The US wants to stockpile rare earths, and these miners are running hot as a result

• Several producers and developers saw share prices jump off the back of US REE stockpile rumours
• Amid trade tensions, President Trump looks to shore up non-Chinese supply of critical minerals
• Countries like Brazil could become global powerhouses in rare earths

This month, China implemented export restrictions on a range of rare earth elements – as well as permanent REE magnets – creating a supply chain shock around the globe.

China produces around 90% of the world’s processed rare earths and magnets. The United States has only one rare earths mine, Mountain Pass, which until recently has been reliant on China to process its material and renewed an offtake agreement with China’s Shenghe Resources as recently as January last year.

Amidst the brewing trade war between the US and China, Nevada-based rare earths miner MP Materials – operator of the Mountain Pass mine – saw its share price climb more than 20% overnight on April 15 in New York.

The jump in valuation comes as Reuters recently reported US President Donald Trump is planning to sign an executive order to shore up the country’s domestic supply of the critical mineral.

Coming ahead of the announcement by Aussie PM Anthony Albanese of a proposed Australian critical minerals strategic reserve, the rumours that Trump would sanction the same for the Yanks, and even sign an executive order supporting deep-sea mining for rare earth ores, set off a major reaction from rare earths miners and explorers.

Tariffs of 125% on US products into China, a retaliatory measure from Beijing against Trump’s shoot first tariff measures, have seen MP halt shipments of concentrate to China. It now refines around half of its product into oxides at a plant in California and is planning to produce its first magnets for General Motors from a metal and magnet facility in Texas this year.

One stock which saw its share price jump 50% off the back of speculation about a US rare earths stockpile was St George Mining (ASX:SGQ), whose executive chairman John Prineas says it all comes down to China’s dominance in the technology to separate rare earths and produce the final product.

American producer MP Materials is moving into metallisation and this year magnet making, albeit on a small scale compared to China. Aussie major Lynas (ASX:LYC) separates rare earths at its Kuantan refinery in Malaysia and expects to begin producing heavy rare earths dysprosium and terbium in June, but does not control the steps beyond that.

“They send their (material) to China to produce these final products so it’s a bit of an embarrassment for the west and gives China the opportunity to weaponise their superiority in this area,” Prineas said.

“Clearly there’s very strong motivation for creating these complete supply chains in the west, with very strong support to have more rare earths mining and also the technology to be able to separate and produce permanent rare earth magnets.

“It’s a very good macro environment for emerging companies like ourselves, developers, hoping to be producers, with a lot of investors willing to come and support us to get to that next level.”

Brazil: The new REE processing hub

Brazil’s mining infrastructure and bounty of high grade rare earths resources has seen experts finger it as a potential winner in the US-China trade war, as it becomes clearer the world’s leading military and economic power will not stomach being under China’s thumb when it comes to materials for car motors, electronics and especially defence industries.

“We can’t be reliant on China for production, so there needs to be new projects and they need to be financed and supported,” Argonaut Funds Management portfolio manager David Franklyn told Stockhead in a recent interview.

“The current producers like a Lynas or an MP have bumped up.”

“But also the more advanced projects are getting interest.”

Franklyn said Brazilian rare earth hopefuls look like they have the potential to produce material and still make money at prices similar to current levels.

St George’s 40.6Mt at 4.13% TREO Araxá project in Minas Gerais, also a potentially large source of steel-firming additive niobium, could be at the forefront of the next processing hub for rare earths.

SGQ is participating in Brazil’s permanent magnet-making initiative – called MAGBRAS – which is aimed at establishing Brazil’s first permanent magnet-making facility.

Other participants include major end-users such as the auto giant Stellantis, as well as emerging rare earths producers in Brazil like Meteoric Resources (ASX:MEI), a favourite of Argonaut’s Franklyn with its exposure to the especially rare heavy rare earths, and Viridis Mining and Minerals (ASX:VMM).

“The Brazilians are the world’s number three in terms of reserves of rare earths, and they’re domestically trying to establish more reliable supply chains for rare earths and permanent rare earths magnets,” Prineas said.

“They’ve got a big automobile industry which requires permanent magnets and they’ve got the MAGBRAS initiative which a lot of Australian companies with rare earths deposits in Brazil have signed up to, as well as big companies like Stellantis and motor vehicle makers who want to see Brazil emerge as a powerhouse for rare earths production and potentially permanent magnets, so they’ve got another source of supply and they’re not vulnerable to these geopolitical tensions between the US and China.”

If the initiative gets off the ground it’ll be a pretty big deal for St George.

“They obviously need domestic supply of rare earths … concentrate and we can deliver that,” Prineas said.

“The other projects I mentioned are also very, very good but one of the advantages we have, is that we are a hard rock deposit not an ionic clay deposit, and typically they have a much smaller environmental footprint.

“Ionic clays are much lower grade, require big tailings dams, big strip ratios etc. so they are a little bit harder to get into production and get permitting.

“We are located in an established mining region, and it’s a relatively small footprint that we need to actually start producing rare earths.

“We could be the first to market in Brazil in terms of rare earths projects.”

