US rare earths stocks

The US is striving to secure stable domestic supply of REEs outside China, a matter that has become even more pressing in 2025 due to the escalation of the US-China trade war and China’s new rare earth mineral export restrictions.

The nation has vast rare earths reserves and is the second largest global REE producer thanks to its sole operating rare earth mine, Mountain Pass. However, it currently lacks sufficient processing facilities.

American rare earths companies are working to address this imbalance, presenting investment opportunities for those looking to capitalize on the market’s growth potential. Learn more about MP Materials, Energy Fuels and NioCorp Developments, the three largest US rare earths stocks by market cap, below.

1. MP Materials (NYSE:MP)

Market cap: US$11.79 billion
Share price: US$66.60

MP Materials, the largest producer of rare earths in North America, focuses on high-purity separated neodymium and praseodymium (NdPr) oxide, heavy rare earths concentrate, lanthanum and cerium oxides and carbonates.

The company went public in mid-2020 after acquiring the Mountain Pass mine in California, the only operational US-based rare earths mine and processing facility. In Q3 2023, MP Materials began producing separated NdPr, marking a significant milestone.

In April 2024, MP Materials was awarded US$58.5 million under the Section 48C tax credit to build the US’s first fully integrated rare earth magnet plant.

Located in Fort Worth, Texas, the facility began making NdFeB magnets in January, with first deliveries due by year-end. MP Materials sources feedstock from its Mountain Pass mine, creating a fully integrated, closed-loop supply chain with integrated recycling.

In its Q2 2025 results, MP Materials reported an 84 percent year-over-year increase in revenue, which totaled US$57.4 million in Q2. Additionally, the company achieved record NdPr output of 597 metric tons (MT), while its rare earth oxide (REO) production reached 13,145 MT, marking its second-highest quarterly production ever and a 45 percent increase from last year.

In early July, MP penned a deal with the US DoD in which the government would purchase US$400 million worth of preferred stock in the company, making the DoD the company’s largest shareholder.

The funds are earmarked for the expansion of its processing capabilities at Mountain Pass and the construction of a second magnet manufacturing facility in the US.

MP also signed a US$500 million deal with Apple (NASDAQ:AAPL) to produce rare earth magnets in the US using only recycled materials. Starting in 2027, MP will supply magnets for hundreds of millions of Apple devices, including iPhones, iPads and MacBooks.

2. Energy Fuels (NYSEAMERICAN:UUUU,TSX:EFR)

Market cap: US$1.97 billion
Share price: US$8.53

Energy Fuels is a leading US uranium and rare earths company that operates key uranium production centers, including the White Mesa mill in Utah and the Nichols Ranch and Alta Mesa projects in Wyoming and Texas.

The company finished construction of Phase 1 REE separation infrastructure at White Mesa in early 2024, and in June reported successful commercial production of separated NdPr that meets the specifications required for REE-based alloy manufacturing. The Phase 1 REE separation circuit is now operating at full capacity.

Following its 2023 acquisition of the Bahia heavy mineral sands project in Brazil, Energy Fuels made multiple deals in 2024 with the aim of acquiring feedstock for White Mesa.

In early June of last year, Energy Fuels executed a joint venture that gives it the option to earn a 49 percent stake in Astron’s (ASX:ATR) Donald rare earths and mineral sands project in Victoria, Australia. Donald is expected to begin production as early as 2026, and will supply the White Mesa mill with 7,000 to 8,000 MT of monazite sand in rare earths concentrate annually in Phase 1.

In October 2024, Energy Fuels acquired Australian mineral sands company Base Resources, which owns the Toliara project in Madagascar.

As for 2025, in mid-March Energy Fuels inked a memorandum of understanding with South Korea-based POSCO Holdings (NYSE:PKX,KRX:005490) for the potential creation of a non-China REE supply chain for EVs and hybrid EV drivetrains for US, EU, Japanese and South Korean auto markets.

In June 2025, the Government of Victoria approved the work plan for the construction and operation of the Donald rare earth and mineral sand project. The site can now move into construction.

A month later, Energy Fuels achieved pilot-scale production of heavy rare earth oxides at its White Mesa mill and aims for commercial output by late 2026. Additionally, the company noted that it could source feedstock from the Donald project by the end of 2027.

