- Rare earth demand from EVs, defense, and clean energy is rising faster than supply, with refining and magnet production as the main bottlenecks.
- China dominates ~92% of refining and ~98% of magnet manufacturing, and 2025 export controls have tightened supplies and lifted prices for key light REEs like NdPr.
- Hedge funds favor U.S. and allied exposure plays such as MP Materials and Energy Fuels, while Cleveland-Cliffs ranks highly but faces valuation skepticism after a downgrade.
- Investors face long, capital-intensive buildouts plus permitting, policy, and demand-cycle risks as Western supply chains may take 5–10 years to scale.
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Rare earth elements (REEs) are entering a phase of heightened strategic and financial importance. Use in electric vehicles, wind turbines, advanced defense systems, robotics, and clean energy technologies is rapidly outpacing production capacity—and for many REEs, the bottleneck isn’t mining, but refining and magnet manufacturing. The IEA estimates primary supply requirements must grow from ~64 kt in 2024 to over 100 kt by 2030 to meet projected demand.
China remains by far the global leader in refining (≈92%) and magnet manufacturing (~98%) of REEs. Developing a mine is only part of the challenge; establishing full supply chains—from raw ore through finished magnets—in the West or allied nations will take 5–10 years, per Goldman Sachs.
On the investment front, hedge funds are gravitating toward companies with strong positioning in rare earths exposure. Insider Monkey ranks Cleveland-Cliffs first among its “best rare earth stocks” thanks to its forays into REE exploration at U.S. sites and its traction in catalytic automotive contracts. However, valuation concerns led KeyBanc Capital Markets to downgrade CLF, suggesting much of its upside may already be priced in.
Other REE-players such as Energy Fuels (UUUU) and MP Materials are seen as core assets in the push to build domestic REE supply chains. Energy Fuels has begun commercial production of high-spec separated NdPr and is building out downstream separation infrastructure. MP Materials owns and operates the only large-scale integrated REE mine + processing facility in the U.S. (Mountain Pass), and has recently secured funding from Apple and U.S. DoD to expand capacity.
Global markets respond: rare earth magnet prices hit multi-year highs following export disruptions, especially after MP Materials stopped shipments to China in mid-2025 and China applied stricter export controls. Light REEs such as neodymium and praseodymium are under particular stress, with Chinese NdPr oxide prices rising sharply.
Strategic implications include: governments will likely increase funding, subsidies and legislation to support REE supply chain security; corporates that can lock supply or vertical integration (upstream extraction through downstream magnet or alloy production) are better positioned; investors face significant risks tied to long project timelines, cost overruns, environmental permitting, and fluctuating policy support and international trade friction.
Open questions remain around whether demand will continue its current growth trajectory if EV adoption slows, whether new projects can scale without compromising ESG or incurring major delays, and how geopolitical competition—especially China’s willingness to use export controls—will evolve.
Supporting Notes
- The global rare earth mineral concentrates market produced about 390,000 tons (REO equivalent) in 2024, led by China’s ~69% production share. North America is projected to grow at a CAGR of 6-8% through 2030.
- Demand for REEs under the IEA “Stated Policies Scenario” (STEPS) is expected to more than double from ~64 kt in 2024 to ~107 kt by 2030, driven mostly by cleantech.
- China currently control ~92% of rare earth refining and ~98% of magnet manufacturing globally, leading to significant supply risk.
- China enforced new export controls in 2025, broadening scope to midstream and downstream REE technologies, causing disruptions to industries reliant on imported REEs, such as automakers.
- Cleveland-Cliffs is held by 52 hedge funds and was reduced from Overweight to Sector Weight by KeyBanc after stock reached prior targets.
- Energy Fuels’ White Mesa facility achieved commercial production of NdPr, and its REE separation Phase 1 circuit (850-1,000 tpa NdPr) is now operating.
- MP Materials operates the only large-scale integrated REE mining and processing facility in the U.S., Mountain Pass; it also signed a sizeable funding deal with Apple and the U.S. DoD.
- Rare earth magnet demand in 2025 is about 385,000 tonnes per year with CAGR ~7.8%; export disruptions (China’s export controls starting April 2025) affected magnet supply chains globally, pressured West to retool supply alternatives.