Rare earths boom: Global investors flock to critical mineral stocks

Global investors are pouring billions into rare earth and critical mineral companies, sending share prices to record highs, as efforts by US President Donald Trump to reduce China’s dominance over the sector spark a seismic shift in global resource policy.

In a push to revive rare earth production outside of China, the Trump administration has rolled out a sweeping package of measures: from financial support and regulatory rollbacks to the creation of a national strategic mineral reserve. The aim is to secure supplies of minerals vital to modern technology, such as smartphones, electric vehicles, and military equipment, The Financial Times writes. 

Shares in US-listed rare earth companies like MP Materials, USA Rare Earth, and Australia's Lynas have more than doubled this year. The rally has also spread to critical mineral producers in lithium, cobalt, and germanium, sectors that have long struggled to compete with low-cost, state-backed Chinese producers.

In the last month alone, the US government has taken equity stakes in Canadian firms Lithium Americas and Trilogy Metals, moves designed to strengthen their balance sheets. Shares in both companies surged following the announcements — Lithium Americas has doubled, while Trilogy Metals has tripled in value.

Washington’s broader strategy includes fast-tracking mine permitting processes, easing environmental restrictions, and setting a price floor for rare earths to shield the market from China-driven volatility. These measures are being promoted under what the administration has dubbed its “mine, baby, mine” policy.

This increasingly nationalistic approach to mineral security comes as China tightens its own grip on the sector. Earlier this month, Beijing introduced new export controls requiring foreign companies to seek Chinese approval to export magnets containing even trace amounts of China-sourced rare earths. It also announced plans to add five additional elements — holmium, erbium, thulium, europium, and ytterbium — to its export control list.

“There’s across-the-board interest from investors in these mining companies,” said Timothy Puko, director of commodities at Eurasia Group. “There aren’t many publicly traded western companies to invest in. Very few targets and a whole lot of shooters in the market right now."

Some companies are capitalising on investor enthusiasm to raise funds. On October 17, Standard Lithium secured $130 million through a public offering. Critical Metals, which is developing the Tanbreez rare earth project in Greenland, announced a $50 million injection from an undisclosed institutional investor. Its share price has tripled since January.

In June, Perpetua Resources raised $425 million through a combination of public and private share placements to fund redevelopment of its Idaho mine, which produces gold and the strategic mineral antimony.

However, analysts have warned that the market frenzy is also attracting opportunistic behaviour.

“Various rare-earth junior-mining companies have been milking the situation, with typically weak and meaningless announcements, with their share prices benefiting from the apparent reaction to the export controls,” said Gareth Hatch, founder of UK-based Strategic Materials Advisory. “While I would not characterise the situation as a bubble just yet, investors must do their homework,” he added.

While the US government is considering setting a minimum price for rare earths — either through subsidies or price guarantees — some in the industry have raised concerns about the long-term implications of such policies.

Guy de Selliers, executive chair of North American rare earths company Defense Metals, criticised the use of abstract price floors.

“Topping up what a commercial buyer had paid to ensure a company received a fixed minimum price was a 'dangerous' form of subsidy,” he said. Instead, he advocated for government stockpiles to establish price references, calling them “the way to create a price floor”.

As part of its stockpiling efforts, the US administration has committed to procuring $1 billion worth of critical minerals to support domestic defence and electronics manufacturing. These materials are key components in advanced military platforms such as F-35 fighter jets and cruise missiles.

The government’s intervention has even extended to equity ownership. In July, Washington purchased a 15% stake in MP Materials for $400 million. Just days ago, the company granted a $15 million stock award to its CEO, James Litinsky. It also took a 5% stake in Lithium Americas and acquired 10% of Trilogy Metals — the latter triggering a dramatic share price surge within hours of the deal.

David Merriman, research director at consultancy Project Blue, said share price increases for companies like MP Materials and Lynas were “more fundamentally driven” due to their role in filling the supply gap created by Chinese export curbs.

But he also noted a wave of speculative activity: “Every rare earths developer and their aunt has jumped on this opportunity to suggest they will be getting government support or a tie up with industry, pushing stocks higher in the hype-storm,” he said.

As geopolitical tensions reshape the global supply chain for rare earths and critical minerals, both governments and investors appear to be betting that the sector, once a niche corner of the commodities market, is now central to national security and economic resilience.

By Sabina Mammadli