In late August, Energy Fuels successfully produced its first kilogram of 99.9 percent pure dysprosium oxide at pilot scale from White Mesa. Using monazite sourced from Florida and Georgia, Energy Fuels now plans to produce 2 kilograms weekly.

“Multiple magnet manufacturers and OEMs have already expressed their strong interest in obtaining these samples to accelerate their validation processes,” the company said.

3. NioCorp Developments (NASDAQ:NB)

Market cap: US$291.32 million
Share price: US$4.01

NioCorp Developments is advancing its Elk Creek project in Nebraska, which features North America’s highest-grade niobium deposit under development, with significant scandium production capacity. The Elk Creek project is fully permitted for construction.

NioCorp is working to secure financing to move the project forward, and the US Export-Import Bank advanced its application for financing to its next stage of due diligence in February.

An updated 2022 feasibility study highlights an extended mine life, improved ore grades and enhanced economics for niobium, scandium and titanium.

In April 2024, NioCorp began exploring integrating permanent rare earth magnet recycling at its Elk Creek project to produce separated rare earth oxides which could then be used to produce new NdFeB magnets. It completed initial bench-scale tests in October.

2025 has been busy for NioCorp. It completed a US$45 million public offering in July, which, combined with an additional US$15 million, will be used to accelerate pre-construction activities at Elk Creek.

NioCorp also secured up to US$10 million from the US DoD under the Defense Production Act’s Title III program. The funding, tied to milestone achievements, is aimed at establishing the country’s first domestic scandium mine-to-manufacture supply chain.

The award is expected to bolster NioCorp’s efforts to secure up to US$800 million in debt financing from the US Export-Import Bank.

In an effort to bolster its Nebraska land position, NioCorp acquired three key land parcels associated with the Elk Creek project in early August. The adjacent parcels will house production operations and infrastructure.

NioCorp is currently awaiting the results from the Phase I drilling campaign completed in mid-August. The program aims to convert portions of the resource from the indicated and probable categories to measured and proven.

Canadian rare earths stocks

As part of Canada’s Critical Minerals Strategy, the government has allocated C$3.8 billion in federal funding for opportunities across the critical minerals value chain, from exploration to recycling.

REEs are among the minerals listed as critical.

Additionally, the government has designated C$7.5 million to support the establishment of a rare earths processing facility in Saskatoon, Saskatchewan. In mid-September 2024, the Saskatchewan Research Council (SRC) announced that the facility reached commercial-scale production, making it the first in North America to achieve this milestone.

The SRC plans to produce 400 MT annually once it is fully operational.

Learn about Aclara Resources, Mkango Resources and Ucore Rare Metals, the three largest Canada-listed rare earth stocks by market cap, below.

1. Aclara Resources (TSX:ARA)

Market cap: C$321.18 million
Share price: C$1.46

Aclara Resources is advancing its Penco Module project in Chile, characterized by ionic clays abundant in heavy rare earths, and its Carina Module project in Brazil.

Its objective at the Penco Module is to generate rare earths concentrate via an environmentally friendly extraction process. This approach aims to eliminate the need for a tailings facility, minimize water use and ensure the absence of radioactivity in the final product.

Aclara successfully concluded a semi-industrial pilot plant program for Penco Module in 2023, yielding 107 kilograms of wet high-purity heavy rare earths concentrate from 120 MT of ionic clays. Aclara and Vacuumschmelze penned a memorandum of understanding in early July 2024 to jointly pursue a ‘mine-to-magnets’ solution for ESG-compliant permanent magnets.

The company submitted a new environmental impact assessment (EIA) for the project in June 2024, and it moved to the next stage in August.

In May 2025, Aclara received the second round of technical observations (Second ICSARA) from the Environmental Service Assessment Authority, including 205 questions regarding technical aspects of the EIA. The company plans to submit its response during Q3 2025.

Aclara is also advancing its Carina Module project in Brazil, which it discovered in 2023. In December of that year, Aclara disclosed an initial inferred resource for the project, saying it encompasses approximately 168 million MT grading 1,510 parts per million TREO and 477 parts per million desorbable rare earth oxides.

In August 2024, Aclara released an updated preliminary economic assessment for Carina Module featuring initial capital costs of US$593 million and sustaining capital costs of US$86 million. Later in the month, the company signed a memorandum of understanding (MoU) with the State of Goiás and Nova Roma to expedite the Carina Module project.

