Wall Street Watchdogs Editorial
Here’s something that should keep you up at night.
Every F-35 fighter jet rolling off Lockheed Martin’s production line requires more than 900 pounds of rare earth elements. Every Virginia-class submarine needs roughly 9,200 pounds. The guidance systems in our missiles, the motors in our drones, the sensors in our satellites — all of them depend on a handful of obscure metals most Americans couldn’t name on a bet.
And China controls virtually all of them.
I’m not talking about some marginal advantage here. According to Resources for the Future, China mines over 60% of global rare earths, processes over 80% of them, and manufactures roughly 90% of the world’s high-performance rare earth permanent magnets. The Center for Strategic and International Studies puts the magnet manufacturing figure even higher — at 93%. These magnets aren’t optional components. They’re the beating heart of everything from precision-guided munitions to electric vehicle motors to the phone in your pocket.
Let me put it bluntly: America’s most advanced technology runs on Chinese-controlled materials. And Beijing has made it abundantly clear it’s willing to use that leverage.
The Wake-Up Call That Changed Everything
In 2022, the Pentagon discovered that F-35 jets contained magnets made from Chinese-sourced rare earth alloys — a direct violation of defense procurement rules. The response? The Department of Defense quietly signed a waiver to keep deliveries flowing, because there was simply no domestic alternative.
Read that again. The most expensive weapons program in human history — $1.7 trillion and counting — couldn’t find a non-Chinese source for a critical component.
Since then, things have escalated dramatically. Beijing has systematically weaponized its rare earth dominance in response to U.S. trade actions:
- December 2024: China banned exports of gallium, germanium, and antimony to the United States outright — critical materials for semiconductors, fiber optics, and military applications.
- April 2025: New export controls targeted seven heavy rare earth elements — including dysprosium, terbium, and gadolinium — along with all related compounds, metals, and magnets. These elements are essential for the high-performance magnets used in defense systems and advanced technology.
- October 2025: Beijing introduced even broader controls intended to limit exports of all products containing more than 0.1% rare earths — though implementation was delayed by one year following intense international pushback.
The International Energy Agency called the April 2025 controls a watershed moment, noting that “supply concentration risks have become reality.” Analysts at Resources for the Future described China’s export control strategy as a “one-shot bazooka” — devastating in its initial impact, but potentially self-defeating if it accelerates permanent supply chain diversification.
The question for investors is whether that diversification is real, and who stands to profit from it.
Why This Isn’t Just a Defense Problem
Rare earths aren’t just about fighter jets. They’re the invisible backbone of the modern economy.
Neodymium and praseodymium (NdPr) are essential for the permanent magnets in wind turbines and electric vehicle motors. A single offshore wind turbine requires up to 600 kilograms of rare earth magnets. A Tesla Model Y uses roughly 2 kilograms of NdPr magnets in its drive motor. Dysprosium makes those magnets work at high temperatures — without it, EV motors would demagnetize during normal operation. Lanthanum is critical for petroleum refining catalysts. Cerium goes into catalytic converters and glass polishing.
The global rare earth market is projected to exceed $15 billion by 2030. But the real leverage isn’t in the raw materials — it’s in the processing. China built its monopoly not by hoarding rocks, but by spending three decades constructing the world’s only full-scale rare earth separation and refining infrastructure. Even when rare earths are mined elsewhere, approximately 41% of China’s rare earth intake comes from processing foreign concentrates. They’ve made themselves indispensable at the most critical chokepoint.
Every solar panel, every electric vehicle, every 5G base station, every MRI machine — they all flow through Chinese facilities. And that means every Western government initiative to go green, digitize, or rearm runs headlong into the same bottleneck.
The irony is staggering: America’s clean energy transition and defense modernization both depend on the goodwill of its primary strategic competitor.
The Pentagon Finally Writes Serious Checks
Washington has finally started treating this as the national security emergency it is. The Department of Defense has invested over $540 million to support critical mineral supply chains in the U.S. and allied nations. The biggest bets are concentrated on a handful of companies that serious investors should be watching closely.
MP Materials (MP) — This is the flagship play. MP operates Mountain Pass in California, the only active rare earth mine in the United States and the largest outside China. In July 2025, the Pentagon announced a transformational public-private partnership: a multibillion-dollar commitment including a $400 million equity investment and a $150 million loan to expand heavy rare earth separation capacity. The deal positions the DoD to become MP’s largest shareholder.
