The geopolitical hedge investors overlook: Rare earths

WHEN China restricted exports of gallium and germanium in 2023, markets were reminded that supply chains can be disrupted. These metals may not be household names, but they are critical to semiconductors, defence systems and renewable energy, which is why the restrictions drew immediate market attention.

This has prompted investors to turn once again to supply chain resilience as a portfolio concern. Rare earth elements sit in the same category as gallium and germanium. Embedded in electric vehicles, advanced weaponry and clean energy infrastructure, rare earth elements represent one of the few asset themes where geopolitics directly drives market outcomes.

That reality was underscored this July, when the United States backed MP Materials, its only active rare earth miner, with a multibillion-dollar package including equity, loans and a 10-year price floor on neodymium and praseodymium. The deal, discussed in detail in Winston Ma’s recent analysis of a potential US sovereign wealth fund, shows how policy is moving from rhetoric to concrete capital commitments.