In late May 2025, Aclara submitted its EIA for the Carina Module, and anticipates its approval during Q4 2025. The company also reiterated its expectations to produce an average of 191 MT of dysprosium and terbium annually. As well as yearly output targets of 1,350 MT of neodymium and praseodymium.

On the innovation side, Aclara is deepening its tech-driven approach to rare earths through a long-term letter of intent (LOI) with Stanford’s Mineral-X initiative to leverage AI, data science and decision modeling to build a more resilient heavy rare earth supply chain.

Meanwhile, an MoU with Virginia Tech covers operation of Aclara’s pilot plant showcasing its solvent-extraction technology for producing high-purity rare earth elements.

2. Mkango Resources (TSXV:MKA)

Market cap: C$262.87 million
Share price: C$0.79

Mkango Resources is advancing as a producer of recycled rare earth magnets, alloys, and oxides, through its 79.4 percent stake in Maginito with partner CoTec Holdings (TSXV:CTH,OTCQB:CTHCF).

Mkango’s assets include Malawi’s Songwe Hill project, targeting neodymium, praseodymium, dysprosium, and terbium, and the Pulawy rare earths separation project in Poland, alongside a broader exploration portfolio in Malawi.

In July 2024, Mkango and the Malawian government signed a mining development agreement for the Songwe rare earths project, granting Malawi a 10 percent stake and customs and excise exemptions. Through Maginito, Mkango also owns HyProMag, which licenses the Hydrogen Processing of Magnet Scrap (HPMS) process to recycle rare earth magnets from scrap.

A pilot plant using a long-loop recycling process underpinned by the HPMS process was commissioned in July 2024. Additionally, Maginito is expanding HyProMag’s recycling technology to the US through the joint venture HyProMag USA, with a positive feasibility study completed in November 2024.

While the feasibility study was based on two HPMS vessels, HyProMag announced in March 2025 that conceptual studies are underway to expand the capacity to three vessels and the addition of ‘long-loop chemical processing’ to complement the HPMS short-loop recycling process.

In an August 2024 update for investors, Mkango reported that HyProMag will receive 350,125 euros to develop its eco-friendly NeoLeach technology, which will further upgrade metals recovered with HPMS. The funding, part of the 8 million euro GREENE project, aims to improve the resource efficiency and performance of rare earth permanent magnets.

Mkango completed a C$4.11 million private placement in early February 2025 to help fund the advancement of its rare earth magnet recycling projects in the UK and Germany. The next month, the company provided an update on the construction of its UK magnet recycling and manufacturing facility, which is on track to begin initial commercial production by the end of Q2 2025.

In late March, the European Commission designated Mkango’s Pulawy project in Poland as a strategic project under the Critical Raw Materials Act.

In June, HyProMag USA received a “Make More in America” LOI from the US Export-Import Bank. The letter signals potential financing of up to US$92 million for the company’s first integrated rare earth recycling and magnet manufacturing facility in Dallas-Fort Worth, with a 10 year repayment term.

Later in the month, Mkango updated on its advanced pilot program and the scale-up of HPMS technology, aiming to produce domestically sourced, short-loop recycled rare earth magnets with a minimal carbon footprint in the UK and Germany in 2025, and the US in 2027. The company commenced initial production runs on its commercial-scale HPMS vessel at Tyseley Energy Park in Birmingham in early July.

On July 3, Mkango signed a definitive merger deal with Crown PropTech Acquisitions that would see several of Mkango’s subsidiaries, including Lancaster Exploration, combine with Crown to form Mkango Rare Earths. The combined company will be a vertically integrated rare earth firm that owns the Songwe Hill and Pulawy projects, and its shares are expected to trade on Nasdaq.

In the US, Intelligent Lifecycle Solutions started stockpiling feedstock under its supply and pre-processing agreement with HyProMag USA in late August. Pre-processing is slated to start before year-end 2025 at ILS facilities in South Carolina and Nevada.

3. Ucore Rare Metals (TSXV:UCU)

Market cap: C$231.44 million
Share price: C$2.60

Ucore Rare Metals is focused on the exploration and separation of rare earth elements in Canada and the US.

The company owns the Bokan-Dotson Ridge rare earth project in Alaska and is developing a strategic metals complex for processing heavy and light rare earth elements in Louisiana, US. Ucore acquired an 80,800 square foot brownfields facility in Alexandria, Louisiana, for developing its first commercial REE processing facility in January 2024.