But here’s what makes this truly significant: the Pentagon established a 10-year NdPr price floor of $110 per kilogram and a 10-year magnet offtake agreement. MP is building a “10X” magnet manufacturing facility — the integrated mine-to-magnet supply chain that America desperately needs. The company is commissioning its “Independence” magnetics facility in Texas, anchoring its downstream capabilities. This isn’t a speculative startup. It’s a company with real assets, real revenue, and the U.S. government as its anchor customer.
Lynas Rare Earths (LYSDY) — The Australian company operates the Mt Weld mine, the richest known deposit of rare earths outside China, and a processing plant in Malaysia. Lynas received $120 million in Pentagon funding under the Defense Production Act to build a heavy rare earth processing facility in Texas. When operational, this will be one of the first non-Chinese heavy rare earth separation plants in the Western world. Lynas represents the allied dimension of the solution — the U.S. can’t do this alone, and Australia is the most natural partner.
Energy Fuels (UUUU) — Originally a uranium producer, Energy Fuels has pivoted into rare earth processing at its White Mesa Mill in Utah — the only conventional uranium mill operating in the United States, now pulling double duty. The company is processing rare earth carbonate from multiple sources and developing separated rare earth oxide capacity. It’s a smaller, more speculative play, but its existing infrastructure and permitting advantages give it a genuine head start. The dual uranium/rare earth exposure is a unique value proposition in this space.
Ucore Rare Metals (UCU.V) — The smallest and most speculative name on this list. Ucore is developing rare earth processing facilities in Louisiana using its proprietary RapidSX™ separation technology, which promises faster, cleaner, and cheaper separation than conventional solvent extraction. Longer-term plans include facilities in Canada and Alaska. The company also holds the Bokan-Dotson Ridge heavy rare earth deposit in Southeast Alaska. High risk, high reward — this is a bet on next-generation processing technology disrupting China’s refining dominance.
The Investor’s Playbook
Here’s how I think about this sector.
The macro setup is about as favorable as it gets. You have bipartisan political support (rare earths are one of the few issues where both parties agree), massive defense spending commitments, accelerating trade tensions with China, and a global energy transition that demands exponentially more rare earth magnets. The question isn’t whether Western rare earth capacity will be built — it’s how fast, and which companies capture the value.
MP Materials and Lynas are the blue-chip plays — real assets, real revenue, government backing. MP’s Pentagon partnership gives it a uniquely defensible position with guaranteed pricing and demand. Energy Fuels offers uranium exposure as a bonus alongside its rare earth optionality — a two-for-one play on two of the decade’s most important commodity themes. Ucore is venture-stage and should be sized accordingly.
But here’s the contrarian angle most analysts miss: the real bottleneck isn’t mining — it’s processing and magnet manufacturing. China didn’t achieve dominance by digging rocks out of the ground. It achieved dominance by controlling the midstream — the complex, capital-intensive chemical processes that turn raw ore into separated oxides and finished magnets. The companies that solve the midstream problem will capture disproportionate value. Watch for who actually delivers separated rare earth oxides and finished NdFeB magnets at commercial scale. That’s where the monopoly premium currently sits, and that’s where the disruption will be most profitable.
For another angle on critical minerals, Banyan Hill’s SFT Sand report explores an overlooked material essential to semiconductor manufacturing. Read it here.
Banyan Hill’s research team has identified what they call the “Mystery Metals” — critical minerals that could see explosive demand. Their report is worth a look.
For investors who want broader exposure without picking individual winners, the VanEck Rare Earth/Strategic Metals ETF (REMX) provides diversified access to the sector, though it includes some Chinese companies — which is worth noting given the geopolitical dynamics at play.
The Long Game
China spent 30 years building this chokehold. Deng Xiaoping reportedly said in 1992: “The Middle East has oil. China has rare earths.” It wasn’t an observation — it was a strategy. While the West outsourced and offshored, Beijing invested in processing capacity, drove competitors out of business with below-cost pricing, and accumulated the technical expertise that now takes years to replicate.
Breaking that monopoly will take a decade of sustained investment. The first serious checks have been written. The political will exists on both sides of the aisle. And the companies building real Western processing capacity today are positioned for a generational tailwind.
The smart money isn’t waiting for the next export ban to make headlines. It’s already moving.
Banyan Hill’s “Project Janus” research dives deep into the companies positioned to profit from the rare earth supply chain overhaul. You can check it out here.
— Wall Street Watchdogs Editorial Team
Wall Street Watchdogs is committed to uncovering the truth about financial markets and helping individual investors prepare for systemic risks that mainstream media won’t discuss. We receive no compensation from the companies or assets we analyze. This article is for educational purposes only and should not be construed as investment advice.
