China tightens rare earths grip, stocks MP, LAC, TMQ surge

A wheel loader operator fills a truck with ore at the MP Materials rare earth mine in Mountain Pass, California, U.S. January 30, 2020.

Steve Marcus | Reuters

Shares of U.S. rare earth and critical mineral miners surged Thursday after China tightened restrictions on exports, fuelling 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 more than 6%. Lithium Americas popped more than 4% and Trilogy Metals rose more than 6%.

Beijing is now requiring foreign entities to obtain a license to export products that contain more than 0.1% of domestically sourced rare earths, according to China’s Ministry of Commerce. Companies will also need export licenses if they use China’s extraction, refining or magnet recyling technology.

China imposed the restrictions ahead of an expected meeting between President Xi Jinping and President Donald Trump at a meeting of regional leaders in South Korea later this month. Rare earths have been a major point of contention in trade talks between Beijing and Washington.

“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,” a White House official told CNBC.

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 crucial inputs for U.S. weapons platforms, robotics, electric vehicles and electronics among other applications.

The Trump administration has taken equity stakes in MP Materials, Lithium Americas and Trilogy Metals this year as it seeks to stand up a domestic supply chain against China.

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.