Shares of United States rare earths and critical mineral miners traded higher on Thursday after China tightened restrictions on exports, with Beijing now requiring foreign entities to obtain a license to export products that contain rare earths worth 0.1% or more of the goods’ value.
According to China’s Ministry of Commerce, companies will also need export licenses if they use China’s extraction, refining or magnet recycling technology.
China chose to tighten restrictions on rare earth exports 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.
While rare earths have underscored trade talk tension between Beijing and Washington for some time, the former dominates the global rare earth supply chain – leaving the U.S., along with the rest of the world, overly reliant on limited supply from China.
Underpinning that tension are White House and the U.S. critical mineral industry claims that China is deliberately manipulating its market dominance to make foreign competition economically unviable.
Rare earths are a subset of critical minerals that are necessary for U.S. weapons platforms, robotics, electric vehicles and electronics, among other applications.
What triggered the overnight rally in rare earth stocks overnight was growing market speculation that the Trump administration would respond to these new measures by moving more aggressively to invest in building out a domestic supply chain.
USA Rare Earth soared 15%, NioCorp Developments surged about 12%, Ramaco Resources rallied more than 11%, Energy Fuels advanced over 9%, and MP Materials gained more than 2%.
Meanwhile, Albemarle was up by around 5%, Trilogy Metals rose nearly 4%, and Lithium Americas advanced 2%.
“The White House and relevant agencies are closely assessing any impact from the new rules, which were announced without any notice and imposed in an apparent effort to exert control over the entire world’s technology supply chains,” according to administration officials.
The Trump administration proved it was serious about backing the U.S. industry against China when the Defence Department struck a watershed deal - including an equity stake - in largest U.S. rare earth miner MP Materials in July.
More recent moves by the White House to take stakes in Lithium Americas and Trilogy Metals, has only fuelled investor speculation that more deals will follow.
“This action reinforces the need for forward-leaning U.S. industrial policy,” a MP spokesperson said of China’s export restrictions.
“Building resilient supply chains is a matter of economic and national security.”
While USA Rare Earth and Energy Fuels have not struck deals with the White House, their CEOs are understood to be in close contact with the Trump administration.
“It’s going to take a lot of players to build out this marketplace,” USA Rare Earth CEO Barbara Humpton recently noted.
China’s export restrictions “help to ensure a strong position for Xi to sit down with Trump” on the sidelines of the summit in South Korea, Evercore ISI analyst Neo Wang said in a recent client note.
“Although both Beijing and Washington learnt the lesson the hard way in their last exchange of export controls back in [April] and May, China’s stronger pain endurance rooted in its political system adds to the credibility of its threats in a game of chicken.”
