The rare metals industry, which supplies critical minerals for modern technologies, is undergoing significant transformations driven by geopolitical developments and strategic policy shifts.
The recent introduction of sweeping U.S. reciprocal tariffs, ranging from 10 to 50 percent on key trading partners, and China’s retaliatory 34 percent duties have further intensified the race to secure domestic sources of these minerals.
This analysis examines recent events impacting the rare metals supply chain and evaluates key North American companies navigating this evolving landscape.
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Geopolitical Dynamics Influencing the Rare Metals Supply Chain:
Recent events have underscored the strategic importance of rare metals. With tensions escalating and global supply chains under pressure, nations are rethinking their approaches to securing vital resources.
1. U.S. Reciprocal Tariffs Take Effect:
On April 2, 2025, the United States implemented a new reciprocal tariff regime that applies a 10 percent baseline duty on all imports and higher rates, up to 50 percent, on major trading partners that maintain their own barriers against U.S. exports.
Under this policy, the European Union faces a 20 percent levy, Japan 24 percent, South Korea 25 percent, India 26 percent, and China 34 percent.
While designed to compel partners to reduce their tariffs, these measures have raised concerns about higher input costs for U.S. manufacturers and potential inflationary pressure across multiple sectors.
2. China’s Retaliatory Tariffs:
In direct response, China’s Ministry of Commerce announced a uniform 34 percent tariff on all U.S. imports effective April 9, 2025. This sweeping measure mirrors the U.S. reciprocal approach and covers goods ranging from aerospace components to agricultural machinery.
Beijing’s decision underscores its readiness to “fight to the end” if pressured, and it has prompted Chinese buyers to seek alternative suppliers in Australia and Brazil to avoid elevated costs
3. US Policy and Strategy
The United States has recognized the necessity of securing domestic sources of critical minerals. Recent measures include:
- Defense Production Act Invocation: Continued use of the DPA to expedite the extraction of lithium, nickel, cobalt, graphite, and manganese for defence and clean?energy applications.
- Reciprocal Tariffs: The April 2 tariff rollout applies 10–50 percent duties on imports from all trading partners, aimed at rebalancing trade but risking higher manufacturing costs and renewed inflationary pressures.
- Strategic Partnerships: Ongoing negotiations—including a minerals?for?aid proposal with Ukraine—seek to diversify access to essential resources.
- Financial Incentives: The DOE maintains funding for domestic processing facilities, such as the $1.2?billion graphite project in Tennessee, to mitigate reliance on foreign suppliers.
- Arcadium Lithium Delisted: Rio Tinto’s Stock Outlook Amid Geopolitical Dynamics
In October 2024, Rio Tinto announced its $6.7 billion acquisition of Arcadium Lithium in order to strengthen its position in the lithium market during the global shift toward renewable energy and electric vehicles. Although current oversupply and declining lithium prices present challenges, Rio Tinto’s move reflects strong confidence in long-term demand.
The acquisition positions the company to benefit from government subsidies and alternative refining capacities, which are key for maintaining leadership in battery supply chains.
STA Analysis for Rio Tinto ADR
Rio Tinto ADR demonstrates a stable, defensive profile with a 1-year total return of 7.85 percent and a low beta of 0.56. Its strong dividend yield of 6.47 percent and solid profitability with an RoA of 8.48 percent and an RoE of 20.25 percent underscore its resilience.
Despite a relatively high valuation, its diversified operations across iron ore, aluminium, and battery-related minerals position it as a critical asset for both defence and energy sectors.
Key North American Players in the Rare Metals Supply Chain
This section examines major U.S. and Canadian companies that are strategically positioned to secure domestic rare metals, a key factor in bolstering national defence capabilities.
U.S. Companies
Following are the US Companies that you must consider.
1. MP Materials Corp. (NYSE: MP)
MP Materials owns and operates the Mountain Pass mine in California, which is the only active rare earth mining and processing facility in the United States. The company reported a 48 percent revenue increase to $60.98 million in Q4 and is set to begin full-scale manufacturing of NdFeB magnets at its Texas facility.
STA Analysis for MP Materials Corp:
MP Materials has delivered an impressive 93.02 percent capital gain over the past year and achieved 5-year revenue growth of 177.69 percent.
Although its high beta of 2.35 indicates significant volatility, strong operational performance, positive cash flows, and efficient capital utilization reinforce its role in strengthening domestic defence and high-tech supply chains.
2. Energy Fuels Inc. (NYSE American: UUUU)
Energy Fuels is a leading U.S. producer of uranium and vanadium and has diversified into the rare earth elements market by processing monazite sands. This diversification reinforces its significance in the domestic rare metals supply chain.
STA Analysis for Energy Fuels Inc
Energy Fuels shows a 1-year capital loss of -31.62 percent and a beta of 1.68, indicating some volatility. However, the company boasts an impressive 5-year revenue growth of 1231.87 percent.
