Why Jim Cramer Picks MP Materials Over NioCorp

Jim Cramer used the Iran peace talks as a reason to pick MP Materials over NioCorp Developments (NASDAQ:NB) during his lightning round on Tuesday. A caller asked about NioCorp, a rare earth developer with no revenue. Cramer replied, “You know, a little too speculative. I like MP.”

The comparison cuts to the core of the rare earths trade. Both companies aim to supply elements outside China, the dominant processor. MP Materials (NYSE:MP) already produces rare earth concentrate at its Mountain Pass mine in California, the largest rare earth mine in the Western Hemisphere. NioCorp is years away from production at its Elk Creek project in Nebraska.

The Iran catalyst Cramer cited is a bet on supply. An agreement that lifts sanctions on Iranian crude would add roughly 1 million barrels a day to global oil markets, according to the International Energy Agency. That extra supply would push prices lower, reduce inflation, and clear a path for the Federal Reserve to cut interest rates. Lower rates tend to lift growth stocks and capital-intensive projects.

Oil markets have already priced in some probability of a deal. West Texas Intermediate crude fell 2.6% on the session to $68.30 a barrel. Gasoline futures dropped 2.2%, dragging down inflation expectations embedded in bond yields.

MP Materials is not a direct oil play. It sells rare earth concentrate at market prices tied to industrial demand, not petroleum. The stock does benefit from a lower-discount-rate environment. Shares rose 1.2% on the session, trading near $46 a share, up 58% this year on rising production and a $58.5 million Department of Defense grant to build a rare earth magnet facility.

NioCorp has no comparable revenue stream. The company has secured $13.7 million in DoD funding for feasibility studies and has targeted 2026 for first production. Its market cap of roughly $70 million is a fraction of MP Materials' $5.5 billion.

The rare earth supply relationship is structural. China controls 60% of global rare earth mining and 90% of processing capacity, a concentration that has pushed Washington to fund domestic alternatives. MP Materials has said it expects to produce 60,000 metric tons of rare earth oxide equivalent this year, up from roughly 40,000 tonnes in 2023. NioCorp has not published a production timeline past the feasibility stage.

Cramer's recommendation aligns with the rule that early production trumps pre-revenue risk in a capital-intensive industry. The difference in execution risk between a mine already ramping output and one still studying its economics defines the comparison. One company has a revenue stream and a DoD contract for downstream processing. The other faces years of permitting, construction, and technical risk.

For investors tracking the rare earth sector, the choice between MP Materials and NioCorp comes down to timing. The Iran oil glut thesis, if it plays out, lowers the cost of capital for both. Only one has a product to sell when that happens.