Trump Wants a Critical Minerals Stockpile, Report Says. What It Means for MP Stock

A report suggesting that a potential second Trump administration is exploring the creation of a U.S. strategic stockpile for critical minerals has sent ripples through the mining and national security sectors. The proposal, aimed at breaking China's stranglehold on key industrial and defense materials, could fundamentally reshape the landscape for domestic producers, with U.S. rare earth leader MP Materials (NYSE: MP) positioned directly in the spotlight.

This move signals a growing consensus in Washington that economic reliance on a single geopolitical rival for essential resources constitutes a critical vulnerability. For investors and industry leaders, the question is no longer if the U.S. will act, but how—and who stands to benefit.

The Proposal: A National Minerals Arsenal

According to sources familiar with the discussions, the plan involves using the federal government's immense purchasing power to build a national reserve of materials like rare earth elements, lithium, cobalt, and graphite.

This initiative is framed as a matter of national and economic security. The goal is twofold: first, to guarantee a domestic supply of minerals essential for everything from F-35 fighter jets to electric vehicle batteries; second, to create a stable, government-backed market that encourages domestic mining and processing investment.

How a Strategic Stockpile Works

The concept is modeled after the U.S. Strategic Petroleum Reserve (SPR), which stores crude oil to mitigate supply disruptions. A critical minerals stockpile would operate on similar principles, serving as a powerful market-shaping tool.

• Price Stabilization: The government would buy minerals when global prices are low, establishing a price floor and providing revenue certainty for domestic miners. Conversely, it could sell from the stockpile during periods of extreme price volatility or supply shortages, capping price spikes for manufacturers.

• Supply Security: It ensures a domestic reserve of materials, insulating the U.S. defense and industrial base from potential export restrictions or weaponized trade policies from foreign suppliers, most notably China.

• Investment Catalyst: By creating a large, reliable customer—the U.S. government—a stockpile de-risks the massive capital expenditures required to develop and operate mines and processing facilities on American soil.

The Geopolitical Backdrop: China's Grip

The urgency behind this proposal is rooted in geopolitics. For decades, China has strategically invested in and consolidated its control over the global critical minerals supply chain.

The numbers are stark. China currently refines approximately 68% of the world's nickel, 73% of cobalt, 95% of manganese, and nearly 100% of the graphite used in EV batteries. In the realm of rare earth elements, its dominance is even more pronounced, controlling over 85% of global processing capacity.

This dominance gives Beijing significant leverage. In 2010, China restricted rare earth exports to Japan during a territorial dispute, demonstrating its willingness to use mineral supplies as a political weapon. Fears of a similar scenario on a larger scale have accelerated the push for supply chain diversification in the West.

Spotlight on MP Materials

Any serious effort to onshore the critical minerals supply chain in the United States inevitably leads to one company: MP Materials.

MP operates the Mountain Pass mine in California, the only integrated rare earth mining and processing site in North America. The company is a cornerstone of America's nascent strategy to challenge Chinese dominance.

• Unique Position: MP Materials is currently the only U.S. company producing separated rare earth oxides at scale, having recently commissioned its processing facilities.

• Government Support: The company has already received significant backing from the Department of Defense, including grants to bolster its domestic processing capabilities for both light and heavy rare earth elements.

• Vertical Integration: MP's strategy involves moving beyond simply mining ore and shipping it to China for processing—the old model. It is focused on creating a fully domestic supply chain, from mine to magnet.

The Two-Sided Coin for MP Stock

For MP Materials, the creation of a national stockpile presents both a monumental opportunity and a complex variable.

The Bull Case: A Guaranteed Customer

A federal stockpile program would instantly create a massive, stable, and high-credit-quality customer for MP Materials. This would provide a foundational level of demand, smoothing out revenue and reducing the company's exposure to volatile commodity prices, which have historically plagued the rare earths industry. A long-term government offtake agreement would dramatically improve the company's financial profile and justify further expansion.

The Bear Case: The Risk of Market Intervention

The long-term risk lies in how the stockpile is managed. If the government were to release large quantities of minerals onto the market to control prices, it could create artificial downward pressure, hurting MP's sales to its commercial customers. The mechanism and triggers for selling from the stockpile would be a critical detail for investors to watch. However, most analysts believe the primary goal would be to support, not supplant, domestic industry.

Broader Implications and Market Reaction

The impact extends far beyond a single company. A firm U.S. commitment to a strategic stockpile could:

• Spur New Investment: Encourage a wave of investment in exploration, mining, and processing projects across the country for a range of critical minerals.
• Benefit End-Users: Provide long-term price and supply stability for automakers like GM and Ford, defense contractors like Lockheed Martin, and renewable energy companies.
• Shift Global Trade: Accelerate the "friend-shoring" trend, where the U.S. and its allies work to build resilient supply chains independent of geopolitical rivals.

The Path Forward

It is crucial to note that this remains a proposal, not yet a formal policy. Its implementation would depend on the outcome of the presidential election and would require significant legislative action and funding appropriation from Congress.

However, the fact that such a plan is being seriously considered underscores a durable, bipartisan shift in Washington's approach to supply chain security.

For investors and industry stakeholders, the key is to monitor the details. The size of the proposed stockpile, the specific minerals targeted, the funding mechanisms, and the rules governing purchases and sales will all be critical. Regardless of the political specifics, the strategic imperative to secure domestic critical mineral supplies is clear. For companies like MP Materials, this long-term policy trend represents a powerful tailwind that is unlikely to dissipate, no matter who occupies the White House.