Why This Intriguing Rare Earth Stock Slumped Over 10% This Week

Core Insights - Critical Metals is experiencing a significant drop in stock price despite securing important deals, with shares falling 10.8% at their lowest point this week [1] Company Developments - Critical Metals owns a 42% stake in Tanbreez in Greenland, one of the largest rare-earth deposits globally, with plans to increase its stake to 92.5% [3] - The company has received environmental approvals, facilitating the development of the mine [3] - A 50/50 joint venture has been established with a state-owned entity in Romania to construct a rare-earth plant for processing concentrates into magnets for aerospace and military applications [4] - Critical Metals will supply half of the rare-earth concentrate from Tanbreez to the joint venture, committing 50% of the mine's concentrate under a long-term offtake agreement [5] Market Context - The company has secured agreements for 75% of the mine's production before mining has commenced, indicating strong demand for rare earths [5] - The market capitalization of Critical Metals is $1.1 billion, with a significant trading volume of 6.7 million shares [6] - The demand for rare earths is heightened, particularly under the current U.S. administration, which prioritizes domestic supply to reduce reliance on China [6] Stock Performance - The stock of Critical Metals surged over 340% at one point this year, but profit-taking has led to a decline in share price [7][8] - Recent trade developments, including a truce between the U.S. and China and an increase in China's rare earth exports, have contributed to the stock's volatility [7]