Rare Earths vs. Copper: Should You Buy MP Materials or Freeport-McMoRan?
From copper deficits to government-supported rare-earth demand, discover which miner deserves a place in your portfolio.
The rapid development of U.S. data centers has highlighted physical limitations, such as power grids and necessary materials. Two commodities under scrutiny are rare-earth elements and copper. Rare-earth elements are vital for defense systems, robotics, and electric vehicles, while copper is essential for data centers and energy supply.
MP Materials, a rare-earth producer, operates the Mountain Pass Mine in California, the only scaled mine in the U.S. This provides a first-mover advantage over competitors. The Department of Defense (DoD) has secured a price protection agreement for MP, ensuring a $110/kilogram price floor for NdPr and a $140 million annual EBITDA guarantee.
MP also has long-term supply agreements with Apple and General Motors. Copper, known as the "metal of electrification," is crucial for data centers and power-grid modernization. Global copper demand could surge by 50% by 2040. Freeport-McMoRan, a leading copper producer, dominates the U.S. market with operations in Arizona, Texas, and New Mexico.
The company is expected to reach over 800 million pounds of copper annually by 2030. Freeport may also benefit from U.S. policies, such as requirements for 25% of domestically produced copper to be sold domestically by 2027. While MP Materials offers exposure to the rare-earth market with government backing, Freeport-McMoRan provides stability as a top copper producer benefiting from infrastructure build-outs.
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