Shares of US rare earth companies climbed in premarket trading Friday following a Reuters report that some Chinese suppliers have declined to ship rare earth materials to US customers despite holding export licenses. The development adds fresh uncertainty to critical mineral supply chains just weeks before Chinese President Xi Jinping is scheduled to visit Washington.
Market reaction
USA Rare Earth (USAR) gained 4.8%, MP Materials rose 3.9%, and Critical Metals climbed 5.9% in premarket action. The moves reflect growing investor focus on the strategic importance of rare earths, which are essential for aerospace, defense, and chipmaking applications.
According to the report, some Chinese suppliers have refused shipments to US customers since early August, citing concerns about potential repercussions from Beijing and the possibility that materials could ultimately reach sanctioned users. This has compounded existing worries about access to rare earths and other critical materials.
Supply chain pressures persist
US officials have repeatedly urged China to honor commitments made in Busan and Beijing to support the flow of rare earth export licenses. A source familiar with US planning said the issue has become part of preparations for Xi's planned Sept. 24 visit to Washington.
The supply situation remains tight for several rare earths and critical materials. While exports of many rare earths and related magnets have recovered since China introduced restrictions in April 2025, prices for some materials remain near record highs. Some US companies have reportedly waited more than six months for mineral licenses, though several firms have recently received multiple approvals after lengthy delays.
Yttrium exports lag
Yttrium exports to the US have increased this year but remain around half of 2024 levels. China shipped 27 tons of yttrium to the US in July after two months without exports, marking the second-highest monthly shipment since January 2025. Chinese restrictions have also affected other markets, with suppliers largely refraining from shipping rare earth materials to Japanese companies, and exports of terbium, gallium, and yttrium to Japan declining sharply in the first eight months of the year.
China's dominant position
China remains the dominant force in the global rare earth industry, accounting for about 70% of mining and 90% of processing. Export restrictions and licensing delays have continued to affect US buyers. Reva Goujon, a geopolitical strategist at Rhodium Group, told Reuters that China has used rare earth export controls as a tool to constrain the US Commerce Department's Bureau of Industry and Security. She also expects Beijing could loosen some controls around the summit to ease US concerns over the implementation of previous agreements.
China's foreign ministry said the country remained committed to maintaining global critical mineral supply chains.
US miners seek alternatives
The supply concerns are strengthening the focus on US and Western rare earth producers seeking to develop alternatives to China's dominance. USA Rare Earth is developing a domestic supply chain that includes its Round Top project in Texas. The company also completed its acquisition of Serra Verde Group on Thursday, described as "the only scaled producer of four magnetic and other critical heavy rare earth elements outside Asia": neodymium, praseodymium, dysprosium, and terbium.
MP Materials operates the Mountain Pass rare earth mine in California and stopped selling rare earth concentrate to China in July 2025. The company is also expanding domestic processing and magnet manufacturing, including at its Independence facility in Texas. Critical Metals is developing the Tanbreez project in Greenland as a potential Western source of rare earths, although the project has not yet entered commercial production.
The US government has also increased support for domestic supply chains. Last month, the Trump administration finalized a $1.55 billion funding package that includes equity investment, debt support, and long-term purchase commitments aimed at expanding domestic rare earth production and reducing reliance on China.
With rare earth supplies expected to feature in the upcoming Xi-Trump meeting, developments in export licensing and shipments could remain an important factor for the sector. For more on related supply chain issues, see China's memory chip push and China's commodity buying patterns.
This article is for informational purposes only and does not constitute financial advice.
