U.S.-listed rare earth miners experienced a significant decline in their stock values following the announcement of a trade framework between the United States and China. This agreement is expected to pause upcoming tariffs from the U.S. and reduce Chinese export controls on critical minerals, alleviating supply disruption concerns that had previously benefited the sector.
Impact of U.S.-China Trade Agreement
The trade truce represents a pivotal moment in the ongoing U.S.-China trade tensions. With the reduction of supply risks, investors have started to pull back on investments in U.S. mining companies that were expected to benefit from prolonged trade disputes. Notable declines were seen across several companies:
- Critical Metals (CRML.O): down 17.6%
- Ramaco Resources (METC.O): down 6.8%
- NioCorp Developments (NB.O): down 15.2%
- Other miners such as MP Materials, Trilogy Metals, and USA Rare Earth saw declines ranging from 8.3% to 18%.
China’s Dominance in Rare Earth Processing
China accounts for over 90% of the global supply of rare earths and magnets. The country has recently tightened its export regulations, adding new elements to their list of controlled materials. U.S. efforts to create a stable and autonomous supply chain have lagged behind China’s capabilities. Currently, the United States has just one operational rare earth mine.
Long-Term Challenges for U.S. Miners
While the U.S. has entered into equity deals with various firms, it remains years away from achieving a refining capacity that can compete with China’s extensive processing infrastructure. This situation has dampened market enthusiasm after recent gains in shares of companies like MP Materials and USA Rare Earth, which saw their stock prices increase significantly earlier this year.
Preliminary Trade Deal Review
The preliminary agreement is set to be reviewed by U.S. President Donald Trump and Chinese President Xi Jinping at the upcoming Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea. The outcome of this meeting could impact the trajectory of U.S.-China relations and the rare earth sector in particular.
As the situation continues to evolve, stakeholders in the rare earth mining industry will be closely monitoring developments between these two economic giants.
