In Rare Earth’s 1971 hit, “I Just Want to Celebrate,” there’s a line that goes “had my hand on the dollar bill and the dollar bill flew away.”
People who have investing in rare earth metals recently have had a lot to celebrate but market analysts suggest they keep a tight grip on that dollar bill.
Rare earth minerals are a group of 17 metallic elements that are essential for many consumer electronics, such as smartphones, computer hard drives and flat-screen TVs.
They are also vital for wind turbines and the motors in electric vehicles, as well as defense systems like radar and sonar.
Rare earth is a bit of a misnomer as these minerals as not so much rare as they are difficult and costly to extract and process because they are dispersed and seldom found in concentrated deposits.
China produced roughly 270,000 metric tons of rare earth minerals in 2024, accounting for about 69% of the world’s total mine production.
The country holds a dominant position not only in extraction but also in processing, with estimates suggesting it handles more than 85% of the world’s processing capacity for refined rare earth elements.
Photo Credit: Michael Tessler/MP Materials
Shares of MP Materials and other rare earth materials stocks have surged this year.
China and U.S. square off over rare earth metals
“While China is currently the world’s leading producer of rare earth elements, other countries are also ramping up production to meet the growing demand for these metals,” Cornell University said in a blog post. “As a result, these mining companies are likely to be able to provide stable long-term returns for investors.”
Cornell advised investors to look for major mining corporations that have proven exploration and mining techniques, reasonable rare earth market share, consistent output, and steady cash flow.
More Tech Stocks:
- The stock market laughed, then Palantir redefined the fight
- Musk’s Netflix boycott could actually hurt the streamer
- OpenAI’s deal with AMD proves AI race has just begun
- Goldman Sachs tweaks Nvidia’s stock price target with a twist
Rare earth stocks went for a bit of a ride in light of the ongoing trade turmoil between the U.S. and China.
In April China introduced export restrictions on rare earth materials to retaliate for the Trump administration’s tariffs. China recently tightened those rules.
The latest restrictions came ahead of an expected meeting between President Donald Trump and President Xi Jinping at the Asia-Pacific Economic Cooperation summit later this month in Seoul, South Korea.
In response, Trump threatened China with 100% tariffs over Beijing’s strict export controls on critical minerals.
In an Oct. 10 post on his Truth Social platform Trump wrote that China was “becoming very hostile” with the rest of the world, especially when it comes to its control of rare earth metals, according to CNBC.
He accused China of holding the world captive because of its “monopoly” on these crucial resources “One of the policies that we are calculating at this moment is a massive increase of tariffs on Chinese products” coming into the U.S., Trump said.
Analysts said that Trump’s post wiped out roughly $2 trillion in value from the U.S. stock market, marking the worst performance since early April, when he first unveiled what he called his Liberation Day tariff regime.
TheStreet Pro’s Ponsi: Dig carefully for rare earth metals stocks
Top U.S. officials blasted China’s major expansion of rare earth export controls as a threat to global supply chains, Reuters reported.
U.S. Trade Representative Jamieson Greer told a news conference that China’s new export restrictions were a “global supply-chain power grab,” and the U.S. and its allies would not accept the restrictions. But he and Treasury Secretary Scott Bessent stressed that Washington did not want to escalate the conflict.
Beijing maintained that it notified Washington before the announcement and that the controls are consistent with measures in place in other major economies.
China has not yet implemented the revised regulatory system for rare earths and could still back away, just as the U.S. had not implemented a retaliatory 100% increase in tariffs on Chinese imports.
“These are drafted, or in draft, so it’s quite real, but our expectation is that they won’t implement this and that we’ll be able to be back to where we were a week ago, where we had the tariff levels we’ve agreed to and we have the flow of rare earths that we agreed to,” Greer said.
Related: Autonomous vehicles moving into the fast lane
TheStreet Pro contributor Ed Ponsi has been keeping an eye on the rare earth minerals sector as some companies hit record highs on Oct. 13 before coming down in the following session.
He said the pullback “provided an opportunity to do a little shopping.”
“Rare earth elements have caught the attention of investors everywhere,” Ponsi said in a recent column. “Discovered in mineral deposits in the late 18th century, these elements have unique magnetic and luminescent properties.
“While China dominates this field, the U.S. is looking to fortify its position in the rare earths markets.”
Ponsi, managing director of Barchetta Capital Management, cited MP Materials MP, Energy Fuels UUUU and USA Rare Earth USAR, which have all posted impressive gains.
MP Materials Corp. has climbed 422% this year, while Energy Fuels is up 300% and USA Rare Earth has jumped 142%.
And he had some advice for people looking to get in on the action.
“USA Rare Earth and other stocks in this sector are highly speculative,” Ponsi said. “Investors in this sector are seeking outsized gains, but the risks are also high. As always, traders should make risk management their top priority.”
Related: After a low period, biotech stocks are on the upswing, experts say
#Rare #earth #materials #offer #investors #potential #gains #big #risks