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The U.S. and China hit pause on the rare earth issue.
But things could spiral out of control again.
That’s because China now wants to prevent the U.S. military from getting its rare earth supply.
As noted by CNBC, “Beijing will not allow the export of rare earth materials for use by foreign militaries, China’s Ministry of Commerce announced on Oct. 9. These are the first restrictions imposed by China that specifically target the defense sector, according to Gracelin Baskaran, a critical minerals expert at the Center for Strategic and International Studies.”
Considering rare earths are critical in U.S. weapons systems, this could get bad again.
If that’s the case, investors may want to jump into rare earth trades again, including:
Company: MP Materials (SYM: MP)
One of the biggest rare earth winners of the bunch has been MP Materials.
Since late April, the MP stock raced from about $25 to a current price of $56.
JPMorgan believes MP is set to benefit from supply-demand issues, too. The firm also upgraded the miner to an overweight rating with a price target of $74 a share.
“Our new rating reflects our view that rare earths national security concerns are ‘here to stay’ despite China’s reported one-year pause on export restrictions, with risks remaining, especially for military exposure,” they said, as quoted by CNBC.
“MP’s unique mine-to-magnet vertical integration positions the company as the ex-China leader ready to immediately begin addressing these concerns, although it will ultimately take multiple players over many years to sort out.”
Company: USA Rare Earth (SYM: USAR)
Analysts at Benchmark have a buy rating on the USAR stock. The firm cites a recent executive order from President Trump that prioritizes the development of rare earths in the United States. They also cited the company’s commercial production of rare earth magnets by 2026.
Company: Lynas Rare Earth (SYM: LYSCF)
Another way to trade that is with Lynas Rare Earth, which engages in the exploration, development, mining, extraction, and processing of rare earth minerals primarily in Australia and Malaysia. The company holds an interest in the Mount Weld project, Western Australia.
ETF: VanEck Rare Earth and Strategic Metals ETF (SYM: REMX)
We also highlighted the VanEck Rare Earth and Strategic Metals ETF (SYM: REMX). With an expense ratio of 0.56%, the ETF provides direct access to the rare earth and strategic metals markets. Plus, according to VanEck, “Companies must derive at least 50% of total revenues from the rare earth/strategic metals industry to be added to the Index.”
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Written by Ian Cooper