$MP Materials Corp.(MP)$What’s the bull and bear case for this rare earths producer?

Let’s start with the bull case. MP owns the Mountain Pass mine in California, said to be the largest source of rare earth outside of China. Various sources state it accounts for about 15% of the world’s reserves.

Rare earths which comprises 17 elements in the periodic table, are typically used for the manufacture of weapons, smart-phone batteries, and the magnet in EV motors. 

The bulls believe demand driven by the rise of EVs will cause a supply squeeze. In addition, China recently announced some potential export restrictions.

Bear case. The mine is old and has been around since the 1950s. Its previous owner Molycorp filed for bankruptcy in 2015. Its high leverage combined with the drop in the price of rare earth caused its demise. 

Seems the mine operations cannot compare with those in China. This is because mines in China are heavily subsidised by the government.

The mine holds mainly cerium and lanthanum, both of which are Low grade rare earth elements.

Anything to add?