In Canada, Ucore’s Ontario-based RapidSX demonstration plant, operated by Kingston Process Metallurgy, was commissioned to evaluate the techno-economic advantages, scalability and commercial viability of the RapidSX technology platform for separating and producing REEs like praseodymium, neodymium, terbium and dysprosium. This initiative was supported by a US$4 million award from the US DoD granted to Ucore’s subsidiary, Innovation Metals.

Last year, Ucore entered and advanced partnerships with several companies. In April, Ucore tested mixed rare earths carbonate from Defense Metals’ (TSXV:DEFN,OTCQB:DFMTF) Wicheeda project and confirmed it was suitable for commercial-scale processing at Ucore’s planned facilities. A few months later, Ucore executed a non-binding MoU with Cyclic Materials to qualify Cyclic’s recycled rare earth oxide product in Ucore’s process.

In August 2024, Ucore and Meteoric Resources (ASX:MEI) signed an MoU for Meteoric to supply 3,000 MT of TREO from its Caldeira project in Brazil to Ucore’s Louisiana strategic metals complex, and Ucore established a similar deal with Australia’s ABx Group (ASX:ABX) in early September under which ABx would supply Ucore with mixed rare earth carbonates from its Deep Leads ionic adsorption clay rare earths resource in Northern Tasmania.

At the start of 2025, Ucore was awarded C$500,000 via its partnership with Ontario’s Critical Minerals Innovation Fund to help finance the advancement of the company’s Canadian RapidSX commercial demonstration facility.

As for its Louisiana facility, the company received an US$18.4 million investment from the US DoD in May, its largest funding commitment to date. The funding will support construction of Ucore’s first commercial-scale RapidSX refining machine in Louisiana.

In late August, Ucore entered a non-binding LOI with Critical Metals (NASDAQ:CRML) for a 10 year offtake of heavy rare earth feedstock from Critical’s Tanbreez project in Greenland that will supply its Louisiana facility, with smaller volumes first processed at its demo facility in Ontario.

Australian rare earths stocks

Australia ranks among the globe’s top rare earths producers and possesses the fourth largest rare earths reserves. The nation is notable for hosting the largest supplier of rare earths outside of China.

Learn more about Lynas Rare Earths, Iluka Resources and Arafura Resources, the three largest ASX-listed rare earths stocks focused stocks by market cap.

1. Lynas Rare Earths (ASX:LYC)

Market cap: AU$13.08 billion
Share price: AU$14.61

Well-known ASX-listed rare earths stock Lynas Rare Earths is the leading separated rare earths producer outside of China, with operations in Australia and Malaysia.

In Western Australia, Lynas operates the Mount Weld mine and concentrator and is ramping up processing at its Kalgoorlie rare earths processing facility.

Lynas secured AU$20 million from Australia’s Modern Manufacturing Initiative in mid-2023 to advance its apatite leach circuit at the Kalgoorlie plant. By December, the facility hit its first production milestone, marking the shift from commissioning to full-scale operations. Lynas’ new large-scale downstream Kalgoorlie rare earths processing facility came online in November 2024.

In August 2024, the firm reported a 92 percent increase in mineral resources and a 63 percent rise in ore reserves at Mount Weld. Resources grew to 106.6 million MT at 4.12 percent TREO, while reserves increased to 32 million MT at 6.44 percent TREO, including added tailings. The updated estimates boost contained heavy rare earths and support a mine life exceeding 20 years at higher production rates.

Lynas also processes mined material at its separation facility in Malaysia. After commissioning the new heavy rare earth separation circuit earlier in the year, the site achieved first production of dysprosium oxide in May 2025.

Later in the month, Lynas penned a non-binding memorandum of understanding with Menteri Besar, the Kelantan state investment arm in Malaysia, to supply mixed rare earth carbonate (MREC). Subsequently, the Malaysian facility reported the first production of terbium oxide.

According to Lynas, the Malaysian milestones mark the first commercial production of separated dysprosium and terbium oxides outside China in decades.

During its June fiscal quarter, the company also signed an MoU with Korea’s JS Link to develop a magnet plant in Malaysia and advanced key expansion projects at Mt Weld and Kalgoorlie.

On August 27, Lynas released its 2025 annual results and its new long-term strategy named Towards 2030. The company produced 10,462 metric tons of rare earth oxides, including 6,558 metric tons of NdPr, in its fiscal 2025.

