The United States faces significant national security and economic vulnerabilities due to its near-total dependence on China for the processing and manufacturing of Rare Earth Elements (REEs)—critical materials essential for modern defense, energy, and technology sectors. In response, the U.S. government has initiated a robust strategy to re-shore a complete "mine-to-magnet" supply chain. This commentary examines this strategic imperative, with a focus on the two cornerstone companies that form the foundation of this initiative: MP Materials (MP) for light rare earths and magnets needs and Energy Fuels (UUUU) for heavy rare earths and uranium domestic demand. Understanding their distinct and complementary roles is crucial for appreciating the long-term industrial policy that shapes this critical sector, regardless of short-term market volatility.
Important Risk Disclosures
The commentary provided by Keaney Financial Services Corp. contains forward-looking statements based on current market conditions, government policies, and economic data. These statements are not guarantees of future performance. Investing in individual equities, particularly in the mining and materials sector, involves a high degree of risk, including operational risks, commodity price volatility, and regulatory changes. This sector is not suitable for all investors. Past performance is not indicative of future results. Investors should carefully consider their investment objectives and risk tolerance before investing, as they may lose a substantial portion or all of their investment. This material should not be considered a recommendation to buy or sell any security.
TheCore Problem: ACritical Security Vulnerability
Rare Earth Elements (REEs) are a group of 17 metals that are essential for modern technology and defense (1). They are used to make the world's most powerful magnets, which are irreplaceable components in:
- Defense: Precision-guided munitions, F-35 fighter jets, drone motors, and missile guidance systems (2).
- Energy: Electric vehicle (EV) motors and direct-drive wind turbines (3).
- Technology: Smartphones, medical devices, and countless other electronics.
The problem is that China currently controls over 85% of the global processing and more than 90% of the manufacturing of rare earth magnets. This near-total monopoly affords them immense geopolitical leverage and poses a significant national security risk to the United States (4). If China were to restrict exports, it could cripple key U.S. defense and industrial manufacturing sectors (5).
The U.S. Strategy: Building a "Mine-to-Magnet" Supply Chain
To address this, the DOD and DOE have initiated a multi-billion-dollar strategy to establish a comprehensive, domestic rare earth supply chain (6). This requires two distinct and complementary capabilities, which are currently only possessed at scale by MP Materials and Energy Fuels.
1. MP Materials (MP): The Light Rare Earth Powerhouse
MP Materials owns and operates the Mountain Pass mine in California, which is the only large-scale rare earth mining and processing facility in the Western Hemisphere (7).
- Their Role: MP is the foundational source of domestically mined rare earths (8). They specialize in Light Rare Earth Elements (LREEs), particularly Neodymium and Praseodymium (NdPr). These are the "workhorse" elements that make up the bulk of high-performance magnets.
- Strategic Importance: MP is a cornerstone of the U.S. strategy (9). The DOD has directly awarded them contracts to help build a domestic processing and magnet manufacturing facility. Their goal is to become the first fully integrated "mine-to-magnet" producer in the U.S., which is why they are a long-term strategic asset (10).
2. Energy Fuels (UUUU): The Heavy Rare Earth Specialist
Energy Fuels, primarily known for its uranium operations, has made a strategic pivot to become the second critical pillar of the U.S. rare earth strategy.
- Their Role: UUUU uses its White Mesa Mill in Utah—the only mill of its kind in North America—to process an ore called monazite (11). This is crucial because monazite is rich in Heavy Rare Earth Elements (HREEs), such as terbium and Dysprosium.
- Strategic Importance: While magnets are mostly NdPr (from MP), they require small amounts of these heavy elements to maintain their magnetic properties at high temperatures. This is essential for military applications and high-performance EVs. China's monopoly on HREEs is even more complete than on LREEs. UUUU is currently the only company in North America capable of commercially producing a separated concentrate containing these vital heavy rare earths (12).
Distinguishing Producers from Developers
It is essential to distinguish the unique, operational roles of MP Materials and Energy Fuels from those of other promising companies in the domestic rare earth sector, such as American Rare Earths (AREC) and USA Rare Earth (USAR). The key differentiator is infrastructure and production status. While companies like AREC (developing the Halleck Creek project in Wyoming) and USAR (developing the Round Top project in Texas) hold significant and strategic resource potential, they are currently in the exploration and development stages. Their path to production involves multi-year timelines subject to extensive permitting, financing, and construction. In contrast, MP Materials and Energy Fuels are the only U.S. companies with fully licensed, operational, and scaled facilities that currently produce and process rare earth materials. This makes them the immediate, foundational pillars of the U.S. supply chain strategy, while the development-stage companies represent the potential for future diversification and expansion of that supply chain.
