By Staff, Agencies

Investors are pouring capital into rare earth and critical mineral stocks as Donald Trump's administration accelerates efforts to challenge China's dominance over the sector, the Financial Times reported on Monday. 

The White House's aggressive push to secure alternative supply chains has turned a once-overlooked industry into a market phenomenon.

Washington is fast-tracking mining permits, easing environmental rules, and creating a strategic reserve under its "mine, baby, mine" policy. It also plans to introduce a price floor to stabilize the volatile market, which is heavily influenced by China's state-owned producers. 

The administration has taken equity stakes in several companies, including $400 million for a 15% stake in MP Materials, and smaller holdings in Canada's Lithium Americas and Trilogy Metals, both of which saw their share prices soar following the investments.

Beijing intensified the rivalry this month by tightening export controls, requiring approval for magnets containing Chinese rare earths and adding five more elements, holmium, erbium, thulium, europium, and ytterbium, to its restricted list. 

"There's across-the-board interest from investors in these mining companies," said Timothy Puko of Eurasia Group. 

"There aren't many publicly traded Western companies to invest in. Very few targets and a whole lot of shooters in the market right now," he added.

The surge has lifted stocks of MP Materials, USA Rare Earth, and Australia's Lynas, all of which have more than doubled this year. 

Companies such as Standard Lithium and Critical Metals have capitalized on the optimism by raising new funds, $130 million and $50 million, respectively, to expand their operations.

Some analysts warn that the market frenzy could invite speculation. "Various rare-earth junior-mining companies have been milking the situation… with their share prices benefiting from the apparent reaction to the export controls," said Gareth Hatch of Strategic Materials Advisory. 

"While I would not characterise the situation as a bubble just yet, investors must do their homework," he added.

Others question government intervention. Defense Metals' executive chair Guy de Selliers argued that "abstract" price floors are "dangerous," favoring stockpiling instead. Still, analysts like David Merriman at Project Blue note that established producers such as Lynas and MP will likely "fill the gap" left by China's tightening export regime.

Still, the political confrontation driving the market rally shows no sign of easing.

The rare earth clash comes amid rising trade tensions, with Trump imposing 100% tariffs on Chinese goods in October, citing Beijing’s “economic coercion” despite risks of market turmoil.

Beijing accuses the US of using trade and tech as tools of "economic coercion" to curb China’s growth in high-tech and green industries.

China's Commerce Ministry defended rare-earth export controls as necessary for national security and in line with global norms, while state media accused the US of double standards over its own tech export restrictions.

Chinese analysts see the standoff as a push for industrial sovereignty, warning that US pressure is speeding up China's tech self-reliance and ties with the Global South.