While it had previously been working with the US DoD to establish a rare earth processing facility in Texas, Lynas shared that it is now uncertain if the facility will be built, in part due to permitting issues with the site. It is negotiating an offtake with the DoD for production from its current operations instead.

2. Iluka Resources (ASX:ILU)

Market cap: AU$2.71 billion
Share price: AU$6.34

Iluka Resources is advancing its Eneabba rare earths refinery in Western Australia with backing from the Australian government, which aims to bolster the country’s footprint in the global rare earths market. The company also owns zircon operations in Australia, including Jacinth-Ambrosia, the world’s largest zircon mine.

Additionally, Iluka is progressing its Wimmera project in Victoria, focusing on mining and beneficiation of fine-grained heavy mineral sands in the Murray Basin. This project aims to supply zircon and rare earths over the long term. A definitive feasibility study for Wimmera is scheduled for completion by the end of 2025.

Iluka secured an AU$1.25 billion non-recourse loan for Eneabba under the AU$2 billion Critical Minerals Facility administered by Export Finance Australia, and the Australian government agreed to an additional AU$400 million in funding in December 2024.

This funding will support the development of Eneabba as Australia’s first fully integrated refinery capable of producing both light and heavy separated rare earth oxides. The facility will process material from Iluka’s own feedstocks and third-party suppliers, with commissioning expected in 2027.

In early August 2025, Iluka signed a 15 year deal with Lindian Resources (ASX:LIN) for the annual supply of 6,000 MT of rare earth concentrate from Lindian’s Kangankunde project in Malawi. The feedstock will be processed at Eneabba, accounting for about 10 percent of the refinery’s capacity.

Also in August, Iluka released its half year results, which were impacted by global economic uncertainty and a subdued mineral sands market, according to the company. The data noted a 8 percent year-over-year revenue decline to AU$558 million in the mineral sands segment.

3. Arafura Resources (ASX:ARU)

Market cap: AU$468.22 million
Share price: AU$0.19

Arafura Resources, an Australian rare earths firm, has secured government funding to advance its Nolans rare earths project in the Northern Territory. Arafura is currently working toward a final investment decision for Nolans, which is shovel ready. Nolans is envisioned as a vertically integrated operation with on-site processing facilities.

A 2022 mine report updates Nolans’ expected lifespan to 38 years, targeting an annual production capacity of 4,440 MT of NdPr concentrate. The project’s definitive feasibility study highlights significant concentrations of neodymium and praseodymium, alongside all other rare earths in varying quantities.

Arafura has inked binding offtake agreements with Hyundai Motor (KRX:005380,OTC Pink:HYMTF), Kia (KRX:000270) and Siemens Gamesa Renewable Energy. Additionally, the company has a non-binding memorandum of understanding with GE Vernova’s (NYSE:GEV) GE Renewable Energy to collaborate on establishing sustainable rare earths supply chains.

In late August 2024, Arafura signed a memorandum of understanding with Canada’s Saskatchewan Research Council to process rare earths from Arafura’s Nolans project into dysprosium and terbium oxides at SRC’s rare earths processing facility in Saskatchewan. The collaboration aims to support global supply chain diversification for energy transition technologies.

The company received a AU$200 million investment commitment from Australia’s National Reconstruction Fund in January 2025.

In March 2025, Arafura announced a binding offtake agreement with Traxys Europe through which Arafura will supply a minimum of 100 MT per year of NdPr oxide over a five-year term from the Nolans project. Arafura has the option to increase the offtake to a maximum of 300 MT per year at its discretion.

The company provided an update in its annual report released in July, noting the Nolans project has advanced to the appraisal stage for 100 million euros in funding from the 1 billion euro German Raw Materials Fund, becoming only the second project to reach this phase. The proposed financing is linked to NdPr oxide supply, supported by Arafura’s existing offtake deal with Siemens Gamesa for 520 MT annually.

As of August 2025, Arafura has secured conditional approval for over US$1 billion in debt funding for the Nolans project.

In August, Arafura received a conditional letter of interest from Export Finance Australia to bolster equity alongside existing debt funding, and completed a AU$80M a “two-tranche institutional placement” at AU$0.19 per share. It also launched a AU$5M share purchase plan at the same price.

