Shares of U.S. rare earth and critical mineral miners surged Thursday after China tightened restrictions on exports, fueling market speculation that the Trump administration will move more aggressively to invest in building out a domestic supply chain.
Ramaco Resources soared 12%, Energy Fuels surged nearly 8%, USA Rare Earth jumped more than 7% and MP Materials rallied over 6%. Lithium Americas popped more than 4% and Trilogy Metals rose over 6%.
Beijing is 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.
“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,” an administration official told CNBC.
China imposed the restrictions ahead of an expected meeting between President Xi Jinping and President Donald Trump on the sidelines of 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. Beijing dominates the global rare-earth supply chain and the U.S. is dependent on imports from China.
‘Game of chicken’
The White House and the U.S. critical mineral industry have accused China of manipulating the market to drive foreign competition out of business. 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 Defense Department struck an unprecedent deal with the largest U.S. rare earth miner MP Materials in July that included an equity stake, the first big salvo in the Trump administration’s push to back the U.S. industry against China. The White House has subsequently taken stakes in Lithium Americas and Trilogy Metals, fuelling investor speculation that more deals will follow.
“This action reinforces the need for forward-leaning U.S. industrial policy,” an MP spokesperson said of China’s export restrictions. “Building resilient supply chains is a matter of economic and national security.”
USA Rare Earth and Energy Fuels have not struck deals with the White House, but their CEOs told CNBC that they are 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 told CNBC on Oct. 2.
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 told clients in a Thursday 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,” Wang wrote.