China has expanded its trade restrictions against the U.S. by adding two rare-earth mining companies to its dual-use export control list.
- China added MP Materials and USA Rare Earth to its export control list.
- The move blocks the firms from receiving certain Chinese-made dual-use products.
- MP runs the Mountain Pass mine in California and is backed by the Pentagon, which holds about a 15% stake.
MP Materials (MP) and USA Rare Earth (USAR) stocks are drawing attention after China tightened trade restrictions on the rare earth companies that play a significant role in U.S. efforts to develop alternative sources of critical minerals used in advanced manufacturing.
China Expands Export Restrictions To MP, USAR
On Monday, the Chinese Commerce Ministry announced that MP Materials and USA Rare Earth have been added to its export control list, a move that limits their access to certain Chinese-origin goods with both civilian and military applications.
According to a Bloomberg report, Chinese suppliers cannot provide designated dual-use products to the two companies. Beijing also said organizations and individuals in other countries are barred from transferring such Chinese-origin items to the affected firms.
China expanded the restrictions beyond rare earth companies, adding eight more U.S. firms to its export control list, including businesses in the drone, robotics, and aerospace industries.
MP, USAR - Strategic Mineral Producers
The inclusion of MP Materials and USA Rare Earth carries importance because both companies are working to strengthen domestic production of materials and components used in electric vehicles, defense systems and advanced manufacturing.
MP Materials operates the Mountain Pass rare earth operation in California, while USA Rare Earth is developing domestic magnet manufacturing capabilities.
Last year, MP Materials entered a long-term agreement with the U.S. Department of Defense (DoD). The arrangement includes commitments tied to future magnet purchases and pricing support designed to reduce exposure to volatile market conditions. Through the arrangement, DoD will have about a 15% stake in MP Materials.
The investment makes the Pentagon the largest shareholder in the Las Vegas-based company and aims to expand domestic rare earth processing and magnet production, reducing reliance on China for materials essential to defense, technology, and electric vehicles.
MP Materials stock inched 0.8% lower, ahead of Monday. On Stocktwits, retail sentiment around the stock remained in ‘bearish’ territory.
In January, USA Rare Earth announced a $1.6 billion agreement with the Trump administration. Under the deal, the company would receive $277 million in federal funding and a $1.3 billion secured loan through the Commerce Department's CHIPS Program.
In return, the U.S. Commerce Department will get an ownership stake in the company, receiving 16.1 million common shares and about 17.6 million warrants (rights to buy additional shares in the future).
USA Rare Earth stock edged 0.6% higher overnight, heading into Monday.
The latest restriction from China comes shortly after leaders of the Group of Seven agreed on a framework aimed at reducing reliance on any single external supplier of rare earth materials. The plan seeks to keep imports from one country below 60% of total supply by 2030.
China is the world's leading supplier of rare earth minerals, producing about 70% of global output and handling around 90% of the world's rare earth processing and refining.
So far this year, while USAR stock has surged 107%, MP Materials stock has gained 20%.
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