Rare earths gain amid U.S. effort to beat China’s dominance

Shares of U.S.-listed companies in the rare earth supply chain saw a surge on Monday as investors continued to assess the implications of Chinese export restrictions on domestic producers. Rare earth minerals play a crucial role in various industries, including technology and the transition to clean energy. These minerals are utilized in semiconductors, electric vehicles, fighter jets, and more.

In a significant development, Prime Minister Donald Trump and Australian Prime Minister Anthony Albanese signed an agreement to invest in joint ventures aimed at establishing a critical mineral and rare earth supply chain that is independent of China. This move comes as the U.S. government seeks to reduce its reliance on Chinese supplies.

U.S. Treasury Secretary Scott Bessent revealed in an exclusive interview with CNBC that the Trump administration plans to set price floors for industries like rare earths to counter market manipulation by China. Consequently, shares of rare earth and critical mineral companies witnessed a rally as investors speculated on potential targets for the government’s industrial policies.

Leading the sector’s gains was NioCorp, which saw a nearly 20% increase in its stock price. Energy Fuels rose by about 7%, while USA Rare Earth surged by nearly 14%. Perpetua Resources and MP Materials also experienced gains of over 7% and 2%, respectively. Additionally, Canada’s Lithium Americas saw a nearly 3% increase in its stock value.

The Trump administration is actively working to strengthen the domestic rare earth supply chain. In July, the Defense Department entered into a deal with MP Materials, the largest rare earth miner in the U.S., which included an equity stake, a price floor, and an offtake agreement. Investors are anticipating further government support for additional miners, with William Blair initiating coverage of USA Rare Earth with an outperform rating, citing the potential for a significant government stake in the company.

Michael Silver, CEO and chairman of rare earths distributor American Elements, highlighted the importance of securing a stable supply chain for heavy rare metals, particularly for military applications. He warned that the supply chain constraints could impact the production of electric vehicles, lasers, and various commercial technologies.

Silver emphasized that establishing operational mines should be considered a national priority, with government involvement and subsidies likely to play a crucial role. Recent regulations in China now require foreign companies to obtain approval from Beijing for rare earth exports and provide details on the intended use of these minerals.

The efforts to bolster the domestic rare earth supply chain are crucial for reducing dependence on Chinese exports and ensuring a stable supply for critical industries. The developments in this sector are closely monitored by investors and industry experts as governments worldwide seek to address supply chain vulnerabilities and secure access to essential minerals.