Rare Earth Stocks Spike as $1B U.S. Plan Hits

- Rare earth stocks surged, with U.S. investing $1 billion to counter China’s export curbs. - Beijing tightened restrictions, adding five critical minerals to its export control list. Rare earth stocks skyrocketed on October 20, 2025, as escalating tensions between the U.S. and China over rare earth minerals rattled global supply chains. The U.S. government responded to China’s tighter export restrictions by announcing a $1 billion commitment. This investment will support domestic mining and create a strategic reserve to secure critical minerals essential for electronics, electric vehicles, and defense systems. According to a Cryptopolitan report on October 20, Beijing intensified its control over the global rare earth market. The government expanded its export restrictions to include five additional minerals: holmium, erbium, thuliam, europium, and ytterbium. This move will likely exacerbate existing supply chain vulnerabilities and increase costs for industries that depend on these materials, triggering swings in international markets. Major players in the rare earth sector reaped significant gains. Stocks of MP Materials, USA Rare Earth, and Australia's Lynas Corporation more than doubled year-over-year, reflecting increased investor confidence. The U.S. government also took direct stakes in multiple mining companies, acquiring 15% of MP Materials for $400 million and taking smaller stakes in Lithium Americas and Trilogy Metals. These actions generated market optimism and bolstered share prices. In tandem with these investments, the U.S. is establishing a $1 billion strategic reserve of rare earth minerals to fortify its supply chain against future disruptions. To expedite this process, the government has relaxed environmental regulations and fast-tracked mining permits for key sites in Nevada and Alaska. The financial markets have quickly responded to the surge in demand. Standard Lithium raised $130 million in new funding, Critical Metals received $50 million for its Greenland ventures, and Perpetua Resources closed a deal for $425 million. This influx of investment underscores the growing interest in the sector as stakeholders move to capitalize on China’s restrictive policies. Despite the substantial rally in rare earth equities, some experts have warned against overspeculation. On October 20, Gareth Hatch of Strategic Materials Advisory noted that smaller firms may use the market frenzy to push out “weak and meaningless announcements” to inflate their valuations. Echoing this cautionary sentiment, Guy de Selliers of Defense Metals argued that the U.S. government’s price floors could distort the industry, advocating instead for more strategic stockpiling approaches. Despite these concerns, analysts expressed confidence in established producers like Lynas and MP Materials. They consider their growth “fundamentally driven” amid supply chain constraints. David Merriman of Project Blue highlighted their proven capacity to address market shortfalls. He also cautioned that increasing demand has provided an opportunity for less credible firms to capitalize on the trend. The sharpening geopolitical rivalry between the U.S. and China has reshaped the rare earth sector, introducing both risks and opportunities. With critical minerals at the heart of high-tech and defense advancements, rare earth stocks remain volatile, highly responsive to policy shifts, and deeply tied to global power dynamics.