The critical minerals supply chain is being pulled apart along geopolitical lines, and investors in mining stocks, energy-transition funds and defence-linked equities are caught in the middle. China’s move on 22 June 2026 to ban dual-use exports to ten named US entities, including MP Materials (NYSE: MP) and USA Rare Earth (Nasdaq: USAR), marks a sharp escalation in a trade dispute that has been building for years.
Beijing’s commerce ministry issued the restriction as MOFCOM Announcement No. 23 of 2026, citing the US expansion of its Chinese Military Companies List on 8 June as the trigger. Benchmark Minerals notes the controls are entity-specific rather than a blanket export ban, but for the named firms they amount to a full prohibition on dual-use shipments.
Why the Critical Minerals Supply Chain Was Already Under Strain
To understand the stakes, consider the concentration problem. China supplies upwards of 90% of refined rare earths and magnets globally, a dominance built partly on domestic reserves and partly on acquiring African production facilities and shipping ore back to China for processing.
The US Geological Survey published its final 2025 List of Critical Minerals on 6 November 2025, covering 60 minerals deemed vital to economic and national security. That list, developed under the Energy Act of 2020, defines critical minerals as commodities whose supply chains are vulnerable to disruption and whose absence would carry serious economic or security consequences. Silver made the list for the first time, weeks before China imposed a complete ban on silver exports that sent prices up fourfold.
Rare earth elements sit at the sharp end of this story. Magnets derived from them are core components of electric motors, wind turbines, aircraft engines and generators. A standard electric car requires about six times more mineral inputs than a comparable petrol vehicle. JP Morgan Global Research forecasts global lithium demand will grow by 16% this year, driven overwhelmingly by electric vehicle production.
The Pentagon’s Bet on MP Materials
The US government’s response has been to invest directly. In July 2025, the Department of Defense formalised its position in MP Materials, the only fully integrated producer of rare earth magnets in the US. The transaction, filed with the SEC, includes a $400 million equity investment in newly authorised Series A Preferred Stock, a commitment for up to $350 million in additional Series A Preferred Stock, and a $150 million loan to support expansion of heavy rare earth separation. The DoD also secured a 10-year price floor on NdPr products and a 10-year offtake agreement for magnet production.
The Washington Post reported that the deal makes the Pentagon the largest shareholder in MP Materials and supports construction of a new processing facility designed to reduce reliance on Chinese supply chains. MP Materials has since announced a joint venture with the Saudi Arabian Mining Company (Maaden) to develop a rare earth refinery in Saudi Arabia, according to its investor relations page, part of a broader US-Saudi strategic framework on critical supply chains.
Ivan Murphy, Executive Chairman of Harena Rare Earths, frames the core tension plainly. ‘This level of control has made pricing very difficult and encouraged the US government to introduce floor pricing for the only rare earth mine in that country and make a huge investment in it. But even within that opportunity for MP Materials, the majority of what it produces in California is light rare earths.’
Volatility, Cycles and the Case for Long-Term Thinking
For retail investors, the appeal of critical minerals producers is real, but so are the risks. Juliette Fortin, Senior Managing Director in the Economic Consulting segment at FTI Consulting, points out that rare earth prices have been highly volatile since 2019, peaking in early 2022 on post-COVID demand and rapid EV growth, before supply growth in battery metals stabilised prices in 2024 and early 2025 until China reimposed export restrictions in April 2025.
Lithium tells its own cautionary tale. Tony Sage, Chairman and CEO of Critical Metals Corp, notes that ‘lithium prices rose sharply and then corrected by more than 70% in a relatively short period, and similar cycles have played out across nickel, cobalt and other critical metals.’ His conclusion: focus on long-term fundamentals rather than short-term price swings, and prioritise resource quality, favourable jurisdictions and proximity to end markets.
Recycling is beginning to add a second supply stream. Fastmarkets estimates that around 8% of global battery metal supply will come from battery recycling this year. Claire Zirkelbach, CFO of Cirba Solutions, describes the aim as diversified sourcing rather than solving a scarcity problem outright, with closed-loop collection systems turning end-of-life batteries into a more localised and disruption-resistant supply.
One final caution: the Critical Minerals Institute has warned that deal-making in the sector is outpacing technical due diligence in some cases. Given the geological complexity involved, that gap between speed and rigour is the variable to watch as the next funding wave arrives.
