The Rise of American Rare Earth Companies' Stocks Supported by Government Actions to Counter Chinese Dominance
The American stock market witnessed a notable surge on Monday for companies operating in the rare earth sector, following official statements and government actions aimed at strengthening local supply chains and reducing dependence on China, which dominates this vital sector.
NioCorp recorded the highest gains among its peers with an increase of 9.3%, while shares of Energy Fuels rose by 3.8%, USA Rare Earth by 2.9%, and Perpetua Resources by 3.4%. Additionally, shares of MP Materials, the largest rare earth mining company in the United States, increased by 1.8%. The positive wave was not limited to the American market, as shares of the Canadian company Lithium Americas rose by 2.6%, and Trilogy Metals by 2.2%.
This strong performance comes amid a politically and economically heightened interest, as China imposes new restrictions on the exports of these minerals, prompting investors to reassess the opportunities for local companies. Rare earth minerals are a key component in a wide range of strategic industries, from semiconductors and fighter jets to electric vehicle engines, making securing their supplies a national priority amid the global shift towards clean energy.
U.S. Treasury Secretary Scott Pruitt revealed in an interview with CNBC the Trump administration's intention to impose a "price floor to counter what he described as 'Chinese market manipulation'." This announcement boosted investor sentiment, with expectations that local mining companies would receive greater support in U.S. industrial policy.
These moves also reflect the positive repercussions of the agreement reached by the U.S. Department of Defense (Pentagon) last July with MP Materials, which included "equity stakes, a price floor, and an agreement to purchase production," in a clear step aimed at stimulating local production.
These developments align with analysts' expectations of continued government support for the sector, as the William Blair financial institution began coverage of USA Rare Earth's shares, indicating expectations of future growth for the company in this supportive environment.
