rare earth sector up potential, the choice between these two leaders depends on risk tolerance, investment horizon, and conviction regarding near-term versus medium-term earnings recovery.