Rare earth elements have always been in demand. Though REEs are relatively abundant in the Earth’s crust, they earn their rarity by the fact that minable concentrations of these ores are relatively low compared to others.
However, in the contemporary era, the rise of semiconductor technology in connection with AI, as well as aerospace, automotive, and defense industries, has led to an increase in rare earth element demand, as they play a key role in the manufacturing of the above, due to their fluorescent, magnetic, and conductive properties.
The U.S. has 1.9 million tons of REE reserves, primarily at Mountain Pass, California. However, this is accompanied by a significant reliance on Chinese imports due to the lack of domestic ore-processing infrastructure within the U.S.
MP Materials (MP), a major player in the rare-earth industry that owns and operates the California Mountain Pass, has recently observed a rise in stock prices. The announcement of plans to establish its 10x facility has further helped provide a bullish outlook for the stock over the next few years. Will the rare earth supply chain demand stay on track for the coming years? Here is what you need to know.
Why are rare earth elements in high demand?
Rare earth elements (REEs) are a set of 17 metallic elements composed of the 15 lanthanides on the periodic table. They can be distinguished into light rare earth elements (light REE), which include lanthanum and cerium, and heavy rare earth elements (heavy REE), which include thulium and erbium. Light REEs are easily accessible, while heavy REEs are quite rare and consequently more expensive.
As of today, the market value of rare earth elements is around $4.1 billion, and it is projected to climb up to $9.9 billion by 2034. The rising demand for REEs observed today is mainly due to their applications within the field of clean energy, aerospace, automotive, and defense.
China is both the world’s largest producer and consumer of REEs, led by China Northern Rare Earth High-Tech, the largest REE mining company in the world. They mainly use REE for the manufacture of consumer electronics for both domestic and international markets.
Holding approximately 49% of the 90 million known tons, China controls almost 90% of the processing capacity and is responsible for around 70% of the global supply of NdFeB magnet exports.
The U.S. entered the REE production market in the mid-1960s, and as of 2026, holds approximately 2% of the world’s total supply.
Expanding the US’s rare earth domestic stronghold
MP Materials was founded in 2017 with the mission to revive the dormant Mountain Pass Mine in California, the world’s largest rare earth mining operation outside of China. Its Mountain Pass is the only commercial-scale, active rare-earth mine in the United States, the commercialization of which can provide the U.S. with strong leverage over the in-demand field.
Historically, the U.S. has been heavily dependent on imports from China, after the ores were shipped to the country for refining. The U.S. government’s investment in MP Materials is a long-term plan to ensure a stable domestic supply of REE that can fuel its defense and commercial industries, while reducing dependency on cross-border imports from China, in the wake of export restrictions from China and rising tariffs within the U.S.
During the next five years, MP Materials plans to amplify production capacity through investment in its 10X facility, a vital cog in the wheel of the reduction of dependence on Chinese processing. The 10X facility is a $1.25 billion, 10,000-metric-ton capacity rare earth magnet manufacturing campus in Northlake, Texas, scheduled for 2028 commissioning.
Bottom Line
Rare earth elements continue to play a vital role in the manufacture of automobiles, energy-efficient lighting, and rare earth magnets. Its applications in the field of medicine and defense will be crucial in the near future.
The growing global demand for consumer electronics, EVs, and other clean energy technologies suggests that the REE market will continue to expand in the coming years, with experts estimating a global supply-demand increase of seven times by 2040.