Coal remains dominant

Although the dataset highlights the role of critical minerals in the energy transition, it also shows that coal remains the single most common mined commodity by number of facilities. Coal accounts for a whopping 42 percent of all mines, followed by gold at 17 percent, copper at 12 percent and iron ore at 9 percent.

The prevalence of coal mines contrasts with global climate goals, but also reflects the legacy infrastructure of energy systems and the uneven pace of transition. Overall, Asia hosts the largest number of coal, copper and iron ore mines, while North and Central America contain the highest number of gold mines.

Playing the long game

ICMM stresses that the release of the dataset is the first step in a multi-year effort to improve transparency and support evidence-based policymaking in the resource sector. Alongside the full dataset, which draws on proprietary sources, ICMM has published a public version covering 8,508 facilities.

Dhawan said the council hopes the data will “continue to expand and improve through partnerships,” while building on key sustainability indicators in the coming months. More crucially, industry observers have long criticized the scarcity of comprehensive, public data on the sector. Without standardized information, they argue, it is difficult to evaluate the social and environmental impacts of mining or even craft effective regulations.

ICMM believes its initiative, though still limited by licensing restrictions on some proprietary datasets, represents one of the most ambitious attempts to date to assemble a global picture of the industry. The council said it will work with partners to expand the dataset and incorporate indicators on sustainability performance.

Prince Silver (CSE:PRNC,OTC:HWTNF) is a Vancouver-based exploration company advancing the Prince Silver project in southeastern Nevada. In July 2025, the company completed the transformational acquisition of Stampede Metals Corporation and rebranded from Hawthorn Resources to Prince Silver Corp. The flagship Prince project is a district-scale, past-producing silver-gold-zinc-manganese carbonate replacement system, historically mined for silver and base metals in the early to mid-1900s.

Fully funded and technically refreshed, the company’s near-term priority is to validate and build upon the 129 historic drill holes (over 16,600 m) completed on the property, with the goal of converting the large JORC-compliant exploration target into a maiden NI 43-101 mineral resource.

A drill program is scheduled to begin in early September 2025, targeting the validation of legacy data, step-outs along mineralized trends, and continuity across the deposit’s multiple mantos, veins, and breccia zones. In parallel, the company will undertake metallurgical test work, geophysical refinement, and updated geological modeling to support a modern pit-constrained resource and underpin a longer-term development strategy.

Company Highlights

• Flagship project: 100 percent ownership of the historic Prince silver mine in Lincoln County, Nevada, an open, near-surface silver-gold-zinc carbonate replacement deposit with a 25 to 43 Mt exploration target and strong historic grades.
• The company’s second project, Stampede Gap, is about 15 km north west of the Prince mine. Stampede Gap is a large porphyry copper-gold-molybdenum with an extensive alteration zone that presents a deep seated exploration target.
• Clean corporate reset: Hawthorn Resources completed the Stampede Metals acquisition and re-listed as Prince Silver Corp. on July 11, 2025, issuing 15 million shares for the acquisition and raising ~C$4 million in gross proceeds to fund drilling.
• Fully funded summer drill program: ~6,500-m reverse-circulation set to begin early Sept 2025 to validate historic holes and step out along strike/dip to expand known mineralization and potential resources. .
• Tight share structure: 45.9 million shares outstanding post-financing; Stampede shareholders voluntarily locked-up for 12 months.
• Experienced, hands-on leadership: President Ralph Shearing, plus new directors Robert Wrixon and Darrell Rader, add mine-building, corporate and capital-markets depth to the company’s leadership team.

This Prince Silver profile is part of a paid investor education campaign.*

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Understanding the two faces of AI

While public attention often gravitates toward chatbots and image generators, many of the most impactful AI innovations are systems that optimize supply chains, detect fraud in financial transactions or accelerate drug discovery.

Enterprise AI, as these systems are often referred to, offers solutions to complex challenges that are unique to large corporations, financial institutions and government entities.

A significant portion of Canada’s AI buildout has been focused on institutional or B2B use cases, even if business adoption has been slower compared to the US. The country’s AI approach involves an organized strategy largely guided by the government, conducive to creating AI products and services designed specifically for large organizations.

Canada’s blueprint for AI adoption within federal departments is laid out in a report released earlier this year, which lists building a central AI capacity as the first of four key priority areas.

