Policy Shift Sparks Renewed Interest in Rare Earths Stocks

Challenges in traditional supply chains

China’s dominance in the rare earths supply chain — from mining to processing to final manufacturing — presents a critical vulnerability for the US, especially in sectors like defense, robotics and artificial intelligence.

NdFeB (neodymium-iron-boron) magnets, essential for everything from drones and EVs to missile guidance systems and fighter jets, are largely sourced or processed in China. While MP Materials mines rare earths in California, most refining still happens overseas, underscoring a lack of domestic downstream capacity. Adding to the challenge, traditional rare earths mining is environmentally damaging and slow to permit in the US.

This urgent need for supply chain independence is also driving interest in alternative approaches like recycling and domestic magnet production.

CoTec Holdings: Positioned for the next phase of rare earths independence

As the US intensifies efforts to secure critical mineral supply chains, CoTec Holdings (TSXV:CTH,OTCQB:CTHCF), with a modest market cap of approximately US$158.88 million (as of October 2025), is emerging as a key player in developing domestic rare earth magnet recycling capabilities. Through a 50/50 joint venture with Maginito, CoTec is advancing HyProMag USA, a project aimed at establishing a rare earth magnet recycling and manufacturing facility in the Dallas-Fort Worth area of Texas.

HyProMag USA will leverage the patented Hydrogen Processing of Magnetic Scrap (HPMS) technology, originally developed at the University of Birmingham. This innovative process enables the efficient recovery of NdFeB magnets from end-of-life products and offers a low-cost, environmentally sustainable alternative to mining.

HyProMag’s “short-loop” process provides a faster and less complex approach compared to conventional chemical-based methods. By using hydrogen gas, magnets within electronic scrap are caused to fracture naturally with minimal pre-processing. The demagnetized material can then be sieved into powder form, which is re-pressed and sintered into new magnets — all while bypassing many of the environmental challenges and delays associated with mining and refining.

The Texas facility is projected to produce 750 metric tons of recycled sintered NdFeB magnets annually by 2027, potentially supplying up to 10 percent of US domestic demand within five years by tripling the capacity contemplated by the feasibility study released in November 2024.

To put this in perspective, CoTec’s market cap is just a fraction of its larger peers, despite its advanced development stage and the strategic importance of its recycling model. The project’s positive November 2024 feasibility study highlights robust economics, with a net present value of US$262 million at current prices and up to US$503 million based on projected pricing scenarios.

The project has garnered support from the Minerals Security Partnership, a coalition of governments including the United States, aimed at developing secure and sustainable critical mineral supply chains.

By focusing on recycling and domestic production, CoTec Holdings is strategically positioned to contribute to the US goal of reducing reliance on foreign sources for critical materials, particularly in sectors vital to national security and technological advancement.

Weighing the risks and rewards in rare earths investing

Government backing, mounting geopolitical urgency and rapid demand growth for applications in defense, artificial intelligence, EVs and clean energy technologies all point to a strong long-term outlook for rare earths.

The US push to secure domestic rare earths supply chains is creating strong tailwinds for investors, but the sector remains nuanced. Major players like MP Materials have benefited significantly from early mover status and government support. Similarly, USA Rare Earth debuted with a valuation of US$887.5 million despite still being in pre-production stages.

By contrast, CoTec Holdings’ lower market cap offers investors a markedly different value entry point. Yet, CoTec is progressing at a faster pace than many larger peers, with a US-based rare earth magnet recycling facility already in advanced development.

This contrast reveals a significant value gap in the market. While larger rare earth equities may offer liquidity and visibility, companies like CoTec provide exposure to near-term production, strategic alignment with US policy goals and cutting-edge technology at a much lower valuation.

Of course, investors should weigh this potential against sector-wide risks. Rare earths production and processing are technically complex and capital intensive, often facing long development timelines and regulatory hurdles. Price volatility is another factor, as rare earths markets are relatively illiquid and can be impacted by sudden changes in global supply, particularly from China.

But for those seeking to participate in the reshaping of the US critical minerals landscape, companies that combine innovative models with accelerated development timelines may offer an attractive mix of upside potential and policy-driven support.

Investor takeaway

Informed investing in this space requires balancing optimism about macro-level trends with a clear-eyed view of execution challenges. As US policy continues to favor domestic rare earth development, the right players could see significant upside.

Unlike traditional miners, CoTec offers investors exposure to a low-footprint, tech-enabled model that may be better aligned with future regulatory and environmental expectations. In an era of supply chain instability, companies that can quickly deploy domestic capacity without the long timelines of mine development may have a distinct advantage.

This INNspired article is sponsored by CoTec Holdings (TSXV:CTH,OTCQB:CTHCF). This INNspired article provides information which was sourced by the Investing News Network (INN) and approved by CoTec Holdings in order to help investors learn more about the company. CoTec Holdings is a client of INN. The company’s campaign fees pay for INN to create and update this INNspired article.

This INNspired article was written according to INN editorial standards to educate investors.

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The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with CoTec Holdings and seek advice from a qualified investment advisor.