(Bloomberg) — The rally in shares of US miners of rare-earth materials got a boost Thursday after a China curb on exports of the minerals fueled bets that the American industry will benefit — and potentially spur additional investments from the federal government.
MP Materials Corp. shares soared almost 10%, USA Rare Earth Inc. jumped more than 15% and Ramaco Resources Inc. climbed 12%. All three have been rallying since early July, when the US government agreed to take a stake in MP Materials. USA Rare Earth and Ramaco have tripled since then.
The latest leg up came after China announced new curbs that will require a license for exporters of items with even traces of certain rare earths, according to a Ministry of Commerce statement Thursday. If rare earth exports from China are tightened significantly, it could led to a market squeeze since China dominates 90% of downstream rare earths and products, according to TD Cowen Analyst David Deckelbaum.
“It just furthers that thematic thesis that US rare earths and that supply chain are an attractive place to be making investments right now,” Deckelbaum said in an interview.
On Monday, the White House said the US government would take a 10% stake in Canada’s Trilogy Metals, adding to its portfolio of companies the Trump administration says are active in areas critical to national security. Rare earths are used in many high-tech weapons.
Deckelbaum sees rare earth stocks continuing to rise on increased government investment and a tightening fundamental backdrop.
“There’s still very much some anticipation that the US is not finished with making these types of investments like MP,” Deckelbaum said. “This is just a rising tide right now that’s lifting all boats.”
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