Why USAR, MP Materials, Other Critical Mineral Stocks are Surging Amid US–China Tensions

Rare earths are becoming the new oil, and the US–China rivalry has just turned them into the market’s next big story. Stocks like USA Rare Earth (USAR) and MP Materials (MP) are rallying sharply as Washington and Beijing escalate their tug-of-war over critical minerals, the building blocks of everything from EVs and fighter jets to wind turbines and AI hardware.

USA Rare Earth Inc (USAR) stock was up more than 22% in the pre-market session on October 13, while MP stock was up over 10%, Google Finance data showed. Let’s break down what’s driving the rally in these critical mineral stocks.

What triggered the sudden rally in critical mineral stocks?

Rare-earth and critical mineral companies began rallying across U.S. markets this month. The timing isn’t random as the rally comes right after China tightened its export licensing rules on rare earths and magnets, a move that’s being seen as Beijing’s counter to U.S. semiconductor restrictions.

• USA Rare Earth (USAR) share price has risen more than 137% in the last one month, of which 15-20% came after China expanded export controls.
• MP Materials (MP) share price has jumped nearly 19% in the last 30 days.
• ETFs tracking strategic minerals also saw inflows as investors looked for ways to hedge geopolitical risk.

Source: Google Finance

Why are US-China tensions driving rare-earth stocks higher?

Let’s unpack the geopolitics behind the market reaction.

1. China’s new export curbs raise supply fears: China has long dominated the rare-earth market, controlling around 70% of mining and 90% of processing capacity worldwide. Its new rules now require export licensing even for foreign-made magnets containing Chinese-processed material, creating a choke point for global supply.
Source: CSIS, AP News

This means even companies sourcing raw ore outside China could face restrictions if any part of their refining chain depends on Chinese inputs. That uncertainty has sent buyers and investors rushing toward non-Chinese producers.

2. U.S. doubling down on domestic production: Washington views rare earths as a national security asset. The Pentagon recently took a 15% stake in MP Materials through preferred shares to fund a domestic magnet-manufacturing hub at Mountain Pass, California, currently the only active U.S. rare-earth mine. MP Materials has also halted exports to China amid retaliatory tariffs and is now expanding its own refining and magnet facilities for U.S. defense and EV clients. This makes MP a strategic play backed by government funding and demand visibility.

3. Supply chain realignment: From Japan to Australia and Canada, allied nations are investing billions to reduce reliance on China. The U.S. and EU have both launched “friend-shoring” initiatives to secure access to critical minerals. These moves are boosting the valuations of any company that can produce or process rare earths outside China.

4. Investor sentiment is amplifying the move: Markets love a good narrative. Once a few names like USAR and MP start rallying, momentum takes over. Social media chatter, defense-sector interest, and ETF buying have combined to turn critical minerals into the “semiconductors of 2025.”

Why USAR and MP Materials stock stand out

USA Rare Earth (USAR)

• Plans end-to-end U.S. production, from mining to magnet manufacturing, positioning itself as a fully domestic alternative to Chinese supply chains.
• Recently announced progress on financing and partnerships for its Texas facility.
• Still a high-risk, early-stage company with limited revenue visibility but high speculative appeal amid policy tailwinds.

MP Materials (MP)

• Operates the Mountain Pass mine, the only integrated rare-earth mine and processing site in the U.S.
• Backed by a long-term Pentagon contract to supply magnets for F-35 fighter jets and EV components.
• Has begun commercial-scale magnet production, moving closer to vertical integration.

Together, they anchor the U.S. bid for mineral independence, a theme investors are increasingly pricing in.

Are critical mineral, rare earth metal stocks in a bubble?

Not necessarily — but caution is warranted.

So while the trend is structural, individual stock performance will depend on execution and timing.

What’s the long-term outlook for critical minerals?

Critical minerals are now as essential as semiconductors for the next decade’s industrial transformation. Clean energy tech, EVs, defense, and AI hardware all rely on permanent magnets made from neodymium, praseodymium, and dysprosium, minerals still largely refined in China.

With both Washington and Beijing treating these resources as strategic levers, this sector’s importance will only rise. In other words: rare earths are moving from niche materials to a mainstream geopolitical asset class.

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