China tightens rare earths grip, stocks MP, LAC, TMQ surge
Shares of U.S. rare earth and critical mineral miners rose on Thursday after China tightened restrictions on exports, fueling market speculation that the Trump administration will move more aggressively to invest in building a domestic supply chain.
Ramaco Resources increased by 12% Energy Fuels increased by almost 8 percent USA Rare Earth increased by more than 7% and Multi-Purpose Materials It rallied over 6 percent. Lithium America rose more than 4% and Trinity Metals It increased by over 6 percent.
According to China’s Ministry of Commerce, Beijing now requires foreign entities to obtain licenses to export products containing more than 0.1% domestically sourced rare earths. Companies will also need export licenses if they use China’s extraction, refining or magnet recycling technology.
“The White House and relevant agencies are closely evaluating the impacts of the new rules, which were announced without notice and imposed in an effort to maintain control over the world’s technology supply chains,” a White House official told CNBC.
China imposed the restrictions ahead of an expected meeting between President Xi Jinping and President Donald Trump during the Asia-Pacific Economic Cooperation summit in Seoul, South Korea, later this month. Rare earths have been a major point of contention in trade talks between Beijing and Washington.
‘game of chicken’
The White House and the US critical mineral industry have accused China of manipulating the market to eliminate foreign competition. Rare earths are a subset of critical minerals that are crucial inputs for U.S. weapons platforms, robotics, electric vehicles, and electronics, among other applications.
The Trump administration bought shares in MP Materials, Lithium Americas and Trilogy Metals this year as it tries to keep the domestic supply chain afloat against China.
US Rare Earth and Energy Fuels has not made a deal with the White House, but its CEOs told CNBC they are in close contact with the Trump administration.
“It’s going to take a lot of players to build this market,” U.S. Rare Earth CEO Barbara Humpton told CNBC on Oct. 2.
Evercore ISI analyst Neo Wang told clients in a note on Thursday that China’s export restrictions “help provide a strong position for Xi to sit down with Trump.”
“Although both Beijing and Washington learned the hard way in the recent export controls exchange [April] “Stronger pain tolerance resulting from China’s political system increases the credibility of game of chicken threats,” Wang wrote.
