China strengthens its control over rare earths, increases actions in MP, LAC and TMQ

Shares of U.S. rare earth and critical mineral miners rose on Thursday after China tightened export restrictions, fueling market speculation that the Trump administration will move more aggressively to invest in building a domestic supply chain.

Ramaco Resources shot up more than 11%, Energy fuels increased more than 12%, US Rare Earths jumped more than 16%, NioCorp Developments recovered 14%, and MP Materials advanced more than 6%. Albermarle jumped 7%, Metal Trilogy increased more than 4%, and Lithium Americas rose approximately 2%.

Beijing now requires foreign entities to obtain a license to export products containing rare earths worth 0.1% or more of the value of the goods, according to China’s Ministry of Commerce. Companies will also need export licenses if they use China’s magnet mining, refining or recycling technology.

“The White House and relevant agencies are closely evaluating any impact of the new rules, which were announced without warning and imposed in an apparent effort to exert control over all of the 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 United States relies on imports from China.

The White House and the major US mining 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, robotics, electric vehicles, and electronics platforms, among other applications.

The Department of Defense launched a Record-breaking deal with MP Materials, the largest U.S. rare earths miner, in July that included an equity stake, the first major salvo in the Trump administration’s push to back U.S. industry against China. The White House subsequently acquired stakes in Lithium Americas and Trilogy Metals, fueling investor speculation that more deals are coming.

“This action reinforces the need for a forward-looking US industrial policy,” a 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 has not reached agreements with the White House, but its CEOs told CNBC they are in close contact with the Trump administration.

“It will take a lot of players to build this market,” USA Rare Earth CEO Barbara Humpton told CNBC on October 2.

China’s export restrictions “help 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 learned their lesson the hard way in their last exchange of export controls in (April) and May, China’s greater resistance to pain embedded in its political system increases the credibility of its threats in a game of chicken,” Wang wrote.