Rare-Earths Stocks Are Up. The Focus Is on Australia, and Trump.

USA Rare Earth Commissions Advanced Innovations Lab in Stillwater, Oklahoma (Courtesy USA Rare Earth)

Key Points

• Shares of rare-earth mineral miners rose due to investor anticipation of U.S. government actions to reduce reliance on Chinese supplies.
• MP Materials has benefited from a July deal with the Defense Department to ensure future supplies of rare-earth minerals.
• Analysts expect more federal support for the critical-minerals sector, with additional funding and policy changes actively being considered by Congress.

Shares of miners of rare-earth minerals rose as investors got a look at another way the U.S. government plans to reduce its reliance on Chinese supplies.

There is more support coming for the sector, with the U.S. turning to allies to help expand production.

President Donald Trump is to meet his Australian counterpart, Prime Minister Anthony Albanese on Monday. They announced a “framework” agreement for rare earth materials designed to unlock more capital for the sector. More investment will ultimately lead to more mining and processing capacity outside of China.

Shares of Australian rare earth miner Lynas Rare Earths rose 6.6% in overseas trading. Shares of MP Materials , the biggest producer of rare earths in the Western Hemisphere, rose 2.6%. Coming into the session, shares were up 418% so far this year, but down 15% over the past five days.

MP has been helped by a July deal with the Defense Department meant to help ensure the future supply of the minerals—a response to concern that China might restrict rare-earth supplies. China controls some 85% of rare earth processing globally. The deal included an equity stake, a price floor for rare-earth products, and a guaranteed customer for any magnets produced from planned capacity.

USA Rare Earth rose 13.9%, also boosted by a new Buy rating by William Blair analyst Neal Dingmann. Ramaco Resources climbed 4.1% after posting losses on Friday.

Meanwhile, the S&P 500 and Dow Jones Industrial Average rose about 1.1%.

Raymond James also said they believe more federal support for the critical-minerals sector is coming. “Additional funding and material policy support are actively being contemplated by Congress. The volatility of the past week will place additional emphasis and urgency on this effort,” said analyst Ellen Ehrnrooth. “The White House is clearly galvanized, seeking to cooperate with other countries to support Chinese alternatives.”

Derek Scissors, economist at the American Enterprise Institute, believes the U.S. should work with Australia on processing rare earths, not only mining. “Australians own the largest refiner outside of China,” he said on CNBC on Monday, adding the U.S. should work with allies to help break China’s hold on raw material supply chains. “To move quickly [to produce more], friends are going to help.”

Another near-term focus for investors is the potential meeting between Trump and China’s leader Xi Jinping on the sidelines of the APEC meeting later this month.

Strategists have suggested that Beijing’s plan to restrict exports of rare earths, key in the production of many high-tech products such as fighter jets and electric vehicles, could be a negotiation tactic ahead of the summit.

Regardless of the outcome of U.S.-China trade talks, investors expect more business for domestic producers of rare-earth materials. Canaccord analyst George Gianarikas estimates that total U.S. demand for rare-earth magnets is about 50,000 metric tons a year. MP plans to produce 10,000 tons a year by the end of the decade. There is a lot of business for non-Chinese rare-earth companies to pursue.

On Sunday, Trump listed rare earths as a priority for the U.S. in its dealings with China. “I don’t want them to play the rare-earth game with us,” Trump told reporters onboard Air Force One.

On Friday, Trump said in an interview that the U.S. is “going to do fine with China,” suggesting that trade relations between the world’s two largest economies might be improving ahead of trade talks.

Meanwhile, Treasury Secretary Scott Bessent said on X he would meet China’s Vice Premier He Lifeng in Malaysia later this week to discuss trade between the two countries.

While the tensions over Chinese export restrictions on rare earths look to be abating as Beijing and Washington get trade discussions back on track, the fundamental problem remains, says Gavekal Research analyst Arthur Kroeber. “China has a lock on rare earth elements and the high-tech magnets made from them, and there is no easy way to break its chokehold.”

Write to Elsa Ohlen at elsa.ohlen@barrons.com