US-China rare earths competition

What happened: In a growing US-China competition over rare earths, China targeted US firms, including MP Materials and USA Rare Earth, with export controls and sanctions. Meanwhile, US companies like ReElement Technologies and POSCO formed a $200M JV to develop a US rare earth separation and magnet production facility. European rearmament efforts were hindered by China's control of critical materials. The US government is backing MP Materials to rebuild its critical mineral supply chain.

Market impact: US rare earth stocks like MP Materials, USA Rare Earth, and American Resources Corporation (AREC) experienced volatility, with MP Materials down 42% from its 52-week high and USA Rare Earth shares falling 23% in June. The US-China competition is driving investment in alternative rare earth supply chains, benefiting companies like ReElement Technologies and POSCO. European defense spending may face headwinds due to Chinese control over critical materials.

What to watch next: On July 28, MP Materials reports earnings, which could provide insights into its progress in rebuilding the US rare earth supply chain. On August 15, the US Department of Defense is expected to release its critical minerals strategy, which may outline further government support for domestic rare earth production. Lastly, keep an eye on geopolitical developments, as any escalation or de-escalation in US-China tensions could significantly impact this narrative.