Up 65% Last Week, What’s Driving Critical Metals Stock Higher?

Critical Metals stock (NASDAQ: CRML) has surged nearly 65% over the past five trading days, driven by reports of potential U.S. government involvement and some major funding developments. The company is a mining exploration and development player focused on sourcing lithium and rare earth elements which are essential materials used in electric vehicles, consumer electronics, and renewable energy systems. Its two flagship assets are the Tanbreez rare earth deposit in Greenland, one of the world’s largest, and the Wolfsberg lithium project in Austria, which is the first fully permitted lithium mine in Europe. Here’s a closer look at what’s driving the stock higher.

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What’s Driving The Rally?

The rally followed reports that the Trump administration is in talks to acquire an equity stake in Critical Metals to better secure U.S. access to strategic minerals. The discussions reportedly evolved from the $50 million Defense Production Act grant application submitted by the company in June. Over the past few weeks, the administration has been exploring a conversion of that grant into a roughly 8% equity stake. Besides this, there are also reports of a potential $120 million Export-Import Bank loan to help fund Tanbreez, which requires roughly $290 million to reach production. In parallel, the company secured $35 million in private funding, and this has also likely improved sentiment around project viability.

Rare earths have become a critical geopolitical asset, as Western nations seek to reduce reliance on China, which currently controls nearly 90% of global rare earth processing. In April, after stiff U.S. tariffs on Chinese products, Beijing set up an export-control system for rare earths. By May, China’s rare earth magnet exports had fallen 74% year-over-year, with shipments to the U.S. reportedly plunging 93%.

Even after limited trade de-escalation, Western companies continue to face supply bottlenecks and regulatory delays in China. Against this backdrop, the U.S. government has become more proactive in supporting domestic and allied mineral projects, taking stakes in firms such as Lithium Americas and MP Materials. For Critical Metals, U.S. backing could prove transformative, as government involvement not only improves access to funding but also reduces project risk and enhances credibility with institutional investors.

What Are The Risks?

For the fiscal year ending June 30, 2025, the company reported $560,620 in revenue, up 326% year-over-year, though it remains pre-revenue from mining operations and continues to post net losses. With a market capitalization of roughly $1 billion, Critical Metals trades like a speculative small-cap growth stock, where sentiment and policy will drive sharp swings. Despite the strong recent narrative, execution, financing, and geopolitical risks remain significant.

The company has no current production, and is executing key projects in remote and climatically challenging regions, and depends heavily on government and investor funding to advance its projects. Any delay, policy shift, or breakdown in negotiations with the  government could quickly reverse recent gains. Investors should also be mindful of the stock’s low liquidity and volatility, which can amplify price movements.

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