Is Critical Metals Stock a Buy Now?

According to research from The Motley Fool, China accounts for roughly 70% of rare-earth extraction and 90% of rare-earth processing. Given its dominant position in these key materials, the U.S. is proactively seeking alternative sources.

Earlier this year, the U.S. took a bold step toward securing critical minerals with the launch of Project Vault, a $12 billion initiative to create a strategic reserve of over 60 essential materials. One company that could benefit from this initiative is Critical Metals Corp. (NASDAQ: CRML).

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Critical Metals' Tanbreez project is rich in crucial rare-earth elements

Critical Metals is an early-stage company developing one of the world's largest rare-earth deposits and could be a key player as the U.S. and others push to secure these critical minerals. Its future success hinges on the development of the Tanbreez project in Greenland, which is rich in rare-earth and other crucial metals, including gallium, hafnium, cerium, and yttrium.

These minerals and other rare-earth elements are crucial to next-generation technologies in the defense, communications, and automotive industries. For example, gallium is essential for high-speed microchips and radar systems. Yttrium is a heavy rare-earth element critical for camera lenses, laser-guided munitions, and superconducting materials.

One major advantage of the Tanbreez project is its lower radioactivity compared to other rare-earth element deposits. The minerals at Tanbreez are hosted in eudialyte, which has low uranium and thorium content, making it easier to permit and safer to process. Not only that, but the project is strategically located in Greenland with access to direct shipping routes to North American and European refineries.

Here's what's next for Critical Metals in the next couple of years

The Tanbreez project is promising, as early drilling programs have returned exceptional grades that support it as a world-class, long-life rare-earth asset. With demand for these critical materials growing, the company's board of directors has approved a $30 million program to fast-track drilling, infrastructure, and engineering for this project. It hopes to produce its first ore in late 2028 or early 2029.

In addition, Critical Metals is building out its downstream processing business. As part of this, it signed a 50-50 joint venture term sheet to build a rare-earth processing facility in Saudi Arabia. The Saudi facility will receive 25% of the Tanbreez Project's rare-earth concentrate for the life of the mine. In return, Critical Metals will retain its 50% ownership on a carried-interest basis, meaning it won't take on debt or capital expenditure obligations to construct the facility.

An early-stage, risky mining stock

Critical Metals could be a key player in helping the U.S. and allies secure critical minerals and other rare-earth elements, giving it massive upside potential. However, at this stage, it is also highly risky as the Tanbreez project is still in the "advanced exploration stage" and does not yet have a definitive feasibility study, which is not expected until the end of 2026.

For highly aggressive investors looking to get in early on the United States' buildup of critical minerals, Critical Metals stock may be worth considering. However, most investors are better off waiting to see how things develop over the next year or two before buying this early-stage mining stock.

Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.