Pentagon's $1 Billion Mineral Purchase Plan Spurs Pre-Market Surge in Rare Earth Stocks

TradingKey - According to the Financial Times, the U.S. Department of Defense is contemplating a strategic procurement of critical minerals, valued at up to $1 billion, to bolster reserves.

Recent documents from the Defense Logistics Agency reveal that the Trump administration is accelerating efforts to expand the national strategic stockpile, responding to China's dominance over essential metals for defense manufacturing.

The Pentagon’s procurement plan includes buying up to $500 million worth of cobalt, $245 million worth of antimony, $100 million worth of tantalum, and approximately $45 million of scandium.

Analysts suggest that stricter export controls from China have heightened concerns in the West regarding future access to these metals. On October 9, China's Ministry of Commerce announced tighter export controls on rare earth elements containing Chinese components and related technologies. As the leading producer of rare earth metals, China's actions significantly impact the global market.

Critical minerals, including rare earth metals, are vital for nearly all military systems, as well as radar and missile detection systems. Stephanie Barna, an attorney at Covington & Burling, noted that cutting off the supply of these critical minerals would adversely affect the technological capabilities essential for U.S. strategic deployments.

The Financial Times further reports that industry executives have indicated the U.S. government recognizes the importance of these resources. Although the stockpiling of critical minerals is in its early stages, awareness is rapidly increasing.

Trump's "One Big Beautiful Bill Act" allocates $7.5 billion towards critical minerals, including $2 billion to strengthen defense reserves, $5 billion to invest in critical mineral supply chains, and $500 million to establish a Pentagon credit program to stimulate investment. Insiders state that this act has ensured ample funding for agencies responsible for the security of critical mineral supply chains.

Currently, U.S. Antimony Corporation has secured an exclusive contract from the Department of Defense to create reserves sufficient for national emergency mobilization. The company plans to acquire around 3,000 tons of antimony metal, equivalent to one-eighth of the projected U.S. antimony consumption in 2024. Fastmarkets analysts have noted a "substantial scale" in the Department of Defense's procurement of bismuth and indium.

Following this announcement, shares of related mineral producers soared. USA Rare Earth (USAR) saw its stock jump over 25% pre-market on Monday, while MP Materials (MP), a rare earth extraction and processing company, rose over 10%. Energy Fuels (UUUU), which mines uranium and produces natural uranium concentrates, climbed over 15%.