Hedge funds increase shorts on US critical minerals firms amid China supply concerns

Hedge funds have boosted bearish positions in several US critical‑minerals companies, including US Antimony Corporation, American Resources Corporation, MP Materials and USA Rare Earth. Data from S&P Global Market Intelligence show short interest in US Antimony rising from 23% to 42% of market capitalisation this year, while American Resources’ short‑interest jumped from about 9% to 23%.

Investors argue that generous government backing—equity investments, loans, defence contracts and other funding—may not be enough to offset China’s long‑standing dominance of global supply chains for rare earths and other strategic minerals. The sector’s share‑price rally, driven by political momentum, is seen by some as outpacing underlying business fundamentals, prompting the surge in short‑selling activity.

The trend underscores skepticism that recent US government support can quickly establish a competitive domestic supply chain given the high capital costs and long timelines needed to develop new mines and processing facilities.