Rare Earths Surge Amid China's Export Restrictions: A New Era for Strategic Investment
ArcStone Financial Pulse | May 22, 2025
Category: Global Commodities & Strategic Materials
Rare earth elements (REEs) have become the focal point of global economic and geopolitical strategies, with recent developments highlighting their critical importance. China's implementation of stringent export controls on key REEs has disrupted global supply chains, leading to significant market reactions and presenting new investment opportunities.
China's Export Controls Disrupt Global Supply
On April 4th, 2025, China, which dominates approximately 90% of the global rare earth processing market, imposed export restrictions on seven of seventeen REEs – samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium.1 These elements are essential for manufacturing high-performance magnets used in electric vehicles, wind turbines, and military applications. The new regulations require exporters to obtain special licenses, a move seen as a strategic response to escalating trade tensions with the United States.
The immediate impact has been a significant disruption in global supply chains. Companies across various sectors, from automotive to defense, are grappling with delays and uncertainties in sourcing these essential materials.
Investment Surge in Rare Earth Sector
Supply constraints stemming from China’s tightened export controls have triggered a surge in rare earth investments, with several assets appreciating sharply in recent weeks. This momentum reflects growing investor awareness of the strategic importance of REEs and the fragility of existing supply chains.
As a result, equities linked to the production or processing of the restricted elements have seen notable upward momentum. Below are select examples of publicly traded companies with targeted exposure:
Lynas Rare Earths Ltd. (LYSCF)
- Primary Exposure: Samarium, Gadolinium, Terbium, Dysprosium
- Context: Lynas Rare Earths (LYSCF), an Australian producer, is the largest producer of rare earths outside China and is advancing new heavy rare earth oxide production in Malaysia, with commissioning expected mid-2025—marking a critical step toward commercial non-Chinese supply of dysprosium and terbium.
- Performance: Lynas Rare Earths (LYSCF) has gained approximately 31% from February 4th to May 23rd, rising from $3.99 to $5.22.2
Ucore Rare Metals Inc. (UURAF)
- Primary Exposure: Lutetium, Yttrium, and other heavy REEs
- Context: Ucore Rare Metals (UURAF) has successfully separated heavy rare earth elements—including lutetium and yttrium—at its 52-stage RapidSX™ demonstration plant in Kingston, Ontario. This achievement is part of a U.S. Department of Defense–funded initiative aimed at establishing a domestic supply chain for critical rare earth elements, reducing reliance on Chinese processing capabilities. The company plans to scale this technology at its forthcoming Louisiana Strategic Metals Complex, expected to commence operations in late 2025.
- Performance: Ucore Rare Metals (UURAF) has surged approximately 68% from February 4th to May 23rd, 2025, rising from $0.56 to $0.94.4
Scandium Canada Ltd. (SCDCF)
- Primary Exposure: Scandium
- Context: Scandium Canada (SCDCF) is advancing its Crater Lake project in Quebec, one of the few primary scandium deposits globally. The company is working towards establishing a fully integrated scandium supply chain, from mining to downstream applications, including 3D printing of aluminum-scandium alloys. This initiative aims to provide a stable and reliable domestic source of scandium, encouraging broader adoption in various industries.5
- Performance: Scandium Canada (SCDCF) rose from $0.01 on February 4th to $0.016 on May 23rd, marking a 60% gain over the period.6
In general, Canada is emerging as a leading alternative in the global race to secure critical minerals. Alongside mining initiatives, firms like Cyclic Materials are developing rare earth recycling capabilities, while the Saskatchewan Research Council is preparing to launch a major processing facility. Meanwhile, innovators like Enedym are advancing rare-earth-free motor technologies, helping reduce long-term dependency on Chinese-sourced magnets. Backed by rising government support and private capital, Canada’s rare earth sector is quickly gaining traction as a key player in the post-China supply chain era.7
Global Efforts to Diversify Supply Chains
Beyond Canada, countries worldwide are accelerating rare earth development to reduce reliance on Beijing. Brazil, home to the world’s second-largest REE reserves, is attracting major projects, including one from Canadian firm Aclara Resources, which is developing a Brazilian mine and a planned U.S. processing facility.8
In the U.S., companies like USA Rare Earth are expanding domestic production to supply finished magnets directly to manufacturers.9
And, as noted earlier, Lynas’s successful production of dysprosium outside China represents a critical proof point for the viability of non-Chinese supply at scale.10
ArcStone’s View
The global rare earth sector is entering a strategic realignment. China’s export restrictions have reignited urgency among Western nations to build resilient and independent supply chains—creating a tailwind for companies operating outside Beijing’s orbit. For investors, this marks the beginning of a structurally significant shift: rare earth equities, particularly those tied to North American and allied-jurisdiction assets, are likely to see sustained capital inflows as demand surges for secure and ethically sourced materials.
While geopolitical friction introduces headline volatility, the long-term fundamentals—rooted in decarbonization, defense modernization, and advanced manufacturing—remain firmly intact. Strategic exposure to critical mineral infrastructure now offers not only resource leverage but also alignment with national security imperatives. This emerging cycle is less about speculation and more about necessity.
About ArcStone Securities and Investments Corp.
ArcStone Securities and Investments Corp. is a leading financial services firm specializing in capital markets, corporate finance, and strategic advisory services. We assist clients with financings, navigating IPOs and RTOs, and executing mergers and acquisitions with precision and expertise. Additionally, we provide comprehensive debt financing solutions and a wide range of financial services to meet the unique needs of our clients. Our dedicated team of professionals offers tailored solutions to help businesses achieve their financial objectives and thrive in a competitive market. Discover how ArcStone can support your growth journey by visiting our website at arcstoneglobalsecurities.com.
ArcStone Financial Pulse Team
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