Helping that along is the company’s cooperation agreement with the State of Minas Gerais to expedite permitting approvals so they’ve got a great chance to really fast track the construction of a new mine, Prineas said.

Ionic clays still have legs

At the same time, the country’s ionic clay purveyors believe they will be in a good place to turn on production once markets respond with higher prices or US Government funding arrives to fill the gap.

“There is a big opportunity for Brazil because the ionic clays are some of the highest margin rare earth projects anywhere in the world,” said Andrew Reid, managing director of Brazilian Critical Minerals (ASX:BCM).

“They can get up and running, they’re not big billion dollar hard rock projects.”

BCM’s Ema project has already been put through the rigours of a scoping study, with a US$55m capex price tag making it one of the cheapest projects to bring into production anywhere in the world.

Operating costs are also impressive, with Ema slated to produce 4800tpa of total rare earth oxides in a 55.3% concentrate at unit cash costs of US$6.15/kg TREO and US$16.95/kg NdPr, a reference to the key light rare earth magnet metals neodymium and praseodymium.

At NdPr prices of just US$74/kg, only ~US$20/kg above current levels, the mine generates a post-tax NPV8 of US$498m and IRR of 55%, with payback just 28 months into its two decade life.

Without Chinese rare earth metals, Reid says end users will need to turn to new operations and build out a supply chain in the West.

“In the Western market, it simply doesn’t exist because there’s only a few mines in operation right now and all of that product is fully talked for through offtake agreements.

“So there’s nothing available. Everybody wants rare earths in the Western market but … The ability for projects to get up and running is very limited because most of them are capital intensive.

“We sit in a very niche position of having very low capex and very low opex relative to just about every other project on the planet right now.”

Lynas x2

St George’s resource at Araxa was just released this month, and Prineas said the grades are up there with Lynas’ in WA. But Prineas says Araxá is twice as big as Lynas was when it started production over a decade ago.

“It’s definitely an economic resource,” he said.

“We have to complete our scoping study and feasibility study to confirm that, and we are going to be doing more drilling to expand the resource.”

Apparently, the independent resource geologist that produced that maiden resource told the company “drill here, here and here and you’ll more than double the resource” with Prineas keen as a bean to start drilling.

“We can’t wait to start drilling, which should start in the next 2-3 weeks and we’re already planning to increase the program from 5,000m to 9,000m of drilling,” he said.

“The resource we have already is enough I think for a 20+ year mine life but bigger numbers are always well received by the market.”

Metallurgical testwork is also underway, with results expected in the next 4-6 weeks.

Which other ASX stocks saw an uplift?

Producer Lynas also saw a 13% upswing last week, underlining its position as the go-to large cap rare earths stock for ASX investors.

The company hasn’t rested on its laurels, having expanded production capacity at Mt Weld and its Malaysian refinery, and opening a new midstream plant in Kalgoorlie.

LYC is also planning to build a manufacturing base for light and heavy rare earths in Houston with funding from the US Department of Defense.

But we’re taking a look down the chain at some of the smaller stocks with the opportunity to make outsized gains as the trade war lifts rare earths interest.

Axel REE (ASX:AXL)

Also operating in Brazil is AXL with its Caladão and Caldas projects, where drilling has returned strong REE results like 14m at 3921ppm TREO from 1m and 37.37m at 2774ppm TREO from 7m along with significant gallium from surface (Caladão) and averages of 3229ppm TREO (Caldas).

Last month, the company executed multiple memorandum of understandings with the Minas Gerais state government to fast track development of the two projects.

This includes a MoU with Federation of Industries Minas Gerais, which owns and operates the LabFab ITR, the first rare earth magnet research and production facility in South America.

Another MoU was signed with the State Economic Development Department and Invest Minas to support project development and fast-track licensing and approvals.

In the near-term, AXL is working on the maiden resource calculation for Caladão.

Meteoric Resources

Rated a speculative buy with a 35c price target by Canaccord, Meteoric reiterated in an announcement in early April that its Caldeira ionic clay project in Brazil would be able to produce significant amounts of the very REEs that China has just placed restrictions on.

In its October 2024 scoping study, the company estimated the project could produce 170t of samarium, 10t of terbium and 60t of dysprosium in the first year of production.

This will increase significantly to 1190t of samarium, 90t of terbium and 430t of dysprosium in the sixth to tenth years of production.

Caldeira has a global resource of 619Mt at 2538ppm TREO with 5000t of terbium oxide and 25,000t of dysprosium oxide.

There is also significant exploration upside. And just last week, the company released the global resource for the project of  1.5Bt at 2,359ppm TREO containing critical rare earth oxides, rising strongly off the announcement of a maiden resource at the Barra do Pacu deposit of 389Mt at 2204ppm TREO

This kind of size could provide a low cost, alternative non-chinese supply. Other near-term milestones include a resource update upgrade, pre-feasibility study and environmental approvals.

At Stockhead, we tell it like it is. While St George Mining, Axel REE, Brazilian Critical Minerals and Meteoric Resources are Stockhead advertisers, they did not sponsor this article.