Washington is jumping into rare earths. Investors have run the other way.

Mint

26-07-2025

A promising mining find in Wyoming aims for lightning-fast production of a resource that is a key chokepoint in America's standoff with China. Federal officials have signaled a potential investment in the project of close to $500 million.
Yet the company behind it is a penny stock.
The paradox of American Rare Earths, whose biggest prospect is the Wyoming site about three hours north of Denver, is endemic to the mostly small firms trying to extract rare-earth elements crucial to everything from electric vehicles to jet fighters. Shares often trade on smaller stock exchanges in Canada or Australia. Banks proceed with caution toward projects that can take a decade to materialize, if they ever do.
That has left the U.S. with a quandary as China wields its dominance over global rare-earths production as a cudgel in the countries' simmering trade dispute. The U.S. has rare earths. What it lacks are investors willing to gamble on an industry dominated by Beijing.
Washington in recent years has tried to pump the market, throwing hundreds of millions of dollars at new mines and processing plants. A Pentagon deal this month with the country's largest producer may be the biggest such investment ever.
Even so, the difficulty of standing up a domestic industry backed by limited private capital has exposed a weak point in the White House's push to wean America off cheap Chinese supplies.
'The financing piece is a big question mark," said Joe Evers, president of American Rare Earths' Wyoming project.
Ubiquitous commodities like oil boast corresponding financial markets where companies can shield themselves from volatility and traders can bet on it. The resulting prices help investors value companies and banks structure loans.
That isn't the case for the 17 rare-earth elements needed in relatively tiny quantities across many high-tech industries. For rare earths, Evers added, the market 'really hasn't evolved at all, in my opinion, because there's such a dominant player in the form of China."
Beijing has spent decades expanding its rare-earths footprint at home and abroad, commanding a huge portion of the world's ability to refine the elements and process them into magnets used by robotics firms, phone makers and other businesses. More than two-thirds of U.S. imports last year came from China, according to S&P Global. China also dominates many of the industries that rely on rare earths, including EVs.
After China imposed export controls earlier this year, automakers like Ford Motor scrambled for supplies, giving Beijing leverage over Washington in trade talks. June shipments abroad were down 38% from a year earlier, even after the countries struck a deal that included China lifting some of the restrictions.
Now, American miners hope tension with China's state-backed model will push the feds to fight fire with fire—and gin up interest among unenthusiastic investors.
'The government has realized that that game ain't gonna work," said Randall Atkins, chief executive of Ramaco Resources, a Kentucky-based coal producer that recently opened a coal and rare-earths mine in Wyoming.
Earlier this month, Nevada-based MP Materials announced a massive Defense Department investment to expand rare-earths production and processing capacity. Analysts say the deal, which includes a loan, a decadelong offtake agreement and equity investment that makes the Pentagon MP's largest shareholder, could total billions and require additional money from Congress. Apple soon after announced its own supply deal with MP.
The moves set off wild price swings in stocks of similar companies that are draping themselves in the American flag—both figuratively and literally—as they vie for government cash.
Shares in Sydney-based American Rare Earths, which last year earned a letter of interest from the Export-Import Bank for debt financing up to $456 million, nearly doubled in value within a week to 46 Australian cents apiece.
Spanning less than half a square mile, the company's proposed Cowboy State Mine sits on land where the state of Wyoming owns both the surface and the minerals, giving it the potential for expedited permitting. The find holds metals including the 'core four" rare earths necessary for powerful permanent magnets: neodymium, praseodymium, dysprosium and terbium.
But the chief executive of American Rare Earths, which aims to start mining and processing as soon as 2029, resigned Monday in the second such shake-up since last year. On Thursday, the company announced a capital raise equivalent to nearly $10 million.
Ramaco stock similarly rocketed higher after the MP deal. At a ribbon-cutting ceremony this month attended by Energy Secretary Chris Wright, Atkins described Ramaco's Wyoming project as 'America's mine" and part of a broader push 'to win a war being waged below our soil."
The executive said in an interview that his firm will seek private and public backing as it pilots a processing facility and builds out the mine's full capacity in the coming years.
'We have to have realistic throughput agreements that aren't subject to Chinese manipulation," he added.
There are dangers to relying on government aid. U.S. policy toward critical minerals—a broader basket of materials that includes rare earths—has long been inconsistent. Tax credits for domestic production were included in President Joe Biden's Inflation Reduction Act, but now will sunset starting in 2030 under Trump's new tax-and-spending law.
With a drawdown in other credits for EV purchases and renewable-energy development, 'you risk killing a demand signal to ensure that these new industries, many of which are coming from startups, are going to have a market," said Milo McBride, a fellow at the Carnegie Endowment for International Peace.
It is unclear if the MP deal can or will be replicated for other rare-earth miners. The Pentagon didn't respond to requests for comment.
But analysts warn that jumping headfirst into the mining business comes with risks inherent to sometimes speculative projects. An Idaho cobalt mine three decades in the making has been mothballed for years despite tens of millions in government support.
'For any of these projects, [commercial production] is probably a long shot," said Rod Eggert, an economics professor at the Colorado School of Mines. 'But that's the nature of the business."
Write to David Uberti at [e-mail] and Jennifer Hiller at [e-mail]