US Policy Shift Sparks Renewed Interest in Rare Earths Stocks

Interest in rare earths stocks is surging as the US government prioritizes supply chain independence from China.
Rare earths stocks are gaining renewed investor attention following recent US government policies that sharpen its focus on securing critical mineral supply chains.
In early 2025, the Trump administration signaled stronger commitments to reduce American reliance on China for rare earth elements (REEs) — especially those essential for defense, energy and advanced manufacturing.
This policy momentum is driving capital into companies positioned to support US supply chain independence, particularly those with innovative and scalable rare earths solutions.
The US Department of Defense, Department of Energy and the White House have all expressed mounting concern over the vulnerability of American industries due to China’s overwhelming control of REEs — over 90 percent of global rare earth magnet production. These magnets are essential for defense systems, robotics, electric vehicles (EVs) and artificial intelligence technologies.
Amid these concerns, the Trump administration has been advancing executive actions designed to fast track domestic production and processing capacity. During his first term in office, Trump signed Executive Order 13953, which addressed the threat of reliance on foreign adversaries for critical minerals and instituted support for domestic mining and processing industries.
As the trade war with China escalates, the US president doubled down on this agenda with a new executive order, issued in March 2025, invoking his wartime powers to strengthen the US critical minerals supply chain.
This series of policy moves has boosted investor enthusiasm for rare earth equities. MP Materials (NYSE:MP), the sole US-based rare earths miner, has seen its stock price climb approximately 70 percent year-to-date, pushing its market capitalization to over US$4 billion, buoyed by its strategic role in domestic production and recent policy endorsements.
Similarly, USA Rare Earth (NASDAQ:USAR), which went public in early 2025, saw a 70 percent surge on its Nasdaq debut and now holds a valuation near US$887.5 million, reflecting strong investor confidence in its plans to establish a comprehensive US rare earths supply chain.
These gains underscore the market's positive response to governmental efforts aimed at reducing reliance on foreign sources, particularly China, for critical minerals essential to defense and advanced technologies.
Challenges in traditional supply chains
China’s dominance in the rare earths supply chain — from mining to processing to final manufacturing — presents a critical vulnerability for the US, especially in sectors like defense, robotics and artificial intelligence.
NdFeB (neodymium-iron-boron) magnets, essential for everything from drones and EVs to missile guidance systems and fighter jets, are largely sourced or processed in China. While MP Materials mines rare earths in California, most refining still happens overseas, underscoring a lack of domestic downstream capacity. Adding to the challenge, traditional rare earths mining is environmentally damaging and slow to permit in the US.
This urgent need for supply chain independence is also driving interest in alternative approaches like recycling and domestic magnet production.
CoTec Holdings: Positioned for the next phase of rare earths independence
As the US intensifies efforts to secure critical mineral supply chains, CoTec Holdings (TSXV:CTH,OTCQB:CTHCF), with a modest market capitalization of approximately US$33 million, is emerging as a key player in developing domestic rare earth magnet recycling capabilities. Through a 50/50 joint venture with Maginito, CoTec is advancing HyProMag USA, a project aimed at establishing a rare earth magnet recycling and manufacturing facility in the Dallas-Fort Worth area of Texas.
HyProMag USA will leverage the patented Hydrogen Processing of Magnetic Scrap (HPMS) technology, originally developed at the University of Birmingham. This innovative process enables the efficient recovery of NdFeB magnets from end-of-life products and offers a low-cost, environmentally sustainable alternative to mining.
HyProMag’s "short-loop" process provides a faster and less complex approach compared to conventional chemical-based methods. By using hydrogen gas, magnets within electronic scrap are caused to fracture naturally with minimal pre-processing. The demagnetized material can then be sieved into powder form, which is re-pressed and sintered into new magnets — all while bypassing many of the environmental challenges and delays associated with mining and refining.
The Texas facility is projected to produce 750 metric tons of recycled sintered NdFeB magnets annually by 2027, potentially supplying up to 10 percent of US domestic demand within five years by tripling the capacity contemplated by the Feasibility Study released in November 2024.
To put this in perspective, CoTec’s market capitalization of just US$33 million is a fraction of its larger peers — despite its advanced development stage and the strategic importance of its recycling model. The project’s positive November 2024 feasibility study highlights robust economics, with a net present value of US$262 million at current prices and up to US$503 million based on projected pricing scenarios.
The project has garnered support from the Minerals Security Partnership, a coalition of governments including the United States, aimed at developing secure and sustainable critical mineral supply chains. A positive feasibility study released in November 2024 highlighted robust economics for the project, estimating a net present value of US$262 million at current prices, with potential to reach US$503 million based on forecasted prices.
By focusing on recycling and domestic production, CoTec Holdings is strategically positioned to contribute to the US goal of reducing reliance on foreign sources for critical materials, particularly in sectors vital to national security and technological advancement.
Weighing the risks and rewards in rare earths investing
Government backing, mounting geopolitical urgency and rapid demand growth for applications in defense, artificial intelligence, EVs and clean energy technologies all point to a strong long-term outlook for rare earths.
The US push to secure domestic rare earths supply chains is creating strong tailwinds for investors, but the sector remains nuanced. Major players like MP Materials have benefited significantly from early mover status and government support. Similarly, USA Rare Earth, which went public in early 2025, debuted with a valuation of US$887.5 million despite still being in pre-production stages.
By contrast, CoTec Holdings’ lower market cap offers investors a markedly different value entry point. Yet, CoTec is progressing at a faster pace than many larger peers, with a US-based rare earth magnet recycling facility already in advanced development.
This contrast reveals a significant value gap in the market. While larger rare earth equities may offer liquidity and visibility, companies like CoTec provide exposure to near-term production, strategic alignment with US policy goals and cutting-edge technology at a much lower valuation.
Of course, investors should weigh this potential against sector-wide risks. Rare earths production and processing are technically complex and capital intensive, often facing long development timelines and regulatory hurdles. Price volatility is another factor, as rare earths markets are relatively illiquid and can be impacted by sudden changes in global supply — particularly from China.
But for those seeking to participate in the reshaping of the US critical minerals landscape, companies that combine innovative models with accelerated development timelines may offer an attractive mix of upside potential and policy-driven support.
Investor takeaway
Informed investing in this space requires balancing optimism about macro-level trends with a clear-eyed view of execution challenges. As US policy continues to favor domestic rare earth development, the right players could see significant upside — especially those aligned with sustainable, scalable supply chain solutions.
Unlike traditional miners, CoTec offers investors exposure to a low-footprint, tech-enabled model that may be better aligned with future regulatory and environmental expectations. In an era of supply chain instability, companies that can quickly deploy domestic capacity without the long timelines of mine development may have a distinct advantage.
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