Strategic and critical minerals: What they are and how to invest in them

In July 2025, a U.S. mining company made headlines with two major investments that underscore the increasing importance of strategic and critical minerals and metals on the world stage.

That month, MP Materials (MP) announced a multibillion-dollar deal making the U.S. Department of Defense its largest shareholder, aiming to accelerate U.S. production of rare earth magnets and reduce foreign import dependency for rare earth elements. Days later, the company signed a $500 million deal to supply Apple (AAPL) with recycled rare earth magnets.

In October 2025, China imposed new restrictions on rare earth exports and tightened rules on overseas mining activity by its citizens, adding pressure to global supply chains for materials vital to defense, energy, and technology production. The move—and the Trump administration’s tariff response—highlighted how critical and strategic minerals have become central to global trade, national security, and economic policy.

Taken together, these developments reflect a shifting global market—one where access to rare earths and other critical minerals has become a key measure of economic and strategic power. The U.S. and its allies are working to rebuild supply chains and secure reliable sources of these materials after years of Chinese dominance and various disruptions—from the COVID-19 pandemic to geopolitical conflict in Ukraine and the Middle East.

What are strategic and critical minerals?

There isn’t a universal definition for these terms, and perspectives have been changing as interest in the transition away from fossil fuels has accelerated. Government agencies sometimes blur the lines, lumping critical and strategic minerals into the same category, or even referring to atomic elements as minerals. Technically, a mineral is a compound of different elements bonded together—monzonite, for example, contains rare earth elements, while spodumene contains lithium.

In general, the definitions have to do with the intersection of scarcity and importance, at least from the perspective of the country trying to obtain these minerals.

The U.S. Geological Survey defines critical minerals as those that are essential to economic and national security, that have vulnerable supply chains, and serve an essential function in manufacturing. The European Commission uses a similar benchmark, identifying raw materials as both of high economic importance and at a high risk of supply disruption.

Strategic materials typically place a sharper focus on defense. The Colorado Geological Survey, for example, distinguishes them from critical minerals on the basis of wartime supply risk. The industry tends to classify strategic metals as inputs to defense and heavy industry, and critical metals as those where domestic supply is limited.

More recently, policy groups have widened the definition of “critical” to include resources needed for the energy transition away from fossil fuels. By that measure, the list extends well beyond rare earths. For example, lithium and copper are key to electric vehicles and grid-scale battery storage.

Strategic and critical minerals: Sources and supply chains

However you define the terms, both strategic and critical minerals and metals are important to the economy and national security. They are mined in many jurisdictions around the world, leaving the U.S., Europe, and Japan dependent on imports and thus exposed to supply chain disruptions.

China dominates both production and refining of rare earths, lithium, and cobalt. Its advantage stems partly from abundant natural deposits, but also from lower labor costs and looser environmental regulations that enabled it to build refining capacity as other countries stepped back.

Western countries are now pushing to source more critical metals domestically or from trusted trading partners (“trustshoring”). The concerns are not new—China restricted rare earth exports to Japan in 2010 during a territorial dispute—but they have intensified as minerals have become part of broader U.S.–China trade negotiations. Russia’s 2022 invasion of Ukraine added to worries over energy and defense supply chains, while reconstruction deals have given the U.S. preferential access to Ukrainian lithium and other minerals.

Political stability is also a consideration. For example, tin, tantalum, and tungsten mining in the Democratic Republic of the Congo has been linked to armed conflict.

How to invest in critical minerals

One way to gain exposure is through the futures market. Well-developed and liquid futures markets exist for aluminum, nickel, zinc, platinum, and palladium, which the U.S. Geological Survey considers critical minerals. The U.S. Department of Energy includes copper as critical to the energy transition, and the red metal is among the most popular commodity futures contracts. In 2025, the Intercontinental Exchange (ICE) launched futures contracts for lithium and cobalt.

For many investors, however, futures trading is too complex and risky, and requires a special margin account. Many instead choose stocks of producers, such as MP Materials (MP) or Lynas Rare Earths (LYSDY) for rare earths, Freeport-McMoRan (FCX) for copper, and Albemarle Corp. (ALB) for lithium.

Exchange-traded funds (ETFs) that combine many mining companies under a single ticker symbol are also popular. These include the VanEck Rare Earth and Strategic Metals ETF (REMX), Sprott Critical Materials ETF (SETM), and Global X Lithium & Battery Tech ETF (LIT). If you want to combine the direct exposure of futures markets with the simplicity of ETFs, you might consider commodity funds such as the United States Copper Index Fund (CPER) and the Invesco DB Base Metals Fund (DBB).

Experts often suggest limiting commodity investments to around 5% of your portfolio. They can hedge against inflation and offer strong returns during boom times. But commodities are tied to economic cycles, which means there can also be pronounced price slumps. With strategic and critical minerals, performance varies by material; some may prosper while others lag. Holding a mix, whether through stocks, futures, or ETFs, can provide diversification while tapping into longer-term themes such as the energy transition and efforts to rebuild supply chains outside China.

The bottom line

Strategic and critical minerals sit at the crossroads of national security, technology, and the clean energy shift. For investors, they are less about chasing short-term commodity spikes and more about measured exposure to long-term structural change.

Specific companies and funds are mentioned in this article for educational purposes only and not as an endorsement.

References

• [PDF] Critical Mineral Resources: National Policy and Critical Minerals List | congress.gov
• RMIS – Raw Materials Information System | rmis.jrc.ec.europa.eu
• What Are Critical Minerals? | usgs.gov