Reality Check: MP Materials and USA Rare Earth Surge on Greenland Deal Despite No Direct Exposure

Key Points

USA Rare Earth (NASDAQ: USAR) and MP Materials (NYSE: MP) experienced significant stock volatility following the announcement of a defense agreement between the U.S., Denmark, and Greenland, aimed at enhancing rare-earth extraction in Greenland. Despite the optimism, neither company currently has assets in Greenland and is unlikely to benefit directly from the deal.

Greenland Agreement Impacts

The agreement allows for U.S. control over rare-earth investments in Greenland, requiring unanimous decisions among the U.S., Greenland, and Denmark, which ultimately restricts investments from non-NATO or non-EU nations, including China and Russia. Conversely, Critical Metals Corp. (NASDAQ: CRML) stands to gain with its rare-earth project in Greenland, along with REalloys (NASDAQ: ALOY), which has a supply agreement linked to that project.

Company Strategies

Both USA Rare Earth and MP Materials pursue a mine-to-magnet strategy for non-China-sourced supply of rare-earth magnets. MP Materials operates a facility in Texas and has existing contracts with Apple and General Motors, while USA Rare Earth aims to commission its Texas mine in 2028 to support its production efforts.