London, 30 July 2026 — EBM Newsdesk Analysis — By Katie Winearls
Hedge funds are increasing their bets against some of the largest beneficiaries of Washington’s critical-minerals strategy, exposing a widening divide between what the United States considers strategically essential and what investors consider commercially viable.
Short positions have risen against United States Antimony Corporation, American Resources Corporation and MP Materials, according to securities-lending data from S&P Global Market Intelligence. Bets against USA Rare Earth have also increased.The trade is not necessarily a wager that America does not need antimony, rare earths or permanent magnets. It is a wager that national importance does not automatically justify any valuation attached to the companies promising to supply them.That distinction matters.
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SubscribeWashington’s money drove the rally
Critical-minerals shares surged last year as the Trump administration invested billions of dollars through equity stakes, loans, procurement contracts and guaranteed prices.MP Materials, America’s largest rare-earths producer, more than tripled in value during 2025 after the government acquired an equity position and guaranteed minimum prices for some of its output.United States Antimony nearly tripled after securing a Pentagon contract worth up to $245mn and subsequently receiving a $27mn investment from emergency funding allocated for Ukraine.
Washington has gone further through Project Vault, its $12bn strategic-minerals stockpile, designed to protect American manufacturers from shortages and Chinese price manipulation.
The intervention has a clear strategic logic. Antimony is used in ammunition and missile systems, while rare-earth magnets are essential to fighter aircraft, electric vehicles, wind turbines and advanced electronics.
But government support also created a momentum trade. Almost $200mn in retail money flowed into United States Antimony and USA Rare Earth during 2025, having attracted negligible retail investment in previous years.
The shorts are testing the economics
Shares on loan in United States Antimony—a widely used proxy for short selling—have risen from 23 per cent to 42 per cent of its market value this year.
Short positions in American Resources have increased from 9 per cent at the end of 2025 to 23 per cent. The company recorded no revenue last year, although its former subsidiary ReElement Technologies recently secured $25mn from the Department of Defense.
MP Materials has also attracted greater short interest. However, a person close to the company said much of that activity relates to arbitrage involving $862mn of convertible bonds rather than outright bearish bets against its operations.
That qualification is important. Not every short position represents a simple prediction that a company’s shares will collapse.
Even so, the central investor concern is legitimate: Washington can subsidise construction, guarantee purchases and protect minimum prices, but it cannot instantly recreate the industrial ecosystem China spent decades building.
China controls more than 80 per cent of global critical-mineral refining capacity in several important categories. New mines and processing plants can take a decade or longer to permit, finance and construct. The US industry is already struggling to meet a January 2027 deadline for ending federal purchases of certain Chinese minerals and components.
China still controls the price
Beijing’s greatest advantage is not simply the minerals beneath Chinese territory. It is control over processing.
China can restrict exports when it wants to apply geopolitical pressure. It can also release additional supply when Western competitors begin to look commercially attractive, depressing prices and weakening the economics of new projects.
That vulnerability sits at the centre of Europe’s own critical-minerals scramble. The US may be spending more aggressively, but neither Washington nor Brussels has yet solved the financing gap between approving a strategic project and producing minerals at globally competitive prices.
The Trump administration has proposed price floors, subsidies and a Western minerals trading bloc. G7 governments and mining companies remain divided over whether direct price intervention would create resilient production or merely sustain uneconomic suppliers.
The Upshot
My view is that Washington is right about the strategic danger and investors are right to question the market response.
The United States cannot operate a modern defence industry while depending on its principal geopolitical rival for the materials inside missiles, radar systems and military aircraft. Government intervention is therefore unavoidable.
But strategic necessity does not mean every company carrying the words “critical minerals” deserves a soaring valuation. Some have limited revenue, unproven technology or production schedules extending years into the future.
The real winners will not simply be the businesses securing the largest government announcements. They will be those capable of moving from subsidy to production before political priorities change or China forces prices lower.
The hedge funds are betting that the market has confused national security policy with guaranteed corporate success.
They may be right.
