Key Takeaways
- Shares of companies outside of China that produce rare earths and minerals surged Thursday as the country moved to tighten exports.
- The sector has been on a tear recently, as the Trump administration has taken stakes in several strategically significant companies to shore up access for the United States.
Rare earths and mineral miner stocks took off Thursday, adding to their recent gains after China moved to tighten restrictions on related exports from the country.
China’s Ministry of Commerce on Thursday expanded licensing requirements for foreign companies to export products containing rare earths critical to producing a wide range of technological products, citing national security reasons.
Shares of USA Rare Earth (USAR) soared 15% and MP Materials (MP) advanced close to 3%. Albemarle (ALB), the world’s largest producer of lithium—which is used in electric vehicles—led gains on the S&P 500 Thursday, as shares jumped 5%, and Lithium Americas (LAC) added 2%.
The gains for companies in the mining sector marked a bright spot in an otherwise down day for U.S. stocks, with the major indexes losing ground amid widespread losses as a federal government shutdown continued. (See here to read more reporting from Investopedia on the day’s market moves.)
Why This Is Significant
China is a leading producer for many rare earths, which are critical components in a range of products, affecting many industries. When China restricts exports, producers of rare earth minerals elsewhere, and their stock prices, can benefit.
Rare earths and mineral stocks have been on a tear recently, as the Trump administration has taken stakes in several strategically significant companies including Lithium Americas and MP Materials, as part of an effort to shore up America’s access and reduce reliance on China, which is a leading producer.
President Trump and Chinese President Xi Jinping are set to meet for the first time in nearly a year at a summit in South Korea later this month, raising speculation China’s move Thursday could be setting the stage for later negotiations.
With Thursday’s gains, Lithium Americas shares have gone up over 40% since the start of October alone, while MP Materials has added close to 10%. Albemarle has gained nearly 20% over the same period.
