Rare earths gain amid U.S. effort to beat China’s dominance

Shares of U.S.-listed companies related to the rare earth supply chain climbed in premarket trading on Monday as investors continued to weigh the impact of export restrictions on domestic producers.  

Rare earths are minerals that are essential to many aspects of modern life, particularly for the technology sector and the energy transition as they are used in semiconductors and the motors of electric vehicles. 

China has long had a stronghold on the rare earth supply chain, dominating almost 70% of production and nearly half of world’s reserves in 2024, according to the U.S. Geological Survey. China keeps a tight grip on exports, leading other countries like the U.S to pursue its own domestic supply chain in order to reduce its reliance on China.  

U.S-listed companies saw their shares soar around 9:00 a.m ET. MP Materials was last seen 3.6% higher in premarket trading, USA Rare Earth was up 8.6%, and Perpetua Resources, was around 6% higher.

Canadian firms also made gains, with Lithium Americas and Trilogy Metals increasing 6.7% and 5.4%, respectively.

Michael Silver, the CEO and chairman of rare earths distributor American Elements told CNBC’s “Squawk Box” last week that the U.S. has enough heavy rare metals for its military applications, but the supply chain squeeze could impact EVs, lasers, and “quite a lot of commercial technology.” 

Getting mines up and running should be “treated as national priorities,” Silver said, adding that there will likely be government involvement and subsidies.  

Under new rules that were announced earlier this month, foreign companies now need Beijing’s approval to export rare earths and are required to explain what they will be used for.