Its low valuation ratios (with a P/E of 8.71) may offer an attractive entry point for long-term investors who anticipate that forthcoming policy measures will boost domestic production.
3. NioCorp Developments Ltd. (NASDAQ: NB)
NioCorp is developing the Elk Creek Superalloy Materials Project in Nebraska, which targets the production of niobium, scandium, and titanium—materials essential for aerospace, automotive, and renewable energy applications.
STA Analysis for NioCorp Developments Ltd:
NioCorp’s stock has declined by 30.27 percent over the past year, and its very low beta of 0.27 reflects its small-cap nature. Weak earnings and profitability (with RoE at -772.2 percent) indicate high risk, but its focus on producing critical defence materials provides strategic importance.
The high-risk, high-reward profile may appeal to investors willing to tolerate volatility for potential breakthroughs in domestic supply.
4. Lithium Americas Corp. (NYSE: LAC)
Lithium Americas is developing the Thacker Pass lithium project in Nevada, the largest known lithium resource in North America, and has secured significant investment from General Motors.
STA Analysis for Lithium Americas Corp:
Lithium Americas has experienced a substantial 1-year capital loss of -55.18 percent and has a beta of 1.54, reflecting notable volatility. Although the company exhibits strong 5-year earnings growth of 86.08 percent, challenges such as negative cash flow persist.
Its strategic role as a supplier for electric vehicle batteries and defence applications remains critical for long-term investors.
Canadian Companies
Following are the Canadian Companies that you must consider.
1. Avalon Advanced Materials Inc. (TSX: AVL)
Avalon Advanced Materials is a Canadian mineral development company specializing in niche market metals and minerals. With assets like the Nechalacho Rare Earth Elements Project and the Separation Rapids Lithium Project, Avalon is positioned to supply rare earth elements and lithium critical for defence and advanced technologies.
STA Analysis for Avalon Advanced Materials Inc
While detailed numerical metrics are not provided here, Avalon’s strategic asset portfolio and its focus on reducing dependency on Chinese supplies make it a key player. Its ability to secure and process niche materials is essential for supporting both national security and technological innovation.
2. Teck Resources Limited (TSX: TECK.B)
Teck Resources is a diversified resource company operating in Canada that produces copper, zinc, and steelmaking coal, all vital for industrial and defence applications.
STA Analysis for Teck Resources Limited:
Teck Resources has a modest 1-year capital gain of -0.51 percent and a beta of 1.29, indicating moderate volatility. Its excellent 5-year dividend growth of 593.76 percent and robust earnings growth, despite low revenue growth, support its defensive profile. As a diversified company, Teck provides stability that is valuable in a challenging geopolitical environment.
3. Neo Performance Materials Inc (TSX: NEO)
Neo Performance Materials produces advanced industrial materials, including rare earth-based functional materials and magnetic powders. Its products play a crucial role in defence and high-tech applications.
STA Analysis for Neo Performance Materials Inc
Neo Performance Materials has recorded a 1-year capital gain of 28.1 percent with a beta of 1.28. With a “Strong Buy” analyst rating and excellent operational performance, the company stands out in terms of return on equity and asset utilization.
However, its high price-to-earnings ratio of 80.1 and modest dividend yield suggest some overvaluation. Its critical role in reducing reliance on Chinese processing for defence applications makes it a key long-term investment.
4. Hudbay Minerals Inc (TSX: HBM)
Hudbay Minerals is a diversified mining company with operations in Canada and the U.S. that produces copper, zinc, gold, and silver—metals essential for various industrial applications including defence.
STA Analysis for Hudbay Minerals Inc:
Hudbay Minerals delivers a 1-year capital gain of 18.02 percent with a beta of 1.8, positioning it as a moderately volatile investment. With strong dividend returns and solid profitability (RoA of 4.84 percent and RoE of 2.79 percent), Hudbay is highly rated by analysts.
Its stable cash flows and attractive valuation metrics make it an appealing defensive play in an uncertain geopolitical climate.
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Conclusion:
The rare metals sector in North America stands at the forefront of a strategic realignment prompted by escalating trade conflicts. The U.S. reciprocal tariffs implemented on April 2 and China’s immediate 34 percent counter?tariffs have underscored the urgency of reshoring critical mineral supply chains. In response, both the U.S. and Canada are ramping up domestic production through policy initiatives and financial incentives.
Muzzammil is a content writer at Stock Target Advisor. He has been writing stock news and analysis at Stock Target Advisor since 2023 and has worked in the financial domain in various roles since 2020. He has previously worked on an equity research firm that analyzed companies listed on the stock markets in the U.S. and Canada and performed fundamental and qualitative analyses of management strength, business strategy, and product/services forecast as indicated by major brokers covering the stock.
