China's Rare Earth Grip and U.S. Supply Chain Peril: Where to Invest in the Geopolitical Minerals War

The U.S. defense and tech sectors are at a crossroads. With China controlling 60% of global rare earth production and 90% of processing capacity, its recent export restrictions—targeting samarium for missile guidance systems and neodymium for electric motors—have exposed critical vulnerabilities. From F-35 fighter jets to EV batteries, U.S. industries face a stark reality: reliance on a geopolitical adversary for materials that underpin national security and economic growth. This article outlines the risks, identifies investment opportunities in alternative supply chains, and highlights companies positioned to capitalize on the scramble to diversify.

The Threat Multiplied: China's Strategic Leverage

China's export restrictions in 2025 have already disrupted U.S. defense contractors. For instance, samarium cobalt magnets, vital for radar systems and missile guidance, are 85% sourced from Chinese refineries. Even “green channels” for automakers like GM and Ford—securing temporary rare earth access—fail to address systemic risks. The U.S. Department of Defense warns that non-Chinese rare earth projects face financial headwinds due to low prices, which favor China's state-backed monopolies. Without immediate action, the U.S. risks ceding control over supply chains for semiconductors, EVs, and advanced weaponry.

The stock's surge in 2025 reflects investor optimism about projects like Greenland's Tanbreez, but volatility underscores the sector's risks.

The Geopolitical Gold Rush: Where to Mine Alternatives

To counter China's dominance, the U.S. is fast-tracking investments in three critical regions: Greenland, the Democratic Republic of the Congo (DRC), and Ukraine. Each offers unique opportunities—and challenges—for investors.

1. Greenland: The Arctic Prize

The Tanbreez project, owned by Critical Metals Corp (CRML), is a linchpin of U.S. strategy. With 27% heavy rare earth content (critical for lasers and missiles) and a $3.04 billion NPV, Tanbreez could supply 425,000 tonnes of rare earth oxides annually at peak production. Its partnership with U.S. firm GreenMet ensures Western control, while U.S. Department of Defense funding is pending.

Investment Thesis: CRML's stock, up 220% since 2024, reflects geopolitical tailwinds. However, execution risks remain: infrastructure gaps and Danish-Greenlandic regulatory hurdles could delay timelines.

2. Congo: Lithium and Cobalt, but at a Cost

The DRC holds 40% of global cobalt reserves and emerging rare earth deposits, but Chinese firms like China Molybdenum (CMOC) control key mines, such as the Tenke Fungurume cobalt giant. U.S. investors must navigate corruption and outdated infrastructure. The U.S.-DRC Strategic Minerals Pact, still in talks, aims to leverage DFC financing for projects like the Kamoa-Kakula copper-rare earth complex.
Investment Alert: Avoid direct exposure to Congolese mines without U.S. government backing. Focus on U.S. firms like MP Materials, which processes DRC cobalt at its California facility, mitigating supply chain risks.

3. Ukraine: A High-Risk, High-Reward Play

The U.S.-Ukraine Reconstruction Investment Fund, finalized in April 2025, targets Ukraine's 500,000-ton lithium reserves and 343 million-ton graphite deposits. However, 40% of Ukraine's rare earth reserves lie in Russian-occupied zones, making stability a prerequisite. The Novopoltavske REE project—if secured—could supply europium for defense lasers.

Investment Caution: Ukraine's projects are years from production. Investors should prioritize U.S. partners like Energy Transition Metals, which have stabilization agreements, over direct Ukrainian equities.

Defense and Tech Sectors: Immediate Opportunities

The urgency to decarbonize and modernize militaries is driving demand for gallium (semiconductors), europium (radar screens), and terbium (military lasers). U.S. firms with stockpiles or strategic partnerships are critical:
- Lynas Corporation (LYC): Australia's only rare earth processor, with a $1.2 billion plant in Texas to refine light rare earths.
- U.S. Critical Materials: Its Sheep Creek mine in Montana hosts 20% of global gallium reserves, vital for 5G chips.

The Bottom Line: Diversify or Perish

Investors must prioritize three criteria:
1. Geopolitical Safeguards: Firms with U.S./EU government backing (e.g., CRML's DoD ties).
2. Processing Capacity: Avoid raw miners—focus on companies like Lynas with refining expertise.
3. Conflict Mitigation: Ukraine projects require multilateral support; Congo needs governance reforms.

The clock is ticking. As China's grip tightens, the race to secure non-Chinese rare earths will define the next decade of U.S. industrial and military might. Investors who act now—targeting Greenland's Tanbreez, U.S. domestic processors, and cautiously backing postwar Ukraine—will position themselves to profit from this geopolitical pivot.

The widening price gap highlights the urgency of diversification. The next move is yours.