Rare-earth metals are in short supply, and most of that supply is controlled by China. Because of the vital role these metals play in the technology sector, companies like MP Materials (MP 3.04%) and TMC The Metals Company (TMC 4.28%) are seeking to capitalize on the unusual supply and-demand dynamics and build rare-earth metals businesses. For most investors, MP Materials will be the safer bet. Here’s why.
Why are rare-earth metals a problem?
China has repeatedly shown its willingness to use access to rare-earth metals as a geopolitical bargaining chip. Supply concerns have led companies that you might not expect to warn of production delays, for example, automakers. However, rare-earth metals play a vital role in everything from your cellphone to missile defense systems. Countries don’t want to be beholden to China for their self-defense needs.
Image source: Getty Images.
The issue is so important that the U.S. government has provided financial support to rare-earth metal companies as they expand their operations. MP Materials is one such firm. However, this isn’t the only way that the United States has been supporting the sector, as it has also made regulatory changes to ease the way for companies like The Metals Company to further their development efforts.
As an investor, however, there is a dramatic difference between MP Materials and The Metals Company. Even if both companies eventually end up big winners, The Metals Company is a much riskier bet right now.
Why The Metals Company is so risky
At this point, The Metals Company generates no revenue. Its income statement starts with two expenses: general and administrative expenses and exploration and evaluation expenses. General and administrative expenses are the basic costs of running a business. However, exploration and evaluation costs are a bit more interesting because they highlight that The Metals Company hasn’t yet begun developing the rare-earth metals production business it hopes to build.
Today’s Change
(-4.28%) $-0.19
Current Price
$4.25
Key Data Points
Market Cap
$1.9B
Day’s Range
$4.18 – $4.43
52wk Range
$3.93 – $11.35
Volume
8.8M
Avg Vol
5.9M
There’s a good reason for that. The Metals Company is looking to develop a deep-sea mine, which is both expensive and complex. There’s no exact timeline for when it will even begin developing a mining operation. The permitting process isn’t expected to be over until early 2027. The company is likely to lose money for the foreseeable future.
None of this is shocking. The Metals Company is a start-up attempting to do something unique and difficult. However, most investors should probably wait until there’s more progress toward actually producing rare-earth metals before investing. You may have to give up some potential gains, but waiting also means you avoid the risk that the company falls short of its lofty goals.
Why MP Materials is a safer rare-earth metals bet
MP Materials is in a totally different position as a business. It has an operating rare-earth metals mine and operating rare-earth metals processing assets. So while The Metals Company is still attempting to build a rare-earth metals business, MP Materials has already surmounted that very significant hurdle. The company generated $90 million in revenue and generated adjusted earnings of $0.03 per share in the first quarter of 2026.
Today’s Change
(-3.04%) $-1.69
Current Price
$53.93
Key Data Points
Market Cap
$9.9B
Day’s Range
$52.99 – $55.00
52wk Range
$29.58 – $100.25
Volume
161.7K
Avg Vol
6.2M
Gross Margin
8.12%
To be fair, MP Materials is still losing money on a GAAP basis. The adjusted earnings figure excludes certain items, such as initial start-up costs, which seems a bit odd. Still, MP Materials is clearly much further along in its development as a business. That makes it a safer bet for investors looking to invest in rare-earth metals.
Carefully assess your risk profile before buying
Every investment involves a trade-off between risk and reward. Take on more risk, and you may end up with more reward, but you could also end up with a company that flames out. The Metals Company is so early in its development as a rare-earth metals business that the risk is unlikely to be worth it for most investors. MP Materials, on the other hand, is already up and running. And, on an adjusted basis, it is profitable. There’s risk in owning MP Materials, which is still a start-up, but it looks like the safer bet in the rare-earth metals space right now.
