The rare earth industry in the U.S. is rapidly gaining strategic and economic importance as the country seeks to reduce its long-standing dependence on China-controlled supply chains. To this end, rare earth elements are at the center of new federal policies, industrial investments and emerging domestic production initiatives aimed at securing a more resilient and sovereign supply of infrastructure.  

To capitalize on these trends, U.S. producers like American Resources Corporation (AREC Quick QuoteAREC - Free Report) , MP Materials Corp. (MP Quick QuoteMP - Free Report) and USA Rare Earth, Inc. (USAR Quick QuoteUSAR - Free Report) are beginning to scale extraction and processing capabilities, while government partnerships and funding are driving expanded capacity and market momentum. 

Federal Push for a Mine-to-Magnet Supply Chain

The U.S. rare earth sector is shaped by a mix of economic, strategic and geopolitical priorities, as policymakers and industry work to reduce reliance on China’s dominance in mining, processing and magnet manufacturing. Rare earths are used in electric vehicles, defense systems, renewable energy technologies, semiconductors and advanced electronics. Rare earths are classified as critical minerals in the 2025 U.S. critical minerals list, reflecting the significant economic and national security risks posed by supply disruptions, particularly for defense and advanced technologies.  

The federal government has launched major funding and policy initiatives to develop a domestic “mine-to-magnet” supply chain. These include funding to support extraction, processing and recovery from unconventional sources such as e-waste and mine tailings to improving commercial viability and reducing foreign dependence. 

Fiscal and tax incentives, such as enhanced tax credits for domestic production under the Advanced Manufacturing Production Credit, further support investment in upstream and downstream processing infrastructure. 

At the policy and diplomatic level, the U.S. is also undertaking international initiatives, such as a rare earth supply cooperation agreement with Japan to diversify sources, attract allied investment and build resilient markets beyond China’s influence. 

This confluence of government funding, regulatory incentives and strategic partnerships reflects a broader national strategy to develop a secure rare earth supply chain, reduce geopolitical risk and position U.S. industry for long-term growth in critical tech and defense sectors. 

3 Rare Earth Stocks to Watch for Upside in 2026

Price Performance of AREC,MP & USAR in Past 6 Months

Image Source: Zacks Investment Research

American Resources’ rare-earth capabilities are centered on ReElement Technologies, which is developing one of the few scalable rare earth refining and separation platforms in the United States. ReElement employs proprietary chromatographic separation and purification technology to process rare earth materials from diverse feedstocks—including recycled magnets, electronics scrap, coal waste concentrates and ore—into ultra-high-purity rare earth oxides such as neodymium, praseodymium, dysprosium and terbium, typically achieving purity levels above 99.5%–99.99%.  

American Resources is advancing its ReElement Technologies refining operations in Indiana, with facilities designed to produce thousands of metric tons per year of magnet-grade rare earths. Early phases target production in the low thousands of MT, alongside broader ambitions in lithium and battery materials, potentially driving revenue growth as capacity scales through 2026–2027. 

The Zacks Consensus Estimate for AREC’s current-year loss is pegged at 34 cents per share, indicating a 35% year-over-year increase. The Zacks Consensus Estimate for 2025 and 2026 earnings has been revised higher over the past seven days. AREC carries a Zacks Rank of #2 (Buy). The stock gained 153.6% in the past six months. You can see the complete list of today’s Zacks #1 (Strong Buy) here. 

MP Materials has one of the most advanced rare-earth platforms in the Western Hemisphere, anchored by its Mountain Pass mine and processing facility in California—the only large-scale integrated rare-earth operation in the United States. The company produces and refines key materials, particularly neodymium-praseodymium (NdPr) oxide, which is critical for permanent magnets used in EVs, wind turbines and defense applications. It is also expanding downstream into magnet manufacturing, including its Texas facility, to build a fully integrated U.S. ore-to-magnet supply chain, supported by strategic partnerships and government backing to reduce reliance on foreign sources. 

MP Materials is well-positioned for long-term growth as it expands both rare earth production and vertical integration. In the third quarter of 2025, the company produced a record 721 metric tons (MT) of NdPr oxide and is targeting an eventual 60,000 MT of annual rare earth oxide (REO) capacity, while simultaneously developing downstream magnet manufacturing. Strategic partnerships and government support are expected to enhance revenue and margins.  

The Zacks Consensus Estimate for MP’s current fiscal-year loss is 22 cents per share, implying a 50% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, with the average earnings surprise being 8.03%. MP currently carries a Zacks Rank #3 (Hold). The stock is up 47.6% in the past six months. 

USA Rare Earth is strengthening its position as a key player in building a domestic U.S. rare earth supply chain through its advancing mine-to-magnet capabilities. The company controls the Round Top deposit in Texas, one of the largest U.S. sources of heavy rare earths such as dysprosium and terbium. It has demonstrated progress in rare earth separation and oxide production using proprietary processing technologies, while simultaneously advancing downstream integration. It is developing a rare earth magnet facility in Oklahoma, where it has begun producing sintered magnets and supporting customer prototyping and R&D. 

USA Rare Earth’s long-term growth is underpinned by its vertically integrated mine-to-magnet strategy and expanding domestic capabilities. Development of the Round Top heavy rare earth project provides a long-duration U.S. source of critical elements such as dysprosium and terbium, while the Oklahoma magnet manufacturing facility positions the company to capture near- and mid-term demand from defense, EV and clean energy markets. The acquisition of Less Common Metals adds rare earth metal and alloy production, strengthening integration and margins. 

The Zacks Consensus Estimate for USAR’s current fiscal-year earnings is pegged at 71 cents per share, indicating a 6% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, with the average earnings surprise being 11.11%. The stock is up 10.5% in the past six months. USAR carries a Zacks Rank #3.