Why Rare-Earth Stock Critical Metals Soared 108% in October

October was a wild, wild month for investors in Critical Metals Group (NASDAQ: CRML).

The mining stock rocketed from single digits at the beginning of the month to an all-time high of $32.15 per share on Oct. 14, only to retrace quickly and give up a big chunk of those gains. The run-up, however, was so gigantic that Critical Metals stock still ended October up 108%, according to data provided by S&P Global Market Intelligence.

If you've been following the rare-earth mania, you'll want to know about Critical Metals -- a company inching closer to mining one of the largest rare-earth deposits in the world and already securing contracts with buyers.

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How rare-earth stocks found a massive tailwind

Rare-earth elements are an essential input for components like batteries and magnets that have critical uses in semiconductors, electronics, home appliances, electric vehicles, wind turbines, and medical imaging. The U.S. currently depends heavily on China for rare-earth materials -- it imported 80% of those consumed in 2024, with 77% coming from China.

To secure domestic supply and cut reliance on imports from China, the U.S. government is aggressively buying stakes in critical minerals mining companies under President Donald Trump's leadership. Examples include a 15% stake in the largest rare-earth producer in the U.S., MP Materials. That has sent rare-earth stocks surging as investors expect a similar government move in other rare-earth miners, including Critical Metals.

Critical Metals is a must-watch rare-earth stock

Critical Metals currently owns a 42% stake in Tanbreez in Greenland, one of the largest rare-earth projects in the world with a resource base of 45 million metric tons. Notably, the company recently entered into an agreement to increase its stake in Tanbreez to 92.5% by issuing 14.5 million shares to Rimbal, subject to the approval of the government of Greenland.

Just days ago, Critical Metals also secured key environmental approvals for Tanbreez, paving the way for the company to start mining. To develop the mine, Critical Metals also secured a $50 million financing deal with an institutional investor in October against the issue of 1.47 million shares and prefunded warrants.

Demand for rare-earth materials is so strong that prospective buyers are already lining up, even though Critical Metals hasn't yet begun production. In October, the company signed a letter of intent for a multiyear offtake agreement to supply up to 15% of Tanbreez's projected production to REalloys, a processor of rare-earth materials.

Shares of Critical Metals have plunged more than 50% since Oct. 15, mainly because of a widespread industry sell-off on profit booking. However, recent developments such as environmental approvals and a growing stake in Tanbreez makes Critical Metals a must-watch rare-earth stock.

Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool recommends MP Materials. The Motley Fool has a disclosure policy.