A related initiative, the Canadian Sovereign AI Compute Strategy, outlines how Canada will ensure it has the physical computing capacity to compete globally and maintain data sovereignty.

It includes a C$2 billion investment to build and provide access to domestic AI computing power and infrastructure. This initiative is a key focus for Evan Solomon, Canada’s minister of AI and digital innovation.

Cohere, a privately owned leading Canadian AI company that specializes in enterprise-focused large language models, exemplifies the country’s strength in this space.

Cohere’s B2B AI strategy takes off

Founded in 2019, Cohere has become a prime example of a successful B2B strategy. The company develops highly specialized, institutional AI solutions for industries like finance, healthcare and logistics.

Its focus on privacy and security enables it to serve large markets needing specialized and secure solutions, providing enterprise-grade large language models and tools for custom AI applications.

Underscoring its growing success, Cohere secured US$500 million in an August funding round led by Canadian funds Radical Ventures and Inovia Capital, bringing its valuation to US$6.8 billion. The company has formed working relationships with several tech industry giants, including Oracle (NYSE:ORCL) and SAP (NYSE:SAP), and has onboarded former executives from Uber Technologies (NYSE:UBER) and Meta Platforms (NASDAQ:META). Global consulting firm McKinsey also works with Cohere to help its clients integrate generative AI into their operations.

A key part of Cohere’s work is Cohere North, an enterprise-ready AI platform that Dell Technologies (NYSE:DELL) began offering to its enterprise customers this past May as part of a complete AI package.

In the financial sector, Cohere and the Royal Bank of Canada (TSX:RY,NYSE:RY) have partnered to introduce North for Banking, a secure generative AI platform designed to enhance productivity and data security specifically within the financial services sector. A January press release emphasizes the goal of speeding generative AI solutions.

This summer, Cohere teamed up with Bell Canada (TSX:BCE,NYSE:BCE) to supply specialized AI models to government and enterprise customers, with Bell providing the infrastructure layer with its AI Fabric network of data centers.

BUZZ High Performance Computing, a subsidiary of Canadian digital infrastructure company Hive Digital Technologies (TSXV:HIVE,NASDAQ:HIVE), contributes to the Cohere-Bell endeavor by providing NVIDIA (NASDAQ:NVDA) GPU clusters as the foundational hardware layer for large-scale AI workloads.

Cohere has also received backing from the Canadian government, with Ottawa signing a memorandum of understanding (MOU) with the company to integrate AI into public services on August 19.

The non-binding agreement acknowledges the company’s public sector ambitions and the government’s interest in leveraging AI for productivity and domestic sourcing.

According to Cohere co-founder and CEO Aidan Gomez, this MOU represents “the beginning, hopefully, of our technology being rolled out quite broadly within the Canadian government.”

Cohere struck a similar agreement with the UK government in June.

Government support for Canadian AI ventures

Canada’s approach to AI is built on stable, institutional-grade solutions and is championed by the administration of Prime Minister Mark Carney, offering a nuanced and attractive proposition for discerning investors.

Focusing on the B2B market provides a foundation of stability, as it offers stable, predictable revenue through multimillion-dollar, long-term contracts and full-stack solutions that ensure customer loyalty and economic resilience.

Many investments also have government support, providing a somewhat “de-risked” play for investors.

The Carney administration has made public commitments to incorporate AI into the public sector, promised to provide tax incentives for companies and said it will slash regulatory red tape on AI infrastructure projects like data centers.

The Department of Finance has already introduced draft reforms to the Scientific Research and Experimental Development program that would extend refundable tax credits to Canadian public companies.

Finally, the strategy is buoyed by a robust domestic investment landscape.

Canadian investors have historically provided strong financial backing for homegrown AI startups. Firms like BDC Capital, Real Ventures and MaRS Investment Accelerator Fund have taken the lead in terms of deal count, demonstrating a strong, homegrown commitment to fostering the Canadian AI ecosystem from its earliest stages.

Canada’s quiet AI leadership

Canada’s stealthy AI strategy is cementing its role as a quiet yet formidable force in the global AI landscape.

Companies like Cohere, bolstered by initiatives such as AXL’s initiative to launch 50 Canadian AI companies in the next five years, underscore a commitment to developing and retaining Canadian AI talent and intellectual property.

For discerning investors, this focus on stable, institutional solutions offers a significant and differentiated long-term growth story beyond the consumer AI buzz.