China Tightens Grip on Global Supplies, Boosting Rare Earth Stocks
The recent tightening of China’s grip on global supplies of rare earth elements has prompted a sharp increase in stock prices for U.S. rare earth and critical mineral mining companies. This surge occurred following China’s new export restrictions, which has raised speculation about the potential for increased investment in a domestic supply chain by the U.S. government.
Market Reactions to China’s Export Restrictions
On Thursday, several mining stocks saw significant gains:
- USA Rare Earth: up 15%
- NioCorp Developments: up about 12%
- Ramaco Resources: up more than 11%
- Energy Fuels: up over 9%
- MP Materials: up more than 2%
- Albemarle: up about 5%
- Trilogy Metals: up nearly 4%
- Lithium Americas: up about 2%
China’s New Licensing Requirements
According to China’s Ministry of Commerce, foreign entities must now obtain licenses to export products containing rare earths valued at 0.1% or more of the goods’ overall worth. Additionally, companies utilizing China’s extraction, refining, or magnet recycling technology must also secure export licenses.
An official from the U.S. administration stated that the White House and relevant agencies are closely monitoring the economic impact of these sudden changes. The restrictions were implemented ahead of a scheduled meeting between President Xi Jinping and President Donald Trump during the Asia-Pacific Economic Cooperation summit in Seoul, South Korea.
U.S. Dependency on Rare Earths
Rare earth elements are crucial to various technologies, including military hardware, robotics, electric vehicles, and consumer electronics. The U.S. heavily relies on imports from China, making the situation especially critical amidst ongoing trade tensions.
U.S. Industry Response
The Trump administration has been proactive in backing domestic rare earth production. An unprecedented deal was made with MP Materials in July, marking a significant government investment in the U.S. mining sector. The White House has also engaged with Lithium Americas and Trilogy Metals.
Despite not having formal agreements with the administration, USA Rare Earth and Energy Fuels are in regular communication with government officials. Barbara Humpton, CEO of USA Rare Earth, noted that collaboration among various stakeholders will be essential to develop a sustainable marketplace.
The Game of Chicken
Analysts describe the escalating tension surrounding rare earths as a “game of chicken.” The U.S. critical minerals industry believes that China is attempting to manipulate the market to outmaneuver foreign rivals. Evercore ISI analysts suggest that China’s renewed restrictions strengthen its position ahead of diplomatic discussions with the U.S.
These developments underscore the urgency for the U.S. to build resilient supply chains, which is increasingly seen as vital for both economic stability and national security.