The Bottom Line: A Symbiotic Domestic Supply Chain
While other smaller exploration companies exist, MP Materials and Energy Fuels are the only two companies in the U.S. with the operational, licensed, and scaled infrastructure to form a complete supply chain today.
- MP Materials provides the LREEs.
- Energy Fuels provides the HREEs (Energy Fuels, 13).
Together, they create a symbiotic relationship that enables the U.S. to establish a supply chain capable of producing the advanced magnets necessary for national defense and the green energy transition, independent of China. This is why, despite short-term stock price volatility, they are considered indispensable long-term strategic partners for the U.S. government.
We should also mention that both MP Materials and Energy Fuels have official standing, given that both companies have been awarded contracts with the Department of Defense (DoD) and Department of Energy (DOE). In 2022, Energy Fuels received a $18.5M contract to supply uranium to the U.S. Uranium Reserve and MP Materials was awarded 2 separate contracts in 2020 and 2022, prior to the more lucrative deal from this past July. The clearance process to get government contracts is extensive and intensive, and the fact that these companies have already demonstrated reliability is indicative of governmental confidence and support.
Important Disclosures
This commentary is for informational purposes only and should not be considered a recommendation to buy or sell any security or the provision of specific investment advice.
The opinions and forecasts expressed are those of Keaney Financial Services Corp. as of the date of this commentary, are subject to change at any time based on market and other conditions, and may or may not come to pass.
The KFSC Macro Regime Model is a proprietary tool, and its analysis is based on historical data; it does not guarantee future results. Past performance is not indicative of future results.
The rapid fluctuations in commodities will lead to significant volatility in an investor's holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors.
All investing involves risk, including the possible loss of principal. Please consult with your financial advisor to determine if the strategies discussed are suitable for your personal financial situation. Consult your qualified financial, legal, or tax advisor before making investment decisions.
References
- U.S. Geological Survey. (2025). Mineral commodity summaries. U.S. Department of the Interior. https://www.usgs.gov/centers/national-minerals-information-center/mineral-commodity-summaries
- U.S. Department of Defense. (2025). 2025 Report to Congress on strategic and critical materials. https://www.defense.gov/News/Publications/
- U.S. Department of Energy. (2025). National strategy for securing critical mineral supply chains, 2025 update. https://www.energy.gov/policy/2025-critical-minerals-strategy
- Congressional Research Service. (2025). Rare earth elements: A review of U.S. policy and global supply dynamics (2025 update). https://crsreports.congress.gov/
- The White House. (2025). Executive Order on securing America's critical supply chains for economic and national security. https://www.whitehouse.gov/briefing-room/presidential-actions/
- U.S. Department of Energy. (2025). DOE earmarks $200 million for domestic rare earth magnet manufacturing grants. https://www.energy.gov/articles/doe-earmarks-200-million-domestic-rare-earth-magnet-manufacturing-grants
- MP Materials Corp. (2025). Form 10-K for the fiscal year ended December 31, 2024. U.S. Securities and Exchange Commission. https://www.sec.gov/edgar/searchedgar/companysearch
- MP Materials Corp. (2025). Investor Presentation, Q2 2025. https://https://investors.mpmaterials.com/events-and-presentations/default.aspx
- U.S. Government Accountability Office. (2025). Rare earths: DOD has made progress in securing supply chains, but gaps remain. https://https://www.gao.gov/search?keyword=Energy+Fuels
- U.S. Department of Defense. (2025). DOD announces follow-on award to MP Materials for magnet production scale-up. https://www.defense.gov/News/Releases/
- Energy Fuels Inc. (2025). Form 10-K for the fiscal year ended December 31, 2024. U.S. Securities and Exchange Commission. https://www.sec.gov/edgar/searchedgar/companysearch
- Energy Fuels Inc. (2025). Energy Fuels confirms multi-year offtake agreement for heavy rare earth carbonate. https://www.energyfuels.com/news-releases
- Energy Fuels Inc. (2025). Corporate Presentation, September 2025. https://https://investors.energyfuels